Top 7 Best SIP Plans in India to invest in 2020
The last two years or so have not been much overwhelming for the mutual fund investors, though they kept on pouring their money into different types of mutual fund schemes. As a result, the total Assets under Management (AUM) rose to an all-time high to Rs.27 Trillion or 27 Lakh Crores in November 2019.
Gradually, they have understood that mutual fund investment is for creating long term wealth and not for short term gains. This led them to continue their investments irrespective of market conditions. Every investor should follow this practice without fail.
In this post, I will discuss the Top 7 Best SIP Plans in India to invest in 2020, from which you may find out the best SIP to invest in 2020 as per your requirement.
Is there indeed Best SIP Plans / Best SIP to invest in 2020?
There is nothing called BEST SIP Plans or BEST SIP to invest if you judge a fund or scheme based on its return only. Very surprising, is not it? Yes, that is absolutely true and you need to understand this. The time has really come now.
I have lots of reasons to explain this. If we call a mutual fund scheme best, so it should remain best at least for the next 5,10 or 15 years. Is not it? But unfortunately, it doesn’t happen so.
A fund can never be at the top of the Himalayas for perpetuity. This is not possible either. Quite obviously a fund will reach the top and again come down from the top gradually.
Further, the recent Categorization of the mutual fund scheme by SEBI has made this notion of the BEST fund very challenging. I have the following reasons in support of my post.
You may or may not accept that most of us consider a fund as the best in terms of its return score only. But how it is possible? A fund may be best performing for you considering its last few years return, but may not be suitable for a person of 60 years old.
I mean, for example, the SBI Small Cap fund is performing exquisitely for the last couple of years, but would anyone suggest this fund to a senior citizen for his regular earnings. Absolutely not I hope.
Even the best fund manager of the country can not guarantee the best performance of a particular fund for the next 5 or 10 years or so. If they can not confirm the BEST status, how can we tell a fund the best one? The time has really come for the investors to know the bitter truth.
I am neither demoralizing you and nor have the intention to do so. But the fact is that the return is not the only criteria to be considered, other parameters like risk profile, risk grade of the fund, age, financial objectives, current financial position, etc. are required to be considered.
So the best mutual funds for SIP or best mutual funds next 10 years for you, may turn out to be the worst for others.
What factors decide the Best SIP plans to invest?
Technically, keeping your emotions aside, you should consider mutual fund schemes as Best SIP Plans to invest in 2020, only when you compare these schemes on the basis of their overall characters such as fund’s return, benchmark return, risk of the funds, the risk profile of the investors, time horizon and their financial objectives. Each and every component is equally important for obtaining the best status.
There is nothing to worry about ultimately. Because we all invest in mutual funds to create long term wealth. Investment in mutual funds using the SIP route simply helps us accumulating more and more units when actually the market goes down.
You would not find these phenomena called Rupee-Cose Averaging elsewhere. But most of you ignore this and simply do the opposite of what you are asked by the experts.
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But those who invest randomly in mutual funds only considering the best status based on the last few years performance, or for greed for short term earnings, ultimately fail miserably.
There are many other things to consider while you select a mutual fund scheme for investment. Again and again, the financial experts suggest us to invest for the long term if we want to build sustainable wealth for our future. Those who have linked their investment with their financial goals or objectives are not required to worry at all.
A disciplined and systematic approach towards long term wealth creation helps you to reach your goals with ease. Systematic Investment Plan or SIP is a medium for investment even in small amounts, that attracts most of the investors.
Which is the best SIP to invest now?
Before deciding the best SIP Plans to invest now, let’s just consider some of the parameters that are very crucial in terms of decision making for the best SIP Plans to invest in 2020.
Alpha :
Alpha is a measure of determining the excess return generated by a fund over and above the average return or the benchmark return. This is also seen as a performance measuring tool of a fund manager. Alpha can be positive or negative.
Why should I see Alpha value in Best SIP Plans in India? What does Alpha denote?
This is one of the most crucial factors for selecting outperformers. Alpha tells us how a fund has performed in comparison to its benchmark or industry average. The higher is the Alpha, the fund is the outperformer.
The low alpha value denotes the worst performance of the fund. Also Alpha denotes the Risk-adjusted return generated by the fund.
For example, if a mutual fund scheme has an Alpha of 4, it primarily means that the fund has outperformed its benchmark index by 4%. If the benchmark return is 10%, this fund has generated a return of 14%.
A positive(+) Alpha means that the fund manager has been able to generate a return over the expected return and it has performed better as compared to its risk profile. Obviously, the fund manager must be given credit for the same.
On the other hand, a negative(-) Alpha means that the fund has not been able to generate sufficient return in comparison to its risk profile.
Recommendations for selecting Best SIP Plans in India to invest in 2020:
Thus, one should predominantly choose a high alpha value mutual fund scheme since a high alpha value fund has the ability to generate returns over and above the benchmark return has also the potential to come back after the market fall.
Beta:
Beta denotes the volatility or the systematic risk of an underlying mutual fund scheme. It also denotes the sensitivity of a mutual fund scheme towards the market movements.
This means how a particular fund moves in tandem with the market movements or swings. Thus, it can be said that beta measures the periodic fluctuations(rise or fall) of a scheme in comparison to the periodic fluctuations(rise or fall) of the index for a particular period.
Why should I see Beta value in Best SIP Plans in India? What does Beta denote?
Beta measures the extent of the underlying fund’s movement in line with the benchmark index. This factor is also a very crucial parameter after Alpha in selecting the best performing fund. It always signifies the systematic risk that a fund bears and how sensitive it is towards the market movements.
The beta of the market or benchmark index is always considered as 1. similarly any fund’s beta value less than 1 signifies lower volatility and higher than 1 signifies higher volatility as compared to the market or benchmark index.
For example, if a mutual fund scheme Z has a beta value of 0.90, it basically denotes the price swing i.e. for every rise or fall of 1 in the market or benchmark index, the value of Z would also rise or fall by 0.90.
Thus, if market returns or rise or fall by 10%, the mutual fund return would also rise or fall by 9%. This suggests that how a mutual fund scheme’s NAV would move in line with the market or benchmark index. However, finding the Beta value will be of no use if the portfolio doesn’t closely follow the benchmark.
What is an ideal Beta Value?
- An ideal beta value should be 1. This means the fund’s NAV value is likely to replicate the exact market swing.
- If the beta value is less than 1, this means the NAV of the fund would swing slower than the benchmark.
- If a mutual fund’s beta is more than 1, this means its NAV is likely to swing more than the benchmark.
Recommendations for selecting Best SIP Plans in India to invest in 2020:
Thus, the beta value indicates the rise or fall of the NAV value of a mutual fund in comparison to its benchmark index, for example, SBI Small Cap fund’s performance in comparison to the NIFTY Small Cap 100 benchmark. The low it is the less volatility of the scheme it signifies.
Standard Deviation:
Standard deviation is a statistical tool to measure the extent of deviation of returns from the average value of returns. In statistical technical terms, the Standard deviation measures the dispersion of a set of data from its mean.
When we invest in any instruments expecting some returns from it, and if there is any variation of actual return from the anticipated return, standard deviation measures the risk of those instruments.
Why should I see Standard Deviation in Best SIP Plans in India? What does Standard Deviation denote?
In finance, the standard deviation is applied to the annual rate of return of an investment to measure the volatility of that investment. This is also known as the historical volatility and is used by the investors to measure the amount of expected volatility.
Standard deviation is calculated as the Square root of variance. The larger the standard deviation, the lower the probability that actual return would be close to the expected return.
For example, if a mutual fund Z has a standard deviation of 5% and an average return of 12%, it means that Z has a tendency of deviating by 5% from its expected average return and may deliver returns between 7% to 17%. Therefore, the standard deviation is directly proportional to the volatility of the portfolio.
Recommendations for selecting Best SIP Plans in India to invest in 2020:
It is recommended to select a fund that has a low standard deviation value. The low it is, the less volatile it is usually.
Sharpe’s Ratio
Sharpe Ratio= (Return of the fund-Risk fee rate)/Standard Deviation of the fund
The Sharpe ratio compares the excess return delivered by the fund over and above the risk-free return rate with its risk measured by Standard Deviation. Higher the ratio, the better it is when similar funds are compared for the same period.
This ratio is used to rank funds within the same category. Therefore, this ratio plays a significant role in order to compare mutual funds and selecting the Best SIP plans 2020. This helps an investor to evaluate, analyze the performance of a particular fund as compared to other similar types of funds.
Recommendations for selecting Best SIP Plans in India to invest in 2020:
This Sharpe value helps investors to make an informed decision regarding investment in the fund. Higher the Sharpe ratio, better the risk-adjusted return of a mutual fund portfolio. So a high Sharpe value mutual fund should be selected.
Treynor’s Ratio:
Treynor’s Ratio= (Return of the fund-Risk fee rate)/Beta of the fund
Treynor’s ratio indicates how much excess return was generated by the fund itself for taking each unit of risk. Simply this ratio tells us about a fund’s ability to deliver better risk-adjusted returns.
A fund with the higher Treynor’s ratio means the fund has been able to deliver better returns for the amount of risk taken. This ratio is calculated by subtracting the risk-free return, defined as an Indian Government Bond, from the fund’s return and then dividing by the Beta of the fund.
For example, if fund X and fund Y both have 3-year returns of 18%, and fund X has a Treynor’s ratio of 1.40 and fund Y has a Treynor’s ratio of 1.25, then you can choose the fund X, as it has given a higher risk-adjusted return.
Expense ratio:
The expense ratio is the cost incurred by a fund manager to operate and maintain a mutual fund scheme. This cost is recovered from the investors’ investment value of that particular fund.
So ideally, if you invest Rs.10 in a fund that has an expense ratio of 1%, you would be allotted units equivalent to Rs.9 only deducting Rs.1, as the expense of that fund.
Recommendations for selecting Best SIP Plans in India to invest in 2020:
I have considered the following funds which have an expense ratio is equal to or below 2.50%. A lower expense ratio helps in generating high fund returns over a long term period of investment.
This expense keeps on changing on a quarterly basis by the fund houses but the low it is the better for the investors in the long term investment.
Now, let’s see what are the Top 7 Best SIP Plans in India to invest in 2020
- Axis Bluechip Fund
- Mirae Asset Large Cap Fund
- Mirae Asset Emerging Bluechip Fund
- Kotak Standard Multicap Fund
- SBI Small Cap Fund
- Axis Long Term Equity Fund
- SBI Equity Hybrid Fund
1. Top 1 Best SIP to invest in 2020 – Axis Bluechip Fund Growth
Investment Objective: This fund aims to achieve long term capital appreciation by investing in a diversified portfolio consisting of equity and equity-related securities of Large Cap companies. This fund aims to outperform the benchmark by lowering the risk than its benchmark.
| Name of Fund | Axis Bluechip Fund Growth |
|---|---|
| Category of Fund | Large Cap |
| Fund Manager | Mr. Shreyash Devalkar |
| Net Asset Under Management (AUM) | ₹ 9481.19 Crore |
| Inception Date | 5th January 2010 |
| Expense Ratio | 1.76% |
| Absolute Returns in 6 months | 8.31% |
| Annualised Returns in 1 Year (1 Yr. CAGR) | 17.72% |
| Annualised Returns in 3 Year (3 Yr. CAGR) | 18.84% |
| Annualised Returns in 5 Year (5 Yr. CAGR) | 9.91% |
| Since Inception (05 Jan 2010) | 12.33% |
| Value of Rs. 1 Lakh invested 1 year ago is | ₹1,17,120 |
| Value of Rs. 1 Lakh invested 3 year ago is | ₹1,67,750 |
| Value of Rs. 1 Lakh invested 5 year ago is | ₹1,60,510 |
| Value of Rs. 1 Lakh invested since inception is | ₹3,16,200 |
| Alpha | 6.93 |
| Beta | 0.84 |
| Sharpe Ratio | 1.36 |
| Standard Deviation | 11.72 |
| Crisil Rank | ***** (5 Star) |
2. Top 2 Best SIP to invest in 2020 – Mirae Asset Large Cap Fund Growth
Investment Objective: This fund aims to invest in a combination of large caps with a few mix-in midcap stocks maintaining an investment combination of 80%-20% in large-cap and mid-cap stocks. This fund has the flexibility to invest in different categories of stocks across sectors and themes.
This scheme primarily invests 80% in Top 100 large cap companies stocks by market capitalization. This fund follows a sustainable growth investment-oriented approach.
| Name of Fund | Mirae Asset Large Cap Fund Growth |
|---|---|
| Category of Fund | Large Cap |
| Fund Manager | Mr. Gaurav Misra, Mr. Neelesh Surana, Mr. Harshad Borawake |
| Net Asset Under Management (AUM) | ₹16,519.2 Crore |
| Inception Date | 4th April, 2008 |
| Expense Ratio | 2.24% |
| Absolute Returns in 6 months | 4.89% |
| Annualised Returns in 1 Year (1 Yr. CAGR) | 12.21% |
| Annualised Returns in 3 Year (3 Yr. CAGR) | 16.43% |
| Annualised Returns in 5 Year (5 Yr. CAGR) | 12.19% |
| Annualised Returns in 10 Year (10 Yr. CAGR) | 14.81% |
| Since Inception ( 4th April, 2008 ) | 15.56% |
| Value of Rs. 1 Lakh invested 1 year ago is | ₹1,13,858 |
| Value of Rs. 1 Lakh invested 3 year ago is | ₹ 1,58,132 |
| Value of Rs. 1 Lakh invested 5 year ago is | ₹1,76,282 |
| Value of Rs. 1 Lakh invested 10 year ago is | ₹4,01,215 |
| Alpha | 2.03 |
| Beta | 0.96 |
| Sharpe Ratio | 1.01 |
| Standard Deviation | 12.21 |
| Crisil Rank | **** (4 Star) |
3. Top 3 Best SIP to invest in 2020 – Mirae Asset Emerging Bluechip Fund Growth
Investment Objective:
This fund follows a value investing approach by investing in growth-oriented businesses. Also, this fund maintains buying a quality stock at reasonable prices and holds them for a long period of time.
The fund invests 35% approx in the top 100 large-cap companies by market capitalization & 65% approx in the top 250 mid-cap companies by market capitalization. Thus, this fund provides investors with an opportunity for participating in the growth of emerging companies.
| Name of Fund | Mirae Asset Emerging Bluechip Fund Growth |
|---|---|
| Category of Fund | Large & Mid Cap |
| Fund Manager | Mr. Neelesh Surana (since inception of the fund) Mr. Ankit Jain (since January 31, 2019) |
| Net Asset Under Management (AUM) | ₹9,229.46 Crore |
| Inception Date | 9th July 2010 |
| Expense Ratio | 1.77% |
| Absolute Returns in 6 months | 6.61% |
| Annualised Returns in 1 Year (1 Yr. CAGR) | 13.22% |
| Annualised Returns in 3 Year (3 Yr. CAGR) | 17.53% |
| Annualised Returns in 5 Year (5 Yr. CAGR) | 16.19% |
| Since Inception ( 9th July, 2010 ) | 20.29% |
| Value of Rs. 1 Lakh invested 1 year ago is | ₹1,14,729 |
| Value of Rs. 1 Lakh invested 3 year ago is | ₹ 1,62,393 |
| Value of Rs. 1 Lakh invested 5 year ago is | ₹2,11,921 |
| Value of Rs. 1 Lakh invested since Inception (9th July, 2010 ) is | ₹5,73,460 |
| Alpha | 2.64 |
| Beta | 0.94 |
| Sharpe Ratio | 1.02 |
| Standard Deviation | 14.12 |
| Crisil Rank | ***** (5 Star) |
4. Top 4 Best SIP to invest in 2020 – Kotak Standard Multicap Fund Growth
Investment Objective: This fund is suitable for those investors who want to invest for more than 5 years or so. This fund has the potential to deliver adequate inflation-adjusted returns due to its versatility over and above the benchmark return.
The fund is a multi-cap fund where the fund manager has the freedom to invest in different categories of companies from which they can deliver maximum returns. Also, this fund contains some risk factors due to its investment nature so investors must invest for a longer time horizon for obtaining maximum returns.
| Name of Fund | Kotak Standard Multicap Fund Growth |
|---|---|
| Category of Fund | Multicap |
| Fund Manager | Mr. Harsha Upadhyaya since 1st August 2012 |
| Net Asset Under Management (AUM) | ₹29,095.76 Crore |
| Inception Date | 11th September 2009 |
| Expense Ratio | 1.63% |
| Absolute Returns in 6 months | 4.09% |
| Annualised Returns in 1 Year (1 Yr. CAGR) | 13.47% |
| Annualised Returns in 3 Year (3 Yr. CAGR) | 15.47% |
| Annualised Returns in 5 Year (5 Yr. CAGR) | 11.43% |
| Annualised Returns in 10 Year (10 Yr. CAGR) | 13.48% |
| Since Inception ( 11th September, 2009 ) | 13.72% |
| Value of Rs. 1 Lakh invested 1 year ago is | ₹1,12,024 |
| Value of Rs. 1 Lakh invested 3 year ago is | ₹ 1,52,497 |
| Value of Rs. 1 Lakh invested 5 year ago is | ₹1,73,076 |
| Value of Rs. 1 Lakh invested 10 year ago is | ₹3,61,010 |
| Value of Rs. 1 Lakh invested since inception(11th September, 2009) is | ₹3,75,920 |
| Alpha | 2.07 |
| Beta | 0.95 |
| Sharpe Ratio | 0.88 |
| Standard Deviation | 12.74 |
| Crisil Rank | **** (4 Star) |
5. Top 5 Best SIP to invest in 2020 – SBI Small Cap Fund Growth
Investment Objective: SBI Small Cap Fund aims to provide investors with opportunities for long-term growth in capital by investing consistently in a well-diversified basket of equity stocks of small-cap companies. This fund primarily invests up to 65% in small-cap stocks for obtaining maximum returns.
Balance 35% is invested in other large and mid-cap stocks and other debt and money market instruments. The fund follows a combination of value investing and growth-oriented investment approach while selecting stocks.
This fund is not suitable for investors who invest for a shorter span of time. Ideally investment in this schme should be made for more than 7 years or so.
| Name of Fund | SBI Small Cap Fund Growth |
|---|---|
| Category of Fund | Small Cap |
| Fund Manager | R. Srinivasan since 16th November 2013 |
| Net Asset Under Management (AUM) | ₹ 3035.06 Crore |
| Inception Date | 9th September, 2009 |
| Expense Ratio | 2.29% |
| Absolute Returns in 6 months | 5.25% |
| Annualised Returns in 1 Year (1 Yr. CAGR) | 5.19% |
| Annualised Returns in 3 Year (3 Yr. CAGR) | 15.10% |
| Annualised Returns in 5 Year (5 Yr. CAGR) | 14.81% |
| Annualised Returns in 10 Year (10 Yr. CAGR) | 17.85% |
| Since Inception (9th September, 2009 ) | 17.68% |
| Value of Rs. 1 Lakh invested 1 year ago is | ₹1,05,186 |
| Value of Rs. 1 Lakh invested 3 year ago is | ₹ 1,52,488 |
| Value of Rs. 1 Lakh invested 5 year ago is | ₹1,99,618 |
| Value of Rs. 1 Lakh invested 10 year ago is | ₹5,17,577 |
| Value of Rs. 1 Lakh invested since inception(9th September, 2009) is | ₹5,33622 |
| Alpha | 10.05 |
| Beta | 0.89 |
| Sharpe Ratio | 0.65 |
| Standard Deviation | 18.92 |
| Crisil Rank | **** (4 Star) |
6. Top 6 Best SIP to invest in 2020 – Axis Long Term Equity Fund Growth
Investment Objective: This fund aims to achieve long term capital appreciation by investing in a diversified portfolio consisting of equity and equity-related stocks. Investment in this fund provides income tax exemption up to Rs.1.5 lakh.
Also, investors can not withdraw their money until each SIP investment or a single investment completes the lock-in period of 3 years from the date of investment. This scheme is suitable for those investors who want to save tax along with capital appreciation by investing in this scheme for a minimum period of 5 years or so.
| Name of Fund | Axis Long Term Equity Fund |
|---|---|
| Category of Fund | Equity Linked Savings Scheme(ELSS) |
| Fund Manager | Jinesh Gopani since 1st April 2011 |
| Net Asset Under Management (AUM) | ₹ 21,159.93 Crore |
| Inception Date | 29th December, 2009 |
| Expense Ratio | 1.68% |
| Absolute Returns in 6 months | 9.14% |
| Annualised Returns in 1 Year (1 Yr. CAGR) | 14.23% |
| Annualised Returns in 3 Year (3 Yr. CAGR) | 18.01% |
| Annualised Returns in 5 Year (5 Yr. CAGR) | 12.02% |
| Since Inception (9th September, 2009 ) | 17.68% |
| Value of Rs. 1 Lakh invested 1 year ago is | ₹1,14,233 |
| Value of Rs. 1 Lakh invested 3 year ago is | ₹ 1,64,336 |
| Value of Rs. 1 Lakh invested 5 year ago is | ₹1,76,497 |
| Value of Rs. 1 Lakh invested since inception(29th December, 2009) is | ₹4,95,751 |
| Alpha | 3.54 |
| Beta | 0.94 |
| Sharpe Ratio | 1.00 |
| Standard Deviation | 13.28 |
| Crisil Rank | ***** (5 Star) |
7. Top 7 Best SIP to invest in 2020 – SBI Equity Hybrid Fund Growth
Investment Objective: This fund aims to provide investors with opportunities for long-term capital appreciation by investing in a mix of debt and equity. The fund invests in a diversified portfolio of stocks of high growth companies and maintains the balance of the risk through investing the rest in fixed-income securities.
This fund invests a minimum of 65% in equity and equity-related instruments and the balance 35% in debt and money market instruments.
| Name of Fund | SBI Equity Hybrid Fund |
|---|---|
| Category of Fund | Hybrid Equity |
| Fund Manager | Dinesh Ahuja since 18th January 2011 |
| Net Asset Under Management (AUM) | ₹3,1248.4 Crore |
| Inception Date | 20th January, 2005 |
| Expense Ratio | 1.63% |
| Absolute Returns in 6 months | 5.81% |
| Annualised Returns in 1 Year (1 Yr. CAGR) | 13.04% |
| Annualised Returns in 3 Year (3 Yr. CAGR) | 12.82% |
| Annualised Returns in 5 Year (5 Yr. CAGR) | 10.47% |
| Annualised Returns in 10 Year (10 Yr. CAGR) | 12.12% |
| Since Inception (20th January, 2005 ) | 15.42% |
| Value of Rs. 1 Lakh invested 1 year ago is | ₹1,13,036 |
| Value of Rs. 1 Lakh invested 3 year ago is | ₹ 1,43,608 |
| Value of Rs. 1 Lakh invested 5 year ago is | ₹1,64,616 |
| Value of Rs. 1 Lakh invested 10 year ago is | ₹3,14,227 |
| Value of Rs. 1 Lakh invested since inception( 20th January, 2005) is | ₹8,49,937 |
| Alpha | 0.64 |
| Beta | 1.80 |
| Sharpe Ratio | 0.86 |
| Standard Deviation | 9.41 |
| Crisil Rank | ***** (5 Star) |
Some Frequently asked Questions (FAQs) on Top 7 Best SIP Plans in India to invest in 2020
Which SIP is best for 5 years?
The best SIP to invest in 2020 may be decided based on certain criteria. Generally, the fund selection process should consider your time horizon for investment and your risk profile. If your goal is only 5 years away it is very prudent to maintain a balanced investment mix like large-cap funds and debt funds.
The shorter is your investment horizon, the lesser amount one should invest in equity or equity-related instruments. Though investment recommendation can’t be so general and it should be an investor specific, you may choose any large-cap fund from the above list as the best SIP for 5 years time horizon.
Which SIP is best for 10 years?
When the investment horizon is 10 years away, you have a plethora of investment options or mix depending upon your requirements like selecting one large-cap, one multi-cap and one small-cap fund from the above list. Don’t invest in the same category of funds as many think this will make more diversification. But this ultimate makes portfolio overlapping.
Which is the best SIP to invest now?
The following Best SIP Plans in India may be chosen as per your investment requirement, time horizon and risk appetite. Every mutual fund scheme has its own unique characteristics and best suited as per your requirements.
- Axis Bluechip Fund– investment horizon is 5 to 7 years away.
- Mirae Asset Large Cap Fund– investment horizon is 5 to 7 years away.
- Mirae Asset Emerging Bluechip Fund– investment horizon is 7 to 10 years away.
- Kotak Standard Multicap Fund– investment horizon is 7 to 10 years away.
- SBI Small Cap Fund– investment horizon is 10 years away.
- Axis Long Term Equity Fund– For saving tax and remain invested at least for 5 years or more.
- SBI Equity Hybrid Fund– investment horizon is 5 to 7 years away.
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