Why invest in SIP with your Diwali Gift or Bonus? Check Out Top 10 Performing MFs

investment in sip can be done with less 500 amount monthly. However, the minimum amount varies. mutual funds Schemes On opting for SIP, a certain amount is deducted from your bank account on a monthly basis — which creates discipline in investing. You can easily enter and exit the SIP. The biggest feature of SIP is that it does not require a huge amount. Investment, they can be chosen by anyone from teens to senior citizens. also has a tax exemption benefit of 1.5 lakh under section 80C of income tax available under SIP.

Why invest in SIP this Diwali?

Gopal Kavalireddy, head of research at FYERS, said, “Diwali is the festival of lights, which brings families together, and also brings unexpected benefits in the form of bonuses for the salaried people and monetary gifts for those younger than the elderly. Spending money on discretionary items provides a sense of satisfaction, and much more can be done if that amount is invested appropriately. One such method is the Systematic Investment Plan (SIP) of mutual funds, which Provides an opportunity to earn good returns for both passive and active investors.”

FYERS expert quoted that recently, equity investment culture has been on the rise in India, with over 100 million active demat accounts, most of which have been opened in the last 3 years. Nifty 50, the benchmark index touched an all-time high of 18,605 in October 2021 and since then, has been undergoing price and timing consolidation. But that didn’t stop mutual fund or direct equity SIP investors, who continued their investment journey.

According to AMFI data, over 2.66 crore new SIPs were registered in FY22 and 1.21 crore in the first six months of FY23. Contribution to SIP has also seen an increase from the average monthly contribution of 8,007 crore in FY 2011 to 10,381 crore and above in FY 2012 12,372 crore in the first six months of FY23.

Between April to September 2022, the contribution in SIP was 74,234 crores – which is already about 60% of the total contribution 1,24,566 crore was recorded in the total FY22. In September 2022 alone, the contribution of SIP is 12,976 crores. Since May 2022, the contribution to SIP has been up 12,000 crores. In the first month of FY23 (April), the contributions were 11,863 crores.

Kavalireddy pointed out that the year 2022 has been volatile in the stock markets due to various reasons – rise in interest rates, geopolitical conflicts, supply chain disruptions and high inflation – are some of the major reasons. This resulted in Nifty 50 giving a negative return of 4.8% for the year, while the return on the Nifty Midcap index stood at negative 3.3% and the Nifty Small Cap index at negative 17.1%.

“But, a monthly SIP in a decent equity mutual fund will provide positive returns and protect the capital – against volatility and inflation,” he said.

Some of the top performing systematic investment schemes in the last 1 year highlight that SIPs perform well in volatile markets, he added.

The FYERS expert highlighted the top performing SIP schemes that gave a yield of 9.2-12.9% between October 2021 and October 11, 2022. The CAGR of these top 10 performing SIPs ranges from 20.5% to 29.5%. a 10,000 SIPs started on Diwali last year, some of these schemes — have given better returns than expected for the average investor.

Here is the list:

1. Motilal Oswal Midcap Fund: This scheme has given a yield of 12.9 per cent while its CAGR is 29.5%.

2. Nippon India Consumption Fund: The scheme registered a yield of 12.5% ​​with a CAGR of 28.4%.

3. SBI Consumption op Fund: This scheme has a yield of 10.7 per cent with a CAGR of 24.1 per cent.

4. SBI Small Cap Fund: The yield of this scheme is 10.7 per cent while the CAGR is 22.4%.

5. ICICI Pru Infrastructure Fund: With a yield of 9.7%, the CAGR of the scheme is around 21.7%.

6. HDFC Infrastructure Fund: The yield of this scheme is 9.6% and CAGR is 21.4%.

7. Quant ESG Equity Fund: The yield and CAGR of this scheme are 9.5% and 21.3% respectively.

8. ICICI Pru FMCG Fund: The scheme has a yield of 9.5% with a CAGR of 21.1%.

9. Nippon India Multi Cap Fund: At a yield of 9.4%, this scheme has a CAGR of 21%.

10. Quantum Fund: This scheme has a 9.2% yield and a CAGR of 20.5%.

Kavalireddy believes that SIPs work well in a volatile stock market environment, in disciplined investments, through rupee cost averaging, building up in an efficient manner.

“The effectiveness of SIPs can be demonstrated with the example of Motilal Oswal Midcap Fund, in giving 12.94% returns as compared to negative returns from most of the indices during last 1 year,” he said.

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In conclusion, he said, “A SIP has effectively countered the volatility of the stock market through rupee cost averaging and has delivered great returns. So, let’s start this Diwali with a SIP, and Use that bonus efficiently.”

The 5-day Diwali festival will begin with Dhanteras on 22 October followed by Lakshmi Pujan (main Diwali) on 24 October and end with Bhai Dooj on 26 October.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.