If you have been reading up on the importance of Systematic Investment Plans (SIPs), you may have also been looking for important resources to help you invest. For many individuals, investing in SIPs becomes a game of chance because of the contrasting sources found online.
However, we’ve done our research across many expert portfolio managers and have come up with this year’s top ten names. In this article, we will give you the 10 best Mutual Funds (MFs) for SIP investment in 2023.
List of Top 10 Mutual Funds for SIPs
Before we delve into more details regarding analysis and factors leading to the comparison, here is our list of the ten best Mutual Funds for SIP investment for the year. Read the categories carefully before creating a diverse portfolio based on your preference!
Equity Model
- Quant Tax Plan Direct-Growth: started by Quant Mutual Fund, this plan helps create capital appreciation by directing funds mainly in equity shares with potential for success. Their ancillary goal is to provide dividends and other incomes.
- Quant Infrastructure Fund Direct-Growth: This fund invests in equity and related instruments belonging to the infrastructure sector. In 2023, this is the best choice to make in the equity fund model.
- BOI AXA Small Cap Fund Direct-Growth: This equity MF scheme was launched by BOI AXA and is one of the most promising picks. As their focus is on long-term asset growth, they have invested in equity and equity-related assets in small-cap organisations.
- PGIM India Flexi Cap Fund Direct-Growth: Formerly known as PGIM India Diversified Equity Direct-G, it aims to improve the value of your capital growth by mainly investing in a diversified portfolio of equity and equity-related instruments, including derivatives.
Debt Model
- ICICI Prudential All Seasons Bond Fund Direct-Plan-Growth: This investment scheme holds several debt and money market instruments. Additionally, the scheme aims to establish optimum yield, ensure safety, and create a liquidity balance.
- Edelweiss Government Securities Fund Direct-Growth: Their objective goal is to maximise earnings by delving into the money market as well as short-term debt instruments.
- HDFC Credit Debt Risk Debt Fund Direct-Growth: This plan works to help investors’ capital appreciation and growth by directing funds to AA and lower-rated corporate debts.
Hybrid Model
- Quant Multi Asset Fund Direct-Growth: This SIP can help investors create more income and promote capital appreciation by diversifying into instruments across the three classes of assets – equity, debt, and commodity markets.
- Quant Absolute Fund Direct-Growth: Owned by Quant Mutual Fund, this plan also considers long-term capital growth and improving the current income. It also dabbles with a blend of fixed-income assets and equity.
- Baroda BNP Paribas Aggressive Hybrid Fund Direct-Growth: This scheme creates a diversified portfolio of equity and equity-related investments as well as fixed-income securities to boost the value of your capital.
Comparison and Analysis of the Top 10 Mutual Funds
- Overall performance and returns: Investors should review the historical performance of funds over various time periods, such as a year, three years, or five years. By examining the returns generated by these funds, investors can assess their consistency and alignment with the fund’s investment objectives. It’s important to note that past performance does not guarantee future results, but it can provide valuable insights into the fund’s track record.
- Investment styles and strategies: Investors should evaluate whether the funds focus on investing in large-cap, mid-cap, or small-cap stocks. Additionally, it is important to determine whether the funds follow a growth-oriented or value-oriented investment approach. By considering these factors, investors can assess whether an MF’s investment style and strategy align with their investment preferences and goals.
- Risk profile and volatility: Different funds may carry varying levels of risk, depending on factors such as asset allocation, sector exposure, and investment strategy. Investors should evaluate the risk measures associated with the funds, such as standard deviation and beta, to gauge their volatility and potential downside. It’s important to choose funds that align with an investor’s risk tolerance and investment objectives.
- Expense ratios and charges: Investors should carefully evaluate the expense ratios of the top MFs, as these fees are deducted from the fund’s assets and can reduce overall returns. Additionally, investors should consider any additional charges, such as entry load, exit load, or transaction fees. Comparing the expense ratios and charges of different funds can help investors choose funds that offer cost-effective investment options.
- Fund size and liquidity: Larger funds may have the advantage of economies of scale and a more extensive research team, which can potentially lead to better investment decisions. Liquidity is also crucial, as it ensures ease of buying and selling fund units. Investors should assess the fund size and liquidity to determine whether the fund can effectively accommodate their investment needs.
- Track record and consistency: Investors should analyse how the fund has performed compared to its benchmark and peers over various market cycles. Consistent performance over time indicates that the fund has navigated different market conditions effectively. A fund with a strong track record and consistency may provide investors with confidence in its ability to deliver sustainable returns.
Factors to Consider Before Investing in MFs
- Risk tolerance and investment goals: Different MFs carry varying levels of risk, and it’s important to choose funds that align with your risk tolerance. Additionally, consider your investment goals, such as long-term wealth creation, retirement planning, or saving for a specific financial milestone. Aligning your investment goals with the appropriate MF can help you achieve desired outcomes.
- Investment time horizon: MFs are generally recommended for long-term investments due to the potential for compounding returns. Assessing your investment time horizon, whether short-term, medium-term, or long-term, will help you select funds that align with your desired investment duration.
- Asset allocation and diversification: A well-diversified portfolio can help mitigate risk by spreading investments across asset classes such as equities, bonds, and cash. Assess whether the MFs have a balanced asset allocation approach that aligns with your risk profile and investment objectives.
- Past performance and future outlook: Consider the fund’s performance over different market cycles and evaluate its consistency. Additionally, research the fund’s investment philosophy and outlook to gauge whether it aligns with your investment expectations.
- Fund manager’s track record and experience: Assess the experience, qualifications, and investment approach of the fund manager. Look for consistency in their decision-making process and evaluate their ability to generate returns in various market conditions. A skilled and experienced fund manager can play a significant role in the success of an MF.
Conclusion
Investing wisely is crucial, and MFs are a reliable choice. In 2023, these 10 funds for SIP investment stand out for their exceptional performance, diversification, and strong track records. With a blend of growth, income, and stability, they offer investors an opportunity to achieve long-term financial goals while minimising risk.