This post was most recently updated on November 22nd, 2022
Finding out the best mutual funds for SIP in India is probably the hardest thing you will find in your investment journey. The reason being there is no single mutual fund that you can blindly trust. Every mutual fund has its pro and cons. Adding to the complexity there are so many types of Mutual fund to consider.
In this article; we will try to understand what should look for in any mutual fund before you think of starting a SIP.
The first thing you should know is how to select mutual funds in India . The below data will help you supplement in choosing the right fund for your SIP in mutual funds.
Before we get into SIP in mutual funds, let’s first understand what is SIP in a mutual fund.
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What is SIP in a mutual fund?
The full form of SIP is a Systematic Investment Plan. SIP is an investment strategy offered by different mutual fund houses to investors wherein, the investors can invest a fixed sum of money at regular intervals in their mutual funds.
I see many people think SIP is a type of mutual fund whereas SIP is nothing but just a method of investing in your preferred choice of the mutual fund.
The SIP term became famous after mutual fund houses started a campaign of Mutual Funds Sahi hai. This platform encourages retail investors to invest their money in their favorite mutual fund via SIP.
Top 10 best large cap mutual funds for SIP
Large-cap mutual funds are considered relatively safe as most of the large-cap companies are blue chip companies having a good track record of stock prices. Based on the performance of the last 5 years here are the Top 10 best large-cap mutual funds for SIP
| Mutual Fund Scheme Name | AuM (Cr) | 1Y | 2Y | 3Y | 5Y |
| Axis Bluechip Fund – Direct Plan – GrowthLarge Cap Fund | 36871.42 | 2% | 6% | 22% | 42% |
| ICICI Prudential Bluechip Fund – Direct Plan – GrowthLarge Cap Fund | 34823.28 | 8% | 17% | 38% | 53% |
| SBI Blue Chip Fund – Direct Plan – GrowthLarge Cap Fund | 34730.27 | 7% | 15% | 36% | 51% |
| Mirae Asset Large Cap Fund – Direct Plan – GrowthLarge Cap Fund | 34406.75 | 6% | 13% | 33% | 49% |
| HDFC Top 100 Fund – Direct Plan – GrowthLarge Cap Fund | 22709.44 | 9% | 19% | 40% | 50% |
| Aditya Birla Sun Life Frontline Equity Fund – Direct Plan – GrowthLarge Cap Fund | 22276.50 | 6% | 14% | 35% | 48% |
| Nippon India Large Cap Fund – Direct Plan – GrowthLarge Cap Fund | 12534.46 | 10% | 22% | 44% | 56% |
| UTI Mastershare Unit Scheme – Direct Plan – GrowthLarge Cap Fund | 10877.78 | 5% | 12% | 33% | 49% |
| Canara Robeco Bluechip Equity Fund – Direct Plan – GrowthLarge Cap Fund | 8547.68 | 6% | 12% | 32% | 55% |
| Franklin India Bluechip Fund – Direct – GrowthLarge Cap Fund | 6541.78 | 3% | 10% | 30% | 42% |
Top 10 best mid cap mutual funds for SIP
Mid-cap mutual funds invest in mid-cap companies. These are companies that have future potential to become large-cap companies. The mid-cap mutual funds are relatively riskier as compared to the large-cap mutual funds as the companies are vulnerable to giving negative returns. Here are the Top 10 best mid-cap mutual funds for SIP.
| Mutual Fund Scheme Name | AuM (Cr) | 1Y | 2Y | 3Y | 5Y |
| HDFC Mid-Cap Opportunities Fund – Direct Plan – GrowthMid Cap Fund | 35120.40 | 11% | 24% | 52% | 68% |
| Kotak Emerging Equity Fund – Direct Plan – GrowthMid Cap Fund | 22540.00 | 7% | 20% | 51% | 74% |
| Axis Midcap Fund – Direct Plan – GrowthMid Cap Fund | 19708.09 | 2% | 12% | 35% | 62% |
| DSP Midcap Fund – Direct Plan – GrowthMid Cap Fund | 14273.52 | 1% | 6% | 25% | 42% |
| Nippon India Growth Fund – Direct Plan – GrowthMid Cap Fund | 13510.02 | 6% | 19% | 49% | 70% |
| Mirae Asset Midcap Fund – Direct Plan – GrowthMid Cap Fund | 8681.46 | 5% | 19% | 52% | – |
| SBI Magnum Midcap Fund – Direct Plan – GrowthMid Cap Fund | 8325.78 | 6% | 22% | 57% | 77% |
| Franklin India Prima Fund – Direct – GrowthMid Cap Fund | 7752.89 | 6% | 13% | 35% | 48% |
| Sundaram Mid Cap Fund – Direct Plan – GrowthMid Cap Fund | 7472.63 | 6% | 17% | 40% | 49% |
| Sundaram Mid Cap Fund – Direct Plan – Growth (Adjusted NAV)Mid Cap Fund | 7413.01 | 8% | 21% | 43% | 52% |
Top 10 best small cap mutual funds for SIP
Small-cap mutual funds are seen as the riskiest out of all the mutual fund types. Small-cap mutual funds tend to give either extremely good returns or extremely bad returns depending on the time frame you are looking for. Here are the Top 10 best small cap mutual funds for SIP
| Mutual Fund Scheme Name | AuM (Cr) | 1Y | 2Y | 3Y | 5Y |
| Nippon India Small Cap Fund – Direct Plan – GrowthSmall Cap Fund | 22844.44 | 10% | 31% | 76% | 100% |
| HDFC Small Cap Fund – Direct Plan – GrowthSmall Cap Fund | 14100.10 | 8% | 25% | 62% | 73% |
| Axis Small Cap Fund – Direct Plan – GrowthSmall Cap Fund | 10992.39 | 6% | 24% | 56% | 91% |
| DSP Small Cap Fund – Direct Plan – GrowthSmall Cap Fund | 9082.34 | 3% | 20% | 55% | 75% |
| Kotak Small Cap Fund – Direct Plan – GrowthSmall Cap Fund | 8614.01 | 2% | 20% | 63% | 93% |
| L&T Emerging Businesses Fund – Direct Plan – GrowthSmall Cap Fund | 8495.85 | 6% | 27% | 67% | 79% |
| Franklin India Smaller Companies Fund – Direct – GrowthSmall Cap Fund | 7297.57 | 8% | 23% | 57% | 66% |
| ICICI Prudential Smallcap Fund – Direct Plan – GrowthSmall Cap Fund | 4388.35 | 7% | 26% | 66% | 90% |
| Canara Robeco Small Cap Fund – Direct Plan – GrowthSmall Cap Fund | 4063.25 | 6% | 30% | 77% | – |
| Aditya Birla Sun Life Small cap Fund – Direct Plan – GrowthSmall Cap Fund | 3022.72 | 1% | 10% | 40% | 44% |
Top 10 best Tax saving ELSS mutual funds for SIP
We have handpicked some excellent top 10 best tax-saving mutual funds for SIP which have consistently given excellent returns over the last 5 years.
| Mutual fund Scheme Name | AuM (Cr) | 1Y | 2Y | 3Y | 5Y |
| Axis Long Term Equity Fund – Direct Plan – GrowthELSS | 31623.92 | -2% | 1% | 17% | 34% |
| Aditya Birla Sun Life Tax Relief 96 – Direct Plan – GrowthELSS | 13943.84 | 3% | 5% | 18% | 26% |
| Mirae Asset Tax Saver Fund – Direct Plan – GrowthELSS | 13546.14 | 5% | 14% | 39% | 63% |
| Nippon India Tax Saver Fund – Direct Plan – GrowthELSS | 12051.94 | 7% | 18% | 40% | 44% |
| SBI Long Term Equity Fund – Direct Plan – GrowthELSS | 11599.86 | 9% | 18% | 40% | 54% |
| DSP Tax Saver Fund – Direct Plan – GrowthELSS | 10427.58 | 6% | 16% | 39% | 58% |
| ICICI Prudential Long Term Equity Fund (Tax Saving) – Direct Plan – GrowthELSS | 10404.52 | 6% | 15% | 37% | 52% |
| HDFC Tax Saver Fund – Direct Plan – GrowthELSS | 10065.81 | 12% | 24% | 46% | 53% |
| Franklin India Taxshield Fund – Direct – GrowthELSS | 5003.82 | 9% | 19% | 43% | 55% |
| Canara Robeco Equity Tax Saver Fund – Direct Plan – GrowthELSS | 4407.33 | 6% | 15% | 40% | 64% |
What is the best approach to start a SIP in mutual funds?
We have seen the Top 10 best mutual funds for SIP above. There is no guaranteed formula that can help you get better returns when investing in mutual funds. If you are thinking of starting a SIP in a mutual fund then you have to assess your risk-taking ability, financial condition, and the situation you are in your life.
Before you consider starting a SIP, I will strongly suggest you get an emergency fund set up for you.
If you are young and have got a strong Financial back up then you can consider taking risks so you can think of allocating a sizeable amount as SIP in small-cap mutual funds.
If you are a person who is not in favor of taking risks then you should stick to large-cap mutual funds.
When you do SIP in a mutual fund then you must remember that the SIP approach works best in long term. The benefit of SIP is that when you invest your money at regular intervals of time then you are getting the benefits of investing in all cycles of the market. If the market is down then you get more units of your mutual fund allocated. This in long term helps a lot to get excellent returns.
Mistakes to avoid while doing a SIP in a mutual fund
Many retail investors start SIP in a mutual fund with much enthusiasm but they start getting disappointed the moment they see negative returns on their investment.
When you start SIP in a mutual fund, you must understand that the SIP approach gives excellent returns over the long term period but most probably give negative/lesser returns in short term. Here are a few mistakes you must avoid while doing SIP in a mutual fund.
- Do not start a SIP with an expectation that mutual funds will give positive returns always.
- Do not invest in too many mutual funds.
- Do not close your SIP because your SIP investments are showing negative returns
- Do not try to time the market while investing in SIP
- Do not sell your SIP investment if the market has gone down a lot
Tips and tricks while finding out the best mutual funds for SIP
While there are no proven tips and tricks in investment into mutual funds but here are a few pointers on how you can effectively use to find the best mutual funds for SIP.
- Try to increase your SIP allocation if markets have more than a 10% correction.
- Have a SIP in index funds as Index funds tend to give better returns over the long term.
- If the market has given a quick return then think of diverting your SIP to debt mutual funds( this is recommended only for people who actively track market movements)
FAQ on best mutual funds for SIP
What is the best date for a mutual fund SIP?
As per a research done by various mutual fund platforms, the best date for your mutual fund SIP – the 1st of the month is best, followed by the 5th and 10th dates.
These date recommendations are based on returns from a mid-cap mutual fund in the past.What if I miss one SIP installment?
It's perfectly fine to miss your SIP in any mutual funds. SIP is only a method to invest in a mutual fund. If you skip a SIP in a mutual fund and don't pay then it's absolutely fine. You can again pay your SIP in the next installment.
How to start SIP investment online?
You can start your SIP in any mutual fund online. These days there are many apps like Groww, PayTM Money which offer direct mutual fund Investment from their platform free of cost.
You can select any mutual fund a decide on a date for your SIP installment. These apps will remind you on the SIP day to make the SIP contribution.Is SIP better or a lump sum investment?
Historically SIP has given better returns than lump sum Investments in mutual funds. When you do a SIP you are spreading your mutual fund investment over time and get the benefits of market ups and downs.
When you invest your money as a lump sum then if the market goes down from that point then you will end up losing your money however if you wish to take advantage of a market crash then it is advisable to invest lump sum money.Can we change the SIP amount every month?
Most of the mutual fund houses do not allow you to change the SIP amount but you can always cancel/skip the current SIP and start a new SIP with your preferred Investment amount.
What is the lock-in period for tax saver mutual funds?
When you invest in a Tax saver / ELSS mutual fund then your contribution has a lock-in of 3 years from the date of investment. So each SIP contribution gets locked in for 3 years from the date of the SIP contribution.
is tax applicable on sip returns from mutual funds?
Yes, your mutual funds are subject to tax. The tax calculation on SIP is done on the date you contributed to the SIP amount and when you have redeemed your SIP contribution.
For equity-oriented schemes; The Tax on SIP contribution is calculated as short-term Capital gain tax if the redemption is done within 1 year of investment. If redemption is done after 1 year of SIP contribution it qualifies for long-term capital gains tax.
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