Table of Contents
- Helps start with a small amount.
- Provides long-term capital appreciation.
- Has choices for all kinds of investors.
- Assists in financial goals fulfillment.
Are you planning to invest in mutual funds for the first time? Have you just started making money and are willing to invest in fulfilling your financial goals? Well, you’ve just landed at the right place. A mutual fund is one such investment option which offers the best opportunities to people who wish to create a huge corpus. This blog is all about the first-time investors where we have created an investment plan according to the different risk appetites. So, without much ado, let’s begin the learning!
Table of Content
No matter how much you earn, if you haven’t saved anything by the end of the month, then it makes no sense at all. People believe that earning good income provides a sense of achievement, but considering today’s time, it is the saving or investment that one makes which offers better satisfaction.
What Are Mutual Funds?
A mutual fund is a professionally managed investment scheme that pools in money from investors and purchase securities from it. With the tagline of ‘Mutual Funds Sahi Hai,’ this investment option has gained huge popularity in the past few years.
One can invest in mutual funds via two basic modes, i.e., SIP and Lumpsum. However, when it comes to new investors, SIP mode is more preferable due to a variety of benefits that it offers.
Why Should Beginners Invest in SIP?
- SIP investments are lighter on the wallet.
- Offers the Benefit of Rupee-Cost averaging.
- Provide the best benefits of compounding.
- Helps in Goal Planning
- Doesn’t require timing the market.
What Should You Check Before Investing?
Mutual funds are market-linked instruments, thus they posses some kind of risk. However, if the investment is done under the guidance of an expert, the consequences of monetary loss can be avoided to a great extent. Being a new investor, you can work on a few of the points to ensure that your invested amount is directed towards your goal. Let’s discuss them one by one.
- Set a Purpose
If you want to make profits from mutual fund investment, then you should invest with a definite purpose. For example, invest money towards a financial goal like wedding planning, child education, retirement, or an overseas vacation. This will help you in making dedicated savings in order to fulfill your long-term financial goals. - Seek knowledge of SIP and Various Benefits it Offers
If you don’t understand your investment product completely, you will never be able to accrue the true benefits. When it comes to SIP, you make small investments for a long-term to accumulate great profits. Here, you don’t need to worry about timing the market as when to enter or exit. Every time is a good time to invest in mutual funds through SIP mode. When the market is down, you get to purchase more number of units at lower NAV and when the market is high, you earn high returns on the units accumulated. - Define Your Risk Profile
Mutual funds, being market-linked instruments, are subject to some kind of market risk. However, they are safer investment avenue than the stock market as they are regulated by SEBI but still there are categories in the mutual funds which put the principal investment amount at risk. Thus, every investor should always have clarity about the scheme that they are investing in by reading the offer document before making any investments.
Top SIP Plans to Start Investment for New Investors
Based on all the points discussed above, you can easily make a decision of investing in a particular category or categories of mutual funds through SIP mode. Depending upon the risk appetite, any new investor would fall in one of the segments, namely Aggressive, Moderate, and Low.
For our investors’ convenience, we have classified our recommendations according to the different risk appetite which are provided in the table below.
Type Recommendations
| Type | Recommendations |
|---|---|
| Aggressive | DSP Equity Opportunities Fund, Reliance Multicap Fund, Kotak Standard Multicap Fund |
| Moderate | Axis Bluechip Fund, Birla Sun life Hybrid 95 Fund |
| Low | Mirae Asset Equity Hybrid Fund, Reliance Equity Hybrid Fund |
1. Aggressive New Investors
Suitability
- High returns on investment
- High risk appetite
- Long-term investment horizon
DSP Equity Opportunities Fund
DSP Equity Opportunities Fund is a diversified equity fund which was launched in May, 2000. Investment here is done using the blend of the top-down and bottom-up approach, and the investment style is highly flexible in nature where the fund managers don’t rely on either value-oriented style or growth. They look for opportunities that can offer them long-term growth at reasonable valuations. Pharmaceutical is one such segment where the fund managers are taking strong bets. They believe that here the capital investment is very low, thus companies are quite profitable and their returns on capital ratios are high. These factors have helped the related companies to grow at a rapid pace. A good allocation of about 5 percent in this segment and other growth sectors will help the fund in earning good returns in the coming time.
Basic Details
| Category | Large & Mid Cap |
| Benchmark | NIFTY 500 TRI |
| Launch Date | 16th May, 2000 |
| Asset Size | Rs. 5,947 crore (As on Aug 31, 2018) |
| Fund Managers | Mr. Jay Kothari & Mr. Rohit Singhania |
| Expense Ratio | 2.20% (As on Jul 31, 2018) |
| Minimum Lumpsum | Rs 500 |
| Minimum SIP | Rs 500 |
| Exit Load | 1% for redemption within 365 days |
SIP and Lumpsum Returns
| DSP Equity Opportunities Fund (SIP Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1 Yr | 12000 | 12530.90337 | 4.42% | ||
| 2 | 3 Yr | 36000 | 45749.54523 | 27.08% | ||
| 3 | 5 Yr | 60000 | 92421.09883 | 54.04% | ||
| Return : As on August 31st, 2018 | ||||||
| DSP Equity Opportunities Fund (Lumpsum Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1-Year | 100000 | 107980.9416 | 7.98% | ||
| 2 | 3-Years | 100000 | 157857.9671 | 57.86% | ||
| 3 | 5-Years | 100000 | 276716.9526 | 176.72% | ||
| Return : As on August 31st, 2018 | ||||||
Reliance Multi-cap Fund
Reliance Multi Cap Fund (G), erstwhile Reliance Equity Opportunities Fund, is one of the most preferred funds in the multi-cap category. It has the combined power of all types of funds such as large cap, mid cap, and small cap funds which make it suitable for a new investor earning high returns. This enables the portfolio to gain solid strength to withstand the market punishment, and have the energy to soar to incredible heights during the market retrieval.
Reliance Multi Cap was launched in the year 2005, with a humble seed capital contributed by the promoters and the founders. Soon, the fund began grasping space in the market and now, as of 31st August, 2018, it holds assets worth Rs 10,269 crore.
Basic Details
| Category | Multi Cap |
| Benchmark | S&P BSE 500 TRI |
| Launch Date | 3/28/2005 |
| Asset Size | Rs 10,269 crore (As on Aug 31, 2018 |
| Fund Managers | Mr. Sailesh Raj Bhan |
| Expense Ratio | 2.16% (As on Jul 31, 2018) |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 100 |
| Exit Load | 1% for redemption within 365 days |
SIP and Lumpsum Returns
| Reliance Multi Cap (SIP Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1-Year | 12000 | 12759.82183 | 6.33% | ||
| 2 | 3-Years | 36000 | 44522.50468 | 23.67% | ||
| 3 | 5-Years | 60000 | 85517.65502 | 42.53% | ||
| Return : As on August 31st, 2018 | ||||||
| Reliance Multi Cap (Lumpsum Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1-Year | 100000 | 113251.711 | 13.25% | ||
| 2 | 3-Years | 100000 | 135659.8441 | 35.66% | ||
| 3 | 5-Years | 100000 | 261447.1636 | 161.45% | ||
| Return : As on August 31st, 2018 | ||||||
Kotak Standard Multi Cap Fund
Kotak Standard Multicap Fund (G), previously known by the name Kotak Select Focus Fund, is a recent entry to the segment of multi-cap funds. Before making a switch in this category, it was considered a small-cap fund in India, with average past earnings exceeding 14.67%. As of today, the fund is recognized as one of the most consistent performers in the segment of multi-cap funds, beating the benchmark and surpassing the results drawn by its peers. This consistency makes it one of the most sought-after schemes for new investors.
Basic Details
| Category | Multi Cap |
| Benchmark | NIFTY 200 TRI |
| Launch Date | Sep 11th, 2009 |
| Asset Size | Rs 21,927 crore (As on Aug 31, 2018) |
| Fund Managers | Mr. Harsha Upadhyaya |
| Expense Ratio | 2.03% (As on Jul 31, 2018) |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 1000 |
| Exit Load | 1% for redemption within 365 days |
SIP and Lumpsum Returns
| Kotak Standard Multi Cap (SIP Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1-Year | 12000 | 13020.68 | 8.51% | ||
| 2 | 3-Years | 36000 | 47107.35 | 30.85% | ||
| 3 | 5-Years | 60000 | 95880.37 | 59.80% | ||
| Return : As on August 31st, 2018 | ||||||
| Kotak Standard Multi Cap (Lumpsum Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1-Year | 100000 | 111417.95 | 11.42% | ||
| 2 | 3-Years | 100000 | 159987.44 | 59.99% | ||
| 3 | 5-Years | 100000 | 296648.09 | 196.65% | ||
| Return : As on August 31st, 2018 | ||||||
2. Moderately Aggressive New Investors
Suitability
- Moderate to low risk appetite
- Investment horizon of 5 years and more
- Moderately high returns
Axis Bluechip Fund
Axis Bluechip Fund is a large-cap scheme which has an impressive track record of outperformance. It emphasises on quality and growth while picking up the stocks for investment favouring companies with improving cash flows and higher earnings visibility. While the fund manager Mr. Shreyash Devalkar tends to maintain a compact portfolio in this scheme and has cut down on the number of stocks sharply in the recent times in response to the prevailing market conditions where only some selected stocks are doing well. He is comfortable in taking large positions in some high-conviction bets with the aim of delivering higher outperformance. The fund is adept at containing the downside better than most of its peers. This has held it in good stead over the long term, even as it has risked not matching peers during a market uptick. The fund has proven to a dependable offering in this category. These all attributes make it a perfect choice for new investors with moderate risk appetite.
Basic Details
| Category | Large Cap |
| Benchmark | S∓P BSE Small Cap |
| Launch Date | 5th Jan, 2010 |
| Asset Size | Rs 2,839 crore (As on Aug 31, 2018) |
| Fund Managers | Mr. Shreyash Devalkar |
| Expense Ratio | 2.53% (As on Jul 31, 2018) |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 1000 |
| Exit Load | 1% for redemption within 365 days |
SIP and Lumpsum Returns
| Axis Bluechip Fund (SIP Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1-Year | 12000 | 13582.56772 | 13.19% | ||
| 2 | 3-Years | 36000 | 48697.82635 | 35.27% | ||
| 3 | 5-Years | 60000 | 91330.68638 | 52.22% | ||
| Return : As on August 31st, 2018 | ||||||
| Axis Bluechip Fund (Lumpsum Return) | ||||||
|---|---|---|---|---|---|---|
| S. No. | Year | Investment | Growth Value | Absolute Return | ||
| 1 | 1-Year | 100000 | 120409.8703 | 20.41% | ||
| 2 | 3-Years | 100000 | 157150.655 | 57.15% | ||
| 3 | 5-Years | 100000 | 243364.328 | 143.36% | ||
| Return : As on August 31st, 2018 | ||||||
Aditya Birla Sun Life Equity Hybrid 95’ Fund
Aditya Birla Sun Life Equity Hybrid ‘95 Fund was launched on February 09, 1995 as Aditya Birla Sun Life Balanced ‘95 Fund which is an open-ended scheme with a hybrid investment portfolio. This category veteran has a track record of beating its benchmark in every one of the last 15 years, except for the year 2008. It has retained a three to four star rating throughout its 12-years’ life. The fund has maintained a 70-30 allocation in favour of equities, with a 5 percent leeway to move either way based on the market conditions. Here, the Rebalancing is done on a monthly basis.
Basic Details
| Category | Aggressive Hybrid |
| Benchmark | CRISIL Hybrid 35+65 Aggressive |
| Launch Date | 2/10/1995 |
| Asset Size | Rs 15,001 crore(As on Aug 31, 2018) |
| Fund Managers | Mr. Dhaval Shah, Mr. Mahesh Patil, and Pranay Sinha |
| Expense Ratio | 2.29% (As on Jul 31, 2018) |
| MMinimum Lumpsum | Rs 500 |
| Minimum SIP | Rs 500 |
| Exit Load | 1% for redemption within 365 days |
SIP and Lumpsum Returns
| SIP Returns & Lumpsum Returns | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | 3-Years | 5-Years | ||||
| Investment | Growth Value | Absolute Return | Investment | Growth Value | Absolute Return | |
| Aditya Birla Sun Life Equity Hybrid 95 Fund - Regular Plan-Growth | 36000 | 43,165 | 19.90% | 60000 | 85001 | 41.67% |
| 100000 | 143,416 | 43.42% | 100000 | 240591 | 140.59% | |
| Return: As on August 31, 2018 | ||||||
3. Low Risk Appetite New Investors
Suitability
- Investors looking for low but consistent returns
- Don’t want to risk their principal amount
- Very low risk appetite
- Investment horizon of 3-5 years
Mirae Asset Hybrid Equity Fund
Mirae Asset Hybrid Equity Fund (G) seeks to generate capital appreciation along with current income from a combined portfolio of equity & related instruments and debt and money market instruments. It was launched on July 29, 2015, and now as on August 31, 2018, it has a whopping asset size of Rs. 1345 crore. In just around 3 years time, it has created a great position in the market and especially, in the aggressive hybrid equity funds’ space. It was successful in delivering consistent high returns than its benchmark as well as the category. This makes it a perfect pick for any new investor.
Basic Details
| Category | Aggressive Hybrid |
| Benchmark | CRISIL Hybrid 35+65 Aggressive |
| Launch Date | Jul 29th, 2015 |
| Asset Size | Rs 1,345 crore(As on Aug 31, 2018) |
| Fund Managers | Mr. Mahendre Kumar Jajoo, Mr. Neelesh Surana, and Mr. Sudhir Kedia |
| Expense Ratio | 2.20%(As on Jul 31, 2018) |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 1000 |
| Exit Load | 1% for redemption within 365 days |
SIP and Lumpsum Returns
| SIP Returns & Lumpsum Returns | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | 3-Years | 5-Years | ||||
| Investment | Growth Value | Absolute Return | Investment | Growth Value | Absolute Return | |
| Mirae Asset Hybrid-Equity Fund -Regular Plan-Growth | 36000 | 45,147 | 25.41% | NA | NA | NA |
| 100000 | 151,281 | 51.28% | NA | NA | NA | |
| Return: As on August 31, 2018 | ||||||
Reliance Equity Hybrid Fund
Reliance Equity Hybrid Fund, formerly known as Reliance Regular Savings Fund-Balanced Option, was launched on June 8th, 2005 with an investment objective to invest in a mixed portfolio comprising of equity and equity-related instruments and fixed income instruments (debt and money market instruments) to earn capital appreciation and generate fixed income. However, it predominantly invests in equity and equity related instruments and is an open market scheme. Being less volatile than that of proper equity funds, the hybrid funds invest in both equity and debt instruments.
Basic Details
| Category | Aggressive Hybrid |
| Benchmark | CRISIL Hybrid 35+65 Aggressive |
| Launch Date | Jun 8th, 2005 |
| Asset Size | Rs 14,481 crore (As on Aug 31, 2018) |
| Fund Managers | Mr. Amit Tripathi & Mr. Sanjay Pareekh |
| Expense Ratio | 2.26% (As on Jul 31, 2018) |
| Minimum Lumpsum | Rs 500 |
| Minimum SIP | Rs 100 |
| Exit Load | 1% for redemption within 365 days |
SIP and Lumpsum Returns
| SIP Returns & Lumpsum Returns | ||||||
|---|---|---|---|---|---|---|
| Scheme Name | 3-Years | 5-Years | ||||
| Investment | Growth Value | Absolute Return | Investment | Growth Value | Absolute Return | |
| Reliance Equity Hybrid Fund - Growth Plan | 36000 | 44,253 | 22.93% | 60000 | 87181 | 45.30% |
| 100000 | 147,626 | 47.63% | 100000 | 253,164 | 153.16% | |
| Return: As on August 31, 2018 | ||||||
Why Regular Plans Are a Better Option than Direct Plans for a New Investor?
Before answering this one, it is important to understand what direct and regular plans are. Well, here is the definition:
Direct Plans: Those mutual fund schemes where an investor invests in directly through the AMC are referred to as Direct plans. Such investment doesn’t involve an intermediary or distributor.
Regular Plans: Mutual fund plans which an investor buys from a broker, distributor, or an advisory are referred to as regular plans.
Why New Investors Should Go for Regular Plans?
A naive or new investor doesn’t have good knowledge of the market. Thus, to prevent himself from any kind of fraud or misguide, he must go for an investment option where unbiased advice is offered that can help him fulfill his goal with which he started investing in the first place. Besides, there are several other benefits that a beginner gets to enjoy when he invests through regular plans, including:
- Best Recommendations
Even the performance of mutual funds which belong to a similar category or class varies drastically. Thus, when picking up a mutual fund scheme to invest in, one has to be quite critical. Such knowledge is something which only an expert can provide. When you directly invests through AMC, you get a product of that particular AMC. However, when you invest through an online distributor platform like MySIPonline, you get the best product after comparing several AMCs. The choice of the best fund vs a good fund could lead to a difference of as much as 4-5 % in return over time. - Periodic Portfolio Review
By reviewing your portfolio in a timely manner and helping you rebalance, your mutual fund expert would further improve the performance of your holdings and this will help you get more returns. Such changes can also bring a difference of about 1-2% over time. - Additional Services
When you invest through a regular plan, you get several add-on facilities which is not possible with direct investment. This not only saves your time and effort but also help you improve your returns in the long run. Most people simply invest and neglect their portfolios. This results in poor returns and sometimes, even loss of money because they don't have a record of their investments.
Considering all the above cases, an expense ratio which is about 1% higher in case of regular plans than direct plans doesn’t seem to be a big difference.
Comparison Tables
1.Returns
| Category | Scheme Name | AUM (As on Aug 31, 2018) | Returns (As on Sep 18, 2018) | Risk Appetite | ||
|---|---|---|---|---|---|---|
| 3 Years | 5 Years | 10 Years | ||||
| Large & Mid Cap | DSP Equity Opportunities Fund (G) | Rs. 5,947 crore | 14.09 | 19.78 | 15.19 | High |
| Multi Cap | Reliance Multi Cap Fund (G) | Rs 10,269 crore | 8.79 | 19.18 | 17.52 | High |
| Multi Cap | Kotak Standard Multicap Fund Regular Plan (G) | Rs 21,927 crore | 14.12 | 21.74 | N/A | High |
| Large Cap | Axis Bluechip Fund (G) | Rs 2,839 crore | 13.71 | 16.96 | N/A | Moderate |
| Aggressive Hybrid | Aditya Birla Sun Life Equity Hybrid '95 Fund (G) | Rs 15,001 crore | 10.8 | 17.47 | 15.53 | Moderate |
| Aggressive Hybrid | Reliance Equity Hybrid Fund (G) | Rs 14,481 crore | 12.02 | 18.78 | 16.14 | Low |
| Aggressive Hybrid | Mirae Asset Hybrid Equity Fund (G) | Rs 1,345 crore | 13.17 | N/A | N/A | Low |
2. Risk
| Category | Scheme Name | Mean | Std Dev | Sharpe | Sortino | Beta | Alpha |
|---|---|---|---|---|---|---|---|
| Large & Mid Cap | DSP Equity Opportunities Fund (G) | 15.85 | 15.88 | 0.59 | 1.01 | 1.05 | -2.07 |
| Multi Cap | Reliance Multi Cap Fund (G) | 10.7 | 15.82 | 0.27 | 0.35 | 1.09 | -5.9 |
| Multi Cap | Kotak Standard Multicap Fund Regular Plan (G) | 15.91 | 13.15 | 0.72 | 1.18 | 0.93 | 0.8 |
| Large Cap | Axis Bluechip Fund (G) | 15.15 | 12.28 | 0.71 | 0.95 | 0.85 | 1.43 |
| Aggressive Hybrid | Aditya Birla Sun Life Equity Hybrid '95 Fund (G) | 12.07 | 10.01 | 0.56 | 0.83 | 0.84 | -0.18 |
| Aggressive Hybrid | Reliance Equity Hybrid Fund (G) | 12.98 | 10.88 | 0.6 | 0.77 | 0.95 | -0.04 |
| Aggressive Hybrid | Mirae Asset Hybrid Equity Fund (G) | 13.83 | 10.42 | 0.71 | 1.06 | 0.94 | 0.89 |
| As on August 31, 2018 | |||||||
A Final Note
We, at MySIPonline, understand all the issues of a first-time investor and have answers to each one of their queries. If the task of investing in mutual funds too seems to be a daunting task to you as well, then don’t delay in connecting with us. We are just a phone call away!
For more information on the best funds for first-time investors, reach out to our expert as per your convenience. We will analyze your requirements personally and provide a customized plan which is best suitable for you.
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