Investing in mutual funds through SIP can help multiply savings. Mutual funds offer diversification across industries and sectors. The SIP route enables small-scale investments and serves as a means to mitigate risk. SIPs bring discipline to investing. Spreading investments across multiple mutual funds is advisable.

What are the Best Mutual Funds for SIP?

One effective approach is to compile a selection of the top-performing mutual funds projected to outperform in the upcoming year.

The finest mutual funds for an SIP are typically the leading performers within a mutual fund category. Furthermore, superior SIP plans generally offer an advantage in terms of investment flexibility, cost, and liquidity.

The substantial growth of SIPs is evident in the massive inflows into mutual funds through the SIP route, reaching Rs. 1.83 lakh crore in 2023, with an additional inflow of Rs. 17,610 crore in December 2023. In 2022, the total for the entire year amounted to Rs. 1.49 lakh crore, showcasing a 23% year-on-year increase.

How do SIPs work?

Investors who want to invest through the SIP route must first become KYC compliant. This means they need to submit necessary documents like bank account details and ID proofs. After completing this process, they can easily invest through online portals of asset management companies or other aggregator platforms. Once the money is deducted from their account, they will be allotted units based on the net asset value of that day.

Top 10 Best Mutual Funds SIP to Invest In India

Here’s the list of the top 10 best mutual funds to consider:

 1. HDFC Mid-Cap Opportunities Fund

  2. Parag Parikh Flexi Cap Fund

  3. ICICI Pru Bluechip Fund

  4. HDFC Flexi Cap Fund

  5. Nippon India Small Cap Fund

  6. HDFC Balanced Advantage Fund

  7. ICICI Prudential Equity & Debt Fund

  8. ICICI Prudential Corporate Bond Fund

  9. ICICI Prudential Short Term Fund

  10. LIC MF Gold ETF FoF

Overview of Best SIP Plans to Invest in 2024:

The HDFC Mid-Cap Opportunities Fund is a remarkable mid-cap investment option with a staggering 93.21% allocation in India’s equities market. Among this, an impressive 52.58% is directed towards mid-cap stocks, while 5.57% is dedicated to large cap stocks, and a substantial 18.09% is invested in small cap stocks. This fund is particularly tailored for individuals seeking to remain invested for a duration of 3-4 years, as it promises exceptional returns. However, it must be noted that this extraordinary investment avenue is not suitable for those who shy away from risks, as it thrives on its inherently audacious nature.

The Parag Parikh Flexi Cap Fund is a highly versatile fund that offers an outstanding investment opportunity. With a solid focus on domestic equities, this fund allocates a remarkable 70.63% of its investments in this lucrative market. Moreover, it intelligently diversifies its holdings within domestic equities, with 48.07% invested in large caps, 5.8% in midcaps, and 7.03% in small cap stocks.To add to its appeal, the fund also includes a strategic investment in debt, constituting 0.31% of its portfolio. This allocation showcases the fund’s commitment to a well-rounded investment approach. Within this debt investment, 0.01% is in the form of highly reliable government bonds, while the remaining 0.3% is wisely allocated to low-risk securities.All in all, the Parag Parikh Flexi Cap Fund combines expert market insight with a comprehensive investment strategy, positioning it as an exceptional choice for investors seeking both growth and stability in their portfolios.

ICICI Pru Bluechip is ideal for investors seeking long-term equity investment with a tolerance for moderate to high risk. With a significant 91.39% investment in Indian stocks, including 81.37% in large caps, 4.85% in midcaps, and the rest in small caps, it offers a diversified portfolio. Furthermore, with 0.47% of the investment in debt, primarily in government securities, it adds a layer of stability to the overall investment strategy.

HDFC Flexi Cap is a flexicap fund that invests 88.67% in domestic equities, with a majority of 62.54% in large caps. While midcaps make up only 6.2% of its holdings and smallcaps account for 3.65%. This fund is considered high risk, but it offers the potential for high returns over a five-year period.

Nippon India Small Cap stands out as a top-performing fund in the bustling Indian mutual fund arena. Boasting a remarkable 96.42% equity investment, with a significant chunk of 55.41% allocated to small cap stocks, this fund exudes a spirit of audacious ambition. Nonetheless, its portfolio composition may be classified as high-risk, offering investors the tantalizing prospect of reaping substantial rewards in return. 

The HDFC Balanced Advantage Fund, a top-performing hybrid mutual fund, boasts an impressive equity exposure of 68.28%. Within this, 42.28% is invested in large-cap stocks, 8.27% in small-cap stocks, and the remaining portion allocated to midcaps. Additionally, 28.63% of the fund is safeguarded in debt, primarily government securities, with a smaller portion in low-risk securities at 11.79%.

Meanwhile, the ICICI Prudential Equity & Debt Fund allocates 71.65% of its investment in equities, with 53.74% dedicated to large caps, 8.07% in midcaps, and a smaller portion in small caps. Furthermore, approximately 17.92% of the fund is allocated to debt, with a considerable portion invested in government securities.

For investors seeking stability and predictable returns in the long run, the ICICI Prudential Corporate Bond Fund is an ideal choice. With an impressive 94.29% investment in debt, this fund prioritizes low-risk securities, accounting for 71.85% of its allocation, with the remaining portion in government bonds.

The ICICI Prudential Short Term Fund allocates a significant portion of 88.95% to debt investments. Within this allocation, 54% is dedicated to low-risk securities, while the remaining amount is invested in government bonds. This fund is an excellent option for individuals seeking to allocate their funds for a duration of up to three years. Moreover, it also provides a compelling alternative to fixed deposits. 

LIC MF Gold ETF FoF manages over Rs. 27400 crore. It is a high-risk gold fund that has gained more than 8.3% in the past year.

Factors to Consider Before Investing in the Best Mutual Funds for SIP 2024 

Investing in the best SIP plans of mutual funds is crucial for achieving long-term financial goals. SIPs are highly favored by small retail investors as they provide the opportunity to make small investments that can accumulate into significant amounts over an extended period. Additionally, investors have the freedom to select the frequency of their investments, whether it be daily, monthly, or quarterly, based on their financial capacity. However, before opting for the SIP route, investors should carefully consider the following factors to ensure successful investments.

Identify your needs: The flexibility of investing a small amount is crucial for long-term wealth creation. Furthermore, SIP investments come with no upper limit, making it a versatile option. Initiating a SIP with a small amount is not only more convenient for your finances but also a smart alternative to making a lump sum investment.

Maintain An Individual SIP for Every Respective Goal:In order to assess the overall performance of an SIP, it is important to connect individual SIPs to each milestone. This approach allows for a systematic tracking of all objectives and enables accurate calculation of fund performance. Moreover, it provides a convenient mechanism for taking timely corrective measures when necessary.

Expand Your Investments Based on Your Personal Risk Tolerance: The level of risk tolerance, which determines the unbiased nature of an investment, is influenced by a variety of factors such as income, psychological fortitude, and the specific time frame being considered. Consequently, individuals with a lengthy time horizon can opt for the most outstanding SIP plans available and allocate their total amount across several of them. This strategy effectively diversifies their investment portfolio, effectively mitigating market risks. Conversely, investors with a low tolerance for risk or those with limited job tenure should restrict themselves solely to short-term mutual fund investments.

Within A Few Years, Evaluate the Portfolio’s Performance: The investment horizon is a crucial factor to consider. While there isn’t a set rule for how frequently one should monitor the fund’s performance, it is ideal to review the SIP mutual fund portfolio at least once every three to four years.

Advantages

• Low-risk factor: Funds that are associated with a lower risk level when compared to other types of equity funds.
• Highly liquid: Fund units are easily redeemable at any time after purchase. Furthermore, the investment is also partially withdrawable. 
• Investment options: Investing in large-cap mutual funds can be done in two ways – through SIP or lump-sum. The choice ultimately lies with the investor.
• Offers stability: Companies are typically well positioned to withstand economic downturns, which in turn provides stability to investors.  
• Steady capital appreciation: These companies boast robust operations, a prudent business model, and an impressive track record of consistently generating revenue.

Risks Involved While Investing in Large Cap Mutual Funds

1.Market Risks

There is a risk of poor market performance, which can be influenced by both internal and external factors such as geopolitics and economic conditions. These types of risks are inevitable due to the unpredictability of market factors.

2.Liquidity Risks

Liquidity risk arises when a fund manager must sell securities because they were unable to generate profit due to a scarcity of buyers. In situations of liquidity risk, the ability to liquidate the fund becomes challenging, leaving investors with no choice but to remain invested.

3.Interest Rate Risks

Increasing interest rates can lead to a decrease in the prices of securities. The levels of these interest rates are determined by the availability of credit from issuers and the demand within the market.

Conclusion

Simply saving money isn’t enough to build wealth. It’s important to also invest. Mutual funds provide diversification and good value. Investing in SIPs for the long term can help build a significant amount for the future, especially when the markets are down. However, choosing the right mutual fund is a personal decision. It’s essential to research the fund house’s reputation, historical returns, and risks involved.