Systematic Investment Plans (SIPs) allow you to invest small amounts each month, which can be as small as Rs 500. We wish to inform readers that some of the funds we are recommending are deep in the negative returns (last 1 year), which is why they are available at a much lower NAV than at anytime this year. You can only make returns, when you buy low and sell high.
Here are some of the SIPs, which are rated well, have a track record of returns over the longer term and where you can invest a little amount every month. Check declared dividends from mutual funds here
DSP Blackrock Smallcap Fund
In the early part of the year, this was one of the most sort after small cap funds in the country, because of the phenomenal returns that it has given in the past.
In fact, the fund has generated a negative return of 19 per cent in the last one year. We wish to inform readers that small cap funds can be more risky than large cap funds, because small cap stocks are high beta stocks and tend to fall faster than the markets.
In any case, DSP Blackrock Microcap Fund has also generated poor returns of 27 per cent in the last three years. However, you always recommend a fund when the chips are down. With small cap stocks falling across the board, investors are getting to buy this SIP at low net asset value.
You can invest in the fund with a small SIP of Rs 500. The fund has holdings in Atul, SKF, IPCA Labs etc.
The current NAV of the fund under the growth plan is Rs 51.68.
HDFC Small Cap Fund - Regular Plan
This is another great small cap fund to own. The one year returns from the fund has been a poor negative 12 per cent over the last one year. However, we wish to clarify that when the returns are poor, the chances of you making money is brighter, because you are getting the fund at a low net asset value.
HDFC Small Cap Fund has investment in Aurobindo Pharma, NIIT Technologies, Chambal Fertilizers, Sharda Cropchem. You can start investing in the fund with a small amount of Rs 500. However, the initial investment is Rs 5,000. We wish to state that small cap funds are risky and if you want to take less risk, you can opt for large cap funds.
Reliance Large Cap Fund
You can invest in the Reliance Large Cap Fund, with a small sum SIP of Rs 100. Of course, the initial investment needed is Rs 5,000.
Reliance Large Cap Fund, has generated return of negative 5.98 per cent in the last one year.
The net asset value under the growth plan is Rs 32.57, thanks to the huge uptick the markets have seen this year. The fund has exposure to quality stocks like State Bank of India, ICICI Bank, Infosys and Larsen and Toubro.
Recently, the fund has increased exposure to ITC. This is probably among the few or perhaps the only SIP where the amount is as low as Rs 100.
Investors are advised to take advantage of the same. Most of the funds under SIP have been constantly increasing as investors have very limited avenues to park money given lower interest rates.
SBI Magnum Equity ESG Fund
SBI Magnum Equity ESG Fund is another fund that has performed poorly in the last one year, in line with the markets. The fund has generated a return of -1 per cent in the last one year. This again is much worse than bank deposits.
You can invest a small monthly sum of Rs 500 in the scheme. The net asset value of the fund is Rs 98.38 under the growth plan. Remember, that the dividend plans are more tax efficient as there is no tax on dividends received from mutual funds. The fund has exposure to the likes of HDFC Bank, Reliance Industries, ICICI Bank etc.
In addition it has smaller exposure to Kotak Mahindra Bank and Bharti Airtel. Again, the fund being a large cap one is heavily skewed in favour of large cap stocks. A good SIP with a very sound portfolio.
ICICI Prudential Focused Bluechip Equity
This fund has sizeable assets under management of more than Rs 20,115 crores.
This is another fund where you can invest with a small sum of as little as Rs 500. As for most funds, the initial amount to be invested is Rs 5,000. The fund has generated a returns of 13.73 per cent in the last 3 years. The one year returns is poor at 0.08 cent.
The fund has top holdings in HDFC Bank, ICICI Bank, State Bank of India, ITC, Maruti Suzuki India and Axis Bank.
ICICI Prudential Focused Bluechip Equity has an NAV of Rs 38.64 under the growth plan and Rs 21.39 under the dividend plan. The portfolio is more geared towards investors who are looking for long term growth. You may want to buy larger SIPs, when the chips are down. At the moment we suggest that you keep your Systematic Investment Plans at modest levels, given that markets have gone significantly higher.
Taxation on mutual funds
It is important to remember that mutual funds are subject to both long term and short term capital gains tax. Investors should therefore note the same.
While there was no long term capital gains earlier on mutual funds, following the Union Budget of 2018-19 they now apply.
The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author and his family do not own any units in the above mentioned mutual funds.