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Best Mutual Funds for SIP in 2022

  • Akshatha Sajumon
  • 12 Jan
  • 12 minutes

Systematic Investment Plan or SIP is a convenient investment process that allows investors to invest a fixed sum regularly in mutual funds. Investments can be made on an annual, quarterly, monthly, weekly, or daily basis. A fixed amount is debited from the investor’s account and invested in mutual funds.

Investment in mutual funds via SIP (Systematic Investment Plan) has become a popular way to invest among Indians specially the youth. SIP is a great way to create long term wealth as it helps in building a disciplined approach to investing without worrying about market volatility. There is a huge spike in retail participation as far as the investment through SIP is concerned. No wonder the number of SIP accounts in India is rising at a rapid pace. 

The total SIP accounts rose to 3.37 crores in October as against 3.32 crores in September 2020. The SIP inflows from these accounts stood at Rs. 7800 crores. It is clear from these figures that more and more Indians are choosing to invest in equity markets via SIP mode to build their corpus and achieve their goals.

What is SIP (Systematic Investment Plan)?

SIP or Systematic Investment Plan is a method offered by all the Mutual Fund Companies (Asset Management Companies) wherein the investor invests a fixed amount at regular intervals in a mutual fund scheme of his choice. SIP helps the investor invest in small amounts rather than investing a huge lump sum amount without worrying about timing the market. The best part is the returns from a SIP are higher than done in a lump sum manner over a long period in the majority of the instances. 

Benefits of SIP

SIP is very easy to set up. Once the investor applies for a SIP, a pre-fixed amount is automatically debited from his bank account and invested in the mutual fund scheme of his choice. SIP has many benefits over lump- sum and that makes it the preferred choice amongst the investors. 

Some  benefits of a Systematic Investment Plan are:

  • Rupee cost averaging

 The biggest benefit of a SIP is its advantage of rupee cost averaging. Rupee Cost Averaging means averaging the value of your investment by investing at regular intervals instead of investing in a lump sum.

Markets are known for their ups and downs. It is difficult for a normal investor to predict market movements. In such cases, SIP investments come across as a great tool to average out your investment cost. When the markets are down, you could buy more units of a mutual fund and when markets are high, you end up with a lesser number of units. This way, over the long term, your average cost comes down when compared to investing a lump sum. 

An example might help you understand this concept better

Amount of SIP Net Asset Value of 1 unit of Mutual Fund (Cost) No of units purchased
Jan  2000 45.7 43.76
Feb  2000 48.0 41.67
Mar 2000 43.5 46.0
Apr 2000 44.0 45.45
May 2000 49.2 40.65
June 2000 47.5 42.10

The total amount of investment over 6 months: Rs 12000

Total number of units of mutual fund purchased:   259.63

Average Cost of investment:  46.21 per unit

  • Helps you become a disciplined investor

 When you set up a SIP,  money deducted from your bank account goes into mutual funds at regular intervals which saves time and effort. You need not be a stock market expert to know how the market moves.  You can sit back and relax as far as investing is concerned.

  • Power of compounding  

The investment automation done through SIP makes sure you never miss out on your investments as opposed to investing in a lump sum manner. The small amounts contributed result in a large corpus and the returns are compounded over the long term.

  • Can start with a small amount

How much do you need to start a Systematic Investment Plan? A common question that comes up especially from the millennials. Well, the best part of a SIP plan is that you can start as low as Rs.100/- per month. Yes, it is that easy and pocket-friendly.

  • Convenience 

You can easily set up a mandate for SIP each month and the amount will get debited without intervention from your end. 

  • Helps you plan your finances better

As you are aware of the SIP amount that will get debited from your account each month, it will help you help your other expenses better. 

Best Mutual Funds SIP Plans to invest in 2022

A big question that comes to everyone’s mind is, “Is this the right time to invest?” Well, as the saying goes- the best time to invest was 20 years ago and the next best time to invest is now. So irrespective of whether the markets are high or low, you should start investing as early as possible. 

If you are looking to start your investment journey or if you are an existing investor here is a list of best mutual funds SIP plans to invest in India this year. The mutual fund plans listed here are predominantly equity funds. The funds are from different categories so that will help you diversify your portfolio. Investors are advised to conduct their due diligence or should consult their financial advisor before selecting a fund for investment. It should also be noted that the past performance of the funds is not indicative of future performance.

Axis Bluechip Fund

As the name suggests this fund invests in the blue-chip companies listed on the stock market.

This fund invests in large-cap companies. This fund is suitable for investors looking to create long term wealth. The ideal SIP amount would vary from person to person. You could start a SIP in this fund with Rs 500/-.

Fund Name Category Minimum SIP amount Fund Managers
Axis Bluechip Fund Large Cap Rs. 500 Shreyas Devalkar

Hitesh Das

UTI Equity Fund

This fund is from a multi-cap category that invests across large, mid, and small-cap companies focussing on a few selected sectors. The fund has been a star performer in its category for the past 3 years with returns of over 15 percent in the same period. Ideally, a minimum SIP of Rs.2000/- should be done for the long- term in this multi-cap fund. The fund has given consistent returns of around 8 % in the last three years. 

Fund Name Category Minimum SIP amount Fund Manager 
UTI Equity fund Multicap Rs. 500 Ajay Tyagi

ICICI Prudential US Bluechip Equity Fund

This fund is for those investors who are looking to diversify their portfolio by investing in stocks of overseas companies. This fund primarily invests in equity and equity-related instruments of companies listed on the New York Stock Exchange and NASDAQ. People investing in this fund should note that this is a high- risk fund. The fund has given excellent returns of 34% in 2019. 

Fund Name Category Minimum SIP amount Fund Manager 
ICICI Prudential US Bluechip Equity Fund Thematic Rs. 500 Rohan Maru

Aditya Birla Sun Life Equity Fund

This is another fund from the multi-cap category and is managed by Aditya Birla Sun Life AMC. Investors looking for a multi-cap fund can invest in this fund for decent returns. This fund has given a return of around 16 percent since inception. 

Fund Name Category Minimum SIP amount Fund Manager 
ABSL Equity Fund  Multi-Cap Rs. 500 Anil Shah

Edelweiss Balanced Advantage Fund

Balanced Advantage funds are increasingly becoming popular amongst the new generation of investors. The beauty of balanced advantage funds is that they work on a dynamic asset allocation strategy. This strategy allocates higher amounts to debt when equity is overvalued and allocates higher amounts to equity when equity valuations are attractive. 

These hybrid funds invest in pure equity instruments, arbitrage opportunities, derivative strategies, debt, and money market instruments. Sip in these types of funds gives investors peace of mind without worrying about the volatility in the market. This fund has been giving consistent returns for the past 3 years.  

Fund Name Category Minimum SIP amount Fund Manager 
Edelweiss Balanced Advantage Fund Hybrid Rs. 500 Bhavesh Jain

Gautam Kaul

ICICI Prudential Pharma Healthcare and Diagnostics (PHD) Fund

This is a thematic fund that invests predominantly in equity/ equity-related or fixed income securities of pharma and allied companies. Pharma as a theme has generated extraordinary returns especially due to the pandemic that has taken the world by a surprise. As we wait for a vaccine for Covid 19 and witness increasing expenditure on healthcare, pharma, and associated companies would continue to do great in terms of earnings. Therefore, pharma as a fund remains a lucrative investment for high- risk investors. This scheme gave a whooping 70 % returns in the previous year. 

Fund Name Category Minimum SIP amount Fund Manager 
ICICI Pru Pharma Healthcare & Diagnostics Fund Sectoral Rs. 500 Ihab Dalwai

Priyanka Khandelwal

ICICI Prudential Bluechip Fund

This fund is a leading mutual fund scheme in the large-cap space. Investors looking for long-term wealth appreciation can invest in this fund through the SIP route.  This fund from ICICI Prudential AMC finds investment opportunities from the economic growth of the country and its structural changes through investing in equity and related securities. This fund has been a consistent performer and has given returns around 14 % since its inception.

Fund Name Category Minimum SIP amount Fund Manager 
ICICI Pru Bluechip Fund Large Cap Rs. 500 Rajat Chandak

Priyanka Khandelwal

L&T Balanced Advantage Fund

L&T Balanced Advantage fund is an open-ended hybrid scheme and has been another consistent performer in the past 3 years. It seeks to provide capital appreciation by investing in a diversified portfolio of predominantly equity and equity-related securities and to generate reasonable returns through a portfolio of debt and money market instruments and arbitrage opportunities in cash and derivatives segments.

Fund Name Category Minimum SIP amount Fund Manager 
L&T Balanced Advantage Fund Hybrid Rs. 500 Venugopal Manghat

Praveen Ayathan

Axis Midcap Fund

Investors looking to invest in the mid-cap companies can start a SIP in this fund. This fund is open-ended and is rated in the category of Moderately High Risk. It is one of the leading midcap funds as far as returns are concerned. Investors can start a SIP with as low as Rs. 500 in this fund.

Fund Name Category Minimum SIP amount Fund Manager 
Axis Mid Cap Fund Mid Cap Rs. 500 Shreyas Devalkar

ABSL Tax Relief 96 Fund

This is an equity mutual fund scheme started by Aditya Birla Sun Life AMC. This fund falls in the category of ELSS (Equity Linked Savings Scheme). The fund has dual benefits. It gives an investor exposure in the equity markets and the investment amount is eligible for tax deduction under section 80C of the Income Tax Act. Thus, investors who want to avail of tax deduction and invest in equity can start a SIP in this scheme. 

If you are wondering how much can one invest in an ELSS fund in a financial year? Well, the maximum amount of deduction available u/s 80C is Rs.1,50,000/-. So a SIP of around Rs.10,000/- is recommended if you are looking to take full exposure in equity. An important thing to note here is that these funds that offer tax benefits have a lockin of 3 years i.e. you cannot redeem your investments before the end of 3 years from the date of investment. 

Fund Name Category Minimum SIP amount Fund Manager 
ABSL Tax Relief 96 Fund ELSS Rs. 500 Ajay Garg

Mistakes to avoid while doing a SIP

Investments through SIP are a comfortable way to invest in Indian equity markets. It facilitates investors to build a  huge corpus without making investments in a lump sum manner. However, if the SIPs are not used correctly, they can cause you a lot of trouble. The majority of investors make so many common mistakes while investing in Indian mutual funds through SIP mode. Here is a list of mistakes that you should avoid while investing via SIP:

  • Timing the market: Many investors try to time the markets and in the process do not even start or start very late. They should know that it requires a lot of knowledge and expertise to time the markets. The easy way to start investing is to do it with a SIP for the long term. Remember the time spent in the market is much better than timing the market.
  • Discontinuing the SIP: Investors should always keep in mind that investing in equity mutual funds should be done from a long term perspective to reap maximum benefits. However, many first time investors do not have enough patience to continue their SIP when they find that their portfolios are in red. The ideal thing to do is to ignore it and do not shy away from continuing the SIP.
  • Selection of mutual fund scheme: Selection of a mutual fund scheme is very critical to your investment journey. The fund should be selected keeping in mind one’s financial goals, risk appetite, and liquidity requirements. But many investors ignore this and select the fund that has given the highest returns in the recent past. It is not the right thing to do. They should do their due diligence and then select the fund that suits them.
  •  Choosing SIP tenure and amount: Investors should know the right amount and the tenure of SIP that will help them achieve their goals. Many investors select a very less amount of SIP and end up being short of the required corpus. They should do a thorough study and find out the correct SIP amount. Some investors start with a small amount of SIP because they do not have adequate liquidity. In such cases, investors should consider raising the SIP amounts at a later stage so that the financial goals are met on time.
  • Not monitoring the SIP: Another common mistake that investors commit is that they fail to track or monitor their SIPs. They are under a misconception that SIPs are for the long- term and therefore it does not require monitoring at all. It should be noted that even the best of funds with the best of the fund managers requires monitoring at regular intervals.

A systematic Investment Plan is a simple and easy way to build wealth. You could get a variety of investment plans based on your goals and risk profile or you choose a fund of your choice to invest through on Fisdom . Download the app to explore more. 

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Akshatha Sajumon

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