Systematic Investment Plans (SIPs) have often been advocated as one of the means of making money, due to the ability of averaging. It has been often advocated as a great investment mechanism, since we cannot time the markets.
To determine whether these are good bets, we have taken a look at the Crisil ratings for the scheme and also ourselves, looked at the past track record and most importantly the portfolio of the scheme. We would like to reiterate, that past track record is no indication of future performance.
Here are some of the best SIPs that we have short listed
SBI Blue Chip Fund
SBI Blue Chip Fund remains the best SIP based on various parameters. It's returns in the last three years of 20 per cent is much superior to peers. Its expense ratio of just 2 per cent is also better than competitors.
The fund has been ranked number 1 by Crisil. The best part of the fund is its portfolio. It includes names like HDFC Bank, Infosys, Reliance Industries and Sun Pharma.
SIPs in the SBI blue Chip Fund have the potential to generate returns over the more medium term.
BNP Paribas Equity Fund
Crisil has accorded the number one rank amongst large cap diversified funds for BNP Paribas Equity Fund. The fund has generated returns of near 19 per cent in the last three years. This is pretty decent returns by any stretch of imagination.
The strength of the fund lies in its solid portfolio. For example, almost 20 per cent of its top holdings is in HDFC Bank, IndusInd Bank and Infosys. This means a large part of its portfolio is in blue chip stocks. We believe that most of these stocks are bellweather stocks and the chances of them sliding, when the markets fall is minimal.
Systematic Investment Plans in this fund can generate wealth over a longer period of time.
The minimum SIP that investors can do is for Rs 500. There is an exit load of 1 per cent, if you for redeem before 1 year.
Franklin India Opportunities Fund
This fund again has been ranked number 1 by Crisil. The assets under management are not too large and are around Rs 489 crores.
In the last three years, the fund has generated a return of almost 16 per cent. What is great about this fund is the portfolio. Quality bluechips like HDFC Bank, Yes Bank, Tata Motors,
Infosys and ICICI Bank make-up around 22 per cent of the portfolio. The portfolio has the ability to churn out good returns in the future.
One drawback is that the expense ratio of 2.85 per cent, is much higher than the expense ratio of BNP Paribas Equity Fund, which is at 2.44 per cent.
You can invest a small amount of Rs 500 every month, through SIP.
It is always difficult to point-out the best SIPs to invest in. Today's performers could well be tomorrow's under performers. However, since one is investing in Systematic Investment Plans the risks are far less.