Best SIP to choose from in 2018

With the mutual funds market becoming the favored avenue of investment, more and more investors are opting for Systematic Investment Plans (SIP). SIPs allow investors to invest a pre-specified amount on a regular basis in their choice of mutual funds. Investing in mutual funds is a prudent action for building your wealth over the long-term or for achieving your short-term financial goals.

Why choose SIP?

SIP is beneficial for investors who cannot invest in lump sum amounts and also for first-time investors who have just started their financial journey. An SIP allows investors to avail the benefits of rupee cost averaging, where the investor gains more units when the market is down and vice versa when the market is up. SIP also instills investing discipline and a savings habit.

The Securities and Exchange Board of India (Sebi) had, in October 2017, re-classified mutual funds, as a result of which, many funds were re-categorized, merged/demerged, and their attributes changed. Mutual fund houses also altered their portfolios after the Sebi circular.

If you want to invest in the financial markets through the mutual funds route and are wondering which SIP to choose from among the many available, here are some of the best SIPs to choose from in 2018.

Large-cap funds

As per the Sebi circular, large-cap companies are those that fall in the ranks of 1-100 in terms of full market capitalization. Thus, the best large-cap funds to invest in 2018 would be:

• Mirae Asset India Equity Fund

  The objective of this fund is to gain maximum appreciation on long-term capital by investing in opportunities from the Indian economic growth story. The fund shifts its investments between equity and equity-related securities.

  The annual returns of this fund for the past two years has been at 20% and it has received a CRISIL rank of 2. Thus, this is one of the best large-cap SIP funds to invest in 2018.

• UTI Equity Fund
  This fund also aims at maximum long-term capital appreciation and invests in equity and equity-related instruments of various large-cap companies.
  The fund has given 17% annual returns in these past five years and has a CRISIL rank of 3. This is also one of the best large-cap SIP funds to invest in 2018.

Mid-cap funds

Bordering between small-cap and large-cap, mid-cap companies are those that rank between 101-250 in terms of market capitalization, as per the Sebi circular. Based on this classification, the best mid-cap funds in 2018 are:

• Aditya Birla Sun Life Pure Value Fund

  The fund’s objective is consistent capital appreciation by investing in stocks that are trading at a valuation lesser than their intrinsic value, namely undervalued stocks. It invests primarily in equity and equity-related instruments.
  The fund has given 29% annualized returns in the past five years and has performed well in the mid-cap segment. CRISIL has given it a ranking of 2.

• Canara Robeco Emerging Equities Fund
  This fund’s objective is to generate capital appreciation by investing in a diversified portfolio of large and mid-cap stocks. The fund has given 30% annualized returns in the past five years and has also out-performed other mid-cap funds.
  It is ranked at number 3 by CRISIL and in one of the best SIPs in the mid-cap segment.

Small-cap funds

The smallest companies in terms of market capitalization, i.e. from rank 250 onwards as per the Sebi classification, are known as small-caps. The best small-cap funds to invest in 2018 are:

• Reliance Small Cap Fund

  The fund’s objective is to generate long-term capital appreciation by investing in equity and equity-related instruments of small-cap companies.
  The fund has given 35% annualized returns in the past five years and has performed well in the mid-cap segment. CRISIL has given it a rank of 1.

• SBI Small Cap Fund
  The fund’s objective is to provide investors with long-term capital growth opportunities with the liquidity of an open-ended scheme by investing primarily in a well-diversified portfolio of equity stocks of small-cap companies.
  The fund has given 35% annualized returns in the past five years.

There are many mutual funds available in the market that have given consistent, profitable returns over the years. However, before investing in a particular fund, conduct due diligence and seek professional advice to choose the fund that fits your risk appetite and leads you to your financial goals.