We all know when markets are extremely volatile, the best way to go about investing is through buying Systematic Investment Plans (SIPs). It acts like cumulative deposits where small sums are deducted and invested in a scheme that you choose. If you choose high risk schemes, you have to go with equity mutual fund schemes. We have taken 3 equity mutual fund schemes from SBI Mutual Fund for investors who are willing to take the risk and invest for the long term.
1. SBI Bluechip Fund
This is probably the largest mutual fund scheme from the SBI stable and has assets under management of Rs 28,000 crores plus. The fund was started way back in 2006 and has generated returns of almost 12 per cent on an annualized basis since its launch.
This fund invests in some of the larger companies, more often called largecap. Exposure of SBI Bluechip Fund is in stocks like HDFC Bank, ICICI Bank, Infosys, HCL Technologies, Larsen and Toubro and similar largecap stocks.
The net asset value under the growth plan is currently around the Rs 55 mark. The 1 year returns from the fund is nearly 50%.
Who should buy the SBI Bluechip Fund?
Investors who are willing to take the risk, can invest in the SBI Bluechip Fund. Remember, this fund is a largecap fund and any fall in the markets, could lead to a fall in the value of investments. This is why it is so important to realize that the best way to go about when investing in largecap equity mutual funds is through the SIP route. So, if this month your SIP happened at a very high NAV because markets fell, next month you can average out the cost if the markets suddenly fall.
As far as SBI Bluechip Fund is concerned you can start off with a small SIP of Rs 500 per month.
2. SBI Focused Equity Fund
The SBI Focused Equity Fund provides investors long-term capital appreciation by investing in a concentrated basket of equity and equity related securities. Unlike the SBI Bluechip Fund, this is a flexi cap fund. What this means is that the fund invests in companies that are large, mid size and also smaller in size. This is also not a very small fund and has sizeable assets under management of nearly Rs 17,000 crores.
It was launched much before the Bluechip Fund in 2004 and currently has a net asset value of more than Rs 213 under the growth option. The fund is suitable for those looking to invest for a tenure of about 5-years or so.
SIP for SBI Focussed Equity Fund
You can start an SIP in the fund through an investment of Rs 500 each month. The 1-year returns from the SBI Focused Equity Fund has been 50.23, which is not bad at all. We suggest investors to go only for SIP and not the lumpsum mode.
SBI Focussed Equity Fund has holdings in stocks like Muthoot Finance, State Bank of India, Alphabet Inc Class A, Divis Labs etc.
3. SBI Small Cap Fund
We wish to begin with a warning. The SBI Small cap Fund is only for those investors who are willing to take a risk. We say so, because small cap stocks are volatile and if the benchmark indices fall, they could fall faster, thus eroding capital significantly. On the other hand, if the markets rally they could give higher returns than the markets.
SBI Small Cap Fund has given solid returns of 84% in the last 1-year as markets have rallied. Therefore, it is good to invest through the SIP mode.
How to go for SIPs for SBI Small Cap Fund?
Invest in the fund through the SIP route, through a small sum of Rs 500 each month. A small sum of Rs 10,000 invested each month would have resulted in a sum of Rs 6.11 lakh. Investors who are willing to invest for 5 years or so, could reap good returns.
Investing in equity mutual funds is risky, so investors need to be cautious. Neither Greynium Information technologies nor the author would be responsible for any losses incurred due to a decision based on the above articles Please consult a professional advisor and remember the markets have run-up sharply.