Systematic Investment Plans are nothing, but mutual fund schemes where you can invest small amounts as small as Rs 100 every month. Most of the mutual fund schemes have done well over the the last 1-year, thanks to the robust gains seen in the markets. As we write, the Sensex has once again crossed the 53,000 points mark. It is therefore advisable to place money in equity mutual fund schemes through the SIP mode. Here are 3 SIPs that you can consider for long term investment, which are rated as 5-star by CRISIL.
Axis Small Cap Fund
This fund has been rated as 5-star by CRISIL and Value Research and a 4-star rating from Morningstar. We recommend that investors invest in this fund only if there are willing to take risk. Please be informed that the Nifty is at a record and is near 16,000 points, which means the markets are not expensive, they are very expensive.
So, if you invest in small cap stocks and if the markets fall, these set of stocks are likely to fall faster.
In any case, you can consider an SIP in the fund with a small sum of Rs 500 every month, which is the right way to go, to hedge your risks. The 1-year returns from the fund has been a whopping 95%, while the 3-year returns has been 28.8% and 5-year returns has been 22.97%.
The markets have rallied greatly, which is why the returns are phenomenal in the last 1-year. Axis Smallcap Fund has investments in stocks like Galaxy Surfacants, Tata Elxi, JK Lakshmi Cement, CCL Products etc. As can be seen the exposure is largely into the small cap stocks.
Invesco India Midcap
Invesco India Midcap has been rated "5-star" by CRISIL. Midcap stocks are high beta stocks, where the returns could be higher than the indices when the markets rally and significantly lower than the indices, should the markets fall. Therefore, caution is advised and only those investors willing to take the risk should invest.
Invesco India Midcap Fund has given a returns of 70% in the last 1-year, while the 3-year returns are 19.55% and 5-year returns are 17.63% on an annualized basis. While the returns are stupendous in the last 1-year, readers must realize that this has largely to do with the markets which have rallied to historic highs. The expense ratio of the fund is a little higher at 2.16% as compared to some other players. Almost 97.3% of the funds are invested in stocks and the balance in cash and cash equivalents.
Edelweiss Large And Midcap Fund
The fund invests in a diversified portfolio of Large Cap and Mid Cap equity and equity related securities. The fund like peers has given good returns of almost 66% in the last 1-year. Like Invesco India Midcap, the Edelweiss Large And Midcap Fund has also been rated 5-star by Crisil, though this fund also invests in largecap stocks. The one advantage of the fund like this is that since they also invest in largecap the risks are slightly lesser, though risk of investing in equities always remains. Value Research has accorded the fund a 4-star rating.
The problem with recommending mutual fund schemes is that no single mutual fund scheme can have a 5-star rating for a long period. Therefore, a mutual fund scheme that looks good today, may not be so tomorrow. Edelweiss Large And Midcap Fund has investment in stocks like Infosys, ICICI Bank, HDFC Bank, State Bank of India and Reliance Industries. The fund's top 5 holdings are more skewed towards the financial sector, which means economic growth remains the key.
Mutual Funds, especially equity schemes are risky and investors are advised caution. Neither the author, nor Greynium Information Technologies Pvt Ltd, would be responsible if investment is made and losses incurred, based on reading the above article. Please consult a professional advisor and remember that markets are at a record high.