Which SIP is best for 5 years?

Choosing the best SIP for a 5-year investment horizon can be a challenging task as it requires a careful analysis of various factors such as the investor’s risk profile, investment objective, and the past performance of the mutual fund scheme. Here are a few tips to help you choose the best SIP for a 5-year investment horizon:

Consider your investment objective:

Before selecting a mutual fund scheme for your SIP investment, it is crucial to understand your investment objective. If your objective is to create long-term wealth, you may consider investing in equity-oriented mutual fund schemes. However, if you are risk-averse and prefer stable returns, you may consider investing in debt-oriented mutual fund schemes.

Analyze the past performance:

Past performance is an essential factor to consider while selecting a mutual fund scheme for your SIP investment. However, it is important to note that past performance is not a guarantee of future returns. Hence, it is advisable to analyze the long-term performance of the mutual fund scheme, ideally over a 5-year period, to determine its consistency and stability.

Diversify your portfolio:

Diversification is the key to reducing risk and increasing returns in your investment portfolio. Hence, it is advisable to invest in multiple mutual fund schemes from different asset classes such as equity, debt, and hybrid. This can help you balance the risk-reward ratio and achieve your investment objective.

Consider the expense ratio:

Expense ratio is the annual fee charged by the mutual fund company to manage your investment. It is important to note that the expense ratio can have a significant impact on your returns over the long-term. Hence, it is advisable to choose a mutual fund scheme with a low expense ratio to maximize your returns.

Consult a financial advisor:

Investing in mutual fund schemes requires a thorough understanding of the market and the investment instruments. Hence, it is advisable to consult a financial advisor to help you choose the best SIP for your 5-year investment horizon.

Some of the best SIPs for a 5-year investment horizon are:

1. Mirae Asset Emerging Bluechip Fund – Direct Plan: This is an equity-oriented mutual fund scheme that invests in mid-cap and small-cap companies. The scheme has consistently delivered high returns over the long-term and has a low expense ratio of 0.45%.
2. Axis Bluechip Fund – Direct Plan: This is a large-cap equity-oriented mutual fund scheme that invests in blue-chip companies. The scheme has consistently delivered high returns over the long-term and has a low expense ratio of 0.27%.
3. HDFC Corporate Bond Fund – Direct Plan: This is a debt-oriented mutual fund scheme that invests in high-quality corporate bonds. The scheme has consistently delivered stable returns over the long-term and has a low expense ratio of 0.29%.
4. ICICI Prudential Balanced Advantage Fund – Direct Plan: This is a hybrid mutual fund scheme that invests in a mix of equity and debt instruments. The scheme has consistently delivered stable returns over the long-term and has a low expense ratio of 0.70%.

FAQs

Q: What is average return on mutual funds for 5 years?

A: Over the past 5 years, the average return on equity-oriented mutual funds in India has been around 12-15%, while debt-oriented mutual funds have delivered average returns of 6-8%. However, it is important to note that past performance is not a guarantee of future returns, and investors should conduct their own research and seek professional advice before investing in mutual funds.

Q: List of Best Performing Mutual Funds in Last 5 Years.

A: Here is a list of some of the best performing mutual funds in India over the last 5 years:

1. Axis Bluechip Fund: This large-cap equity fund has delivered an average annual return of 19.85% over the last 5 years. It invests primarily in blue-chip companies with a proven track record of consistent growth and profitability.

2. Mirae Asset Emerging Bluechip Fund: This mid-cap equity fund has delivered an average annual return of 22.06% over the last 5 years. It invests in companies that have the potential to become large-cap companies in the future.

3. SBI Small Cap Fund: This small-cap equity fund has delivered an average annual return of 23.11% over the last 5 years. It invests in small-cap companies that have the potential to grow rapidly in the future.

4. HDFC Corporate Bond Fund: This debt fund has delivered an average annual return of 8.68% over the last 5 years. It invests in high-quality corporate bonds with a rating of AAA or AA+.

5. ICICI Prudential Balanced Advantage Fund: This hybrid fund has delivered an average annual return of 14.24% over the last 5 years. It invests in a mix of equity and debt instruments, and the allocation between the two is dynamically managed based on market conditions.

In conclusion, selecting the best SIP for a 5-year investment horizon requires a careful analysis of various factors. It is important to choose a mutual fund scheme that aligns with your investment objective, has a consistent and stable performance record, and has a low expense ratio. It is advisable to consult a financial advisor to help you make an informed investment decision.