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The unprecedented boom that the Indian stock market and mutual fund industry has witnessed in the last few years has completely changed the way ordinary middle class citizens invest. Leaving behind bank fixed deposits (FD) and traditional savings schemes, today the common investor of the country is preparing a fund worth crores for the future by investing his small investments in the stock market through Systematic Investment Plan i.e. SIP. Whenever it comes to long-term wealth creation in mutual funds, the names of certain fund houses and schemes come to mind. Financial analysts and market experts of the country have prepared a list of top 5 SIP funds of the country which have made their investors really rich on the basis of historical returns, alpha generation and risk management of the last 5 to 10 years. From Quant Mutual Fund to Nippon India and big fund houses like Tata and Parag Parikh, these schemes have increased the investors’ money manifold. Let us know in detail today which are those top 5 SIP funds and what excellent returns they have given to investors in the long term.
When any financial advisor is asked how to survive the ups and downs of the stock market and how to build a big corpus in the safest possible way, they have only one answer – long term SIP. When you consistently invest a fixed amount (be it Rs 500 or Rs 5000) every month in a good equity mutual fund, you get the double benefit of ‘Rupee Cost Averaging’ and ‘Power of Compounding’ i.e. compound interest. When the market falls, you get more units and when the market rises, the value of your portfolio increases rapidly. This is the reason why the monthly SIP figure in India has crossed thousands of crores of rupees in the last decade. Today, young investors from small towns to metros start SIP as soon as they get their first job. Let us now know about those top 5 funds which have made a mark among the investors with their excellent performance.
The first and most popular name in this list is Quant Small Cap Fund. This fund has given surprising returns to investors in the last few years on the basis of its unique and aggressive investment model (Predictive Analytics & Dynamic Management). This fund, falling in the small cap category, invests in shares of those companies which have immense growth potential. Investors who started SIP in this fund 5 to 7 years ago, their money has multiplied. Although the risk (volatility) is slightly higher in small cap funds, but for those who have a long perspective, this fund has always proved to be a wealth creator.
Nippon India Small Cap Fund, one of the largest and popular small cap funds in the country, has won the tremendous trust of investors over the long term. The asset under management (AUM) of this fund is the largest in the country. Due to the acumen of the fund manager and strong stock selection, the scheme has consistently outperformed its benchmark index. Investors who have disciplinedly invested in this fund through long-term SIPs have not only met their financial goals but also earned handsome profits.
If an investor is looking for a fund which has less fall in the market and gives good profits in the rise, then Parag Parikh Flexi Cap Fund is the first name that comes to mind. This fund works on the principles of value investing and has the ability to invest in Indian markets as well as foreign companies (like Alphabet, Microsoft etc.). This fund in the flexi cap category remains a favorite among investors due to its balanced portfolio and excellent risk-adjusted returns. It is considered to be the safest and most reliable fund for long term SIP.
Since the modern era is of digital, Artificial Intelligence (AI) and technology, technology sector funds have also given bumper returns to investors. Tata Digital India Fund has made investors rich in the long term by investing in IT sector shares. Although sector funds have a slightly higher risk as they are dependent on a single industry, yet in this era of tech revolution, these funds have given excellent CAGR returns to investors through SIPs.
Before starting an SIP in any of the top-performing funds, investors must assess their individual financial position, risk appetite and investment objectives (such as children’s education, retirement or buying a house). Last year’s excellent returns do not guarantee that you will get similar returns in the future, so it is always wise to invest by creating a diversified portfolio.