Investing in a mutual fund through a Systematic Investment Plan (SIP) for the long term or 5+ years allows you to build wealth slowly but surely. That said, selecting the right mutual funds for a SIP is crucial.
Let’s take a step back and understand why. Investors are known to select a SIP mutual fund to achieve a specific financial goal based on different periods of time - in this case, we’re looking at 5 years.
This SIP is generally in line with the risk profile of the investor. That’s why we’ve compiled a list of the best SIPs for 5 years for risk profiles across the board, ranging from conservative to aggressive.
Best SIPs For 5 Year Investment In 2023
5 years is somewhat of a sweet spot when it comes to investing in SIP mutual funds. While it falls under the long term, a list of the best SIPs for 5 years has room for debt funds, equity funds, international funds, and more.
You can consult a Cube Wealth coach or download the Cube Wealth App.
Without further ado, let’s take a look at the best mutual funds for a 5-year SIP. We’ll start with the conservative risk category and end with the aggressive risk category.
A. Conservative
This risk profile would include debt funds, liquid funds, and large-cap funds. Most of the funds that fall under this category are known to generate predictable returns.
1. IDFC Banking & PSU Debt Fund
This is a debt fund that primarily invests in bonds, T-bills, and more issued by banks and public sector undertakings. IDFC Banking & PSU Debt Fund has generated an average return of 7.97% on a SIP for 5 Years.
- AUM: ₹19,205 crores
- 5-year return: 7.97%
- Expense ratio: 0.62%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹4,17,212.
2. ICICI Prudential Corporate Bond Fund
Corporations like Reliance Industries issue bonds to raise money. That’s what ICICI Prudential Corporate Bond Fund invests in. This debt fund has generated an average return of 7.90% on a SIP for 5 Years.
- AUM: ₹19,205 crores
- 5-year return: 7.97%
- Expense ratio: 0.58%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹4,17,212.
3. Axis Liquid Fund
This is a liquid fund that invests in debt securities known to mature in less than 91 days. Axis Liquid Fund has generated an average return of 6.03% on a SIP for 5 Years.
- AUM: ₹24,318 crores
- 5-year return: 6.03%
- Expense ratio: 0.25%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹3,05,241.
4. Mirae Asset Large Cap Fund
This is an equity fund that invests in large-cap stocks like HDFC Bank Limited, Infosys Limited, and others. Mirae Asset Large Cap Fund has generated an average return of 15.45% on a SIP for 5 Years.
- AUM: ₹30,456 crores
- 5-year return: 15.45%
- Expense ratio: 1.59%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹9,24,786.
5. Motilal Oswal Focused 25 Fund
This is an equity fund that invests in up to 25 stocks, most of which are from the large-cap category. Motilal Oswal Focused 25 Fund has generated an average return of 14.15% on a SIP for 5 Years.
- AUM: ₹1,832 crores
- 5-year return: 14.15%
- Expense ratio: 2.21%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹8,27,024.
B. Moderate
The moderate category consists of flexi cap funds, contra funds, index funds, and more. These mutual funds are relatively riskier than conservative funds but have the potential to generate better returns.
1. SBI Flexicap Fund
This fund has the flexibility to invest in shares of companies from different market caps. SBI Flexicap Fund has generated an average return of 13.85% on a SIP for 5 Years.
- AUM: ₹15,291 crores
- 5-year return: 13.85%
- Expense ratio: 1.92%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹8,05,076.
2. Invesco India Contra Fund
This fund follows a contrarian approach to investing and buys undervalued shares of companies that have a solid business. Invesco India Contra Fund has generated an average return of 16.34% on a SIP for 5 Years.
- AUM: ₹7,982 crores
- 5-year return: 16.34%
- Expense ratio: 2.06%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹9,94,279.
3. Principal Emerging Bluechip Fund
This fund invests in large-cap and mid-cap companies that can potentially become bluechip companies in the future. Principal Emerging Bluechip Fund has generated an average return of 16.41% on a SIP for 5 Years.
- AUM: ₹3,121 crores
- 5-year return: 16.41%
- Expense ratio: 2.02%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹9,99,836.
4. HDFC Flexi Cap Fund
This is an equity fund that can invest in stocks from across market caps. HDFC Flexi Cap Fund has generated an average return of 13.31% on a SIP for 5 Years.
- AUM: ₹26,773 crores
- 5-year return: 13.31%
- Expense ratio: 1.74%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹7,66,133.
5. Canara Robeco Emerging Equities Fund
This fund aims to invest in companies that have the potential to become leaders. Canara Robeco Emerging Equities Fund has generated an average return of 17.69% on a SIP for 5 Years.
- AUM: ₹11,461 crores
- 5-year return: 17.69%
- Expense ratio: 1.87%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹11,03,846.
C. Aggressive
The aggressive category has the potential to generate big wins and equally big losses. This includes small-cap, mid-cap, and international mutual funds, all of which require you to stay patient for 5+ years.
1. Edelweiss Greater China Equity Off-shore Fund
This is an international fund of fund scheme that invests in JP Morgan Greater China Equity Fund, whose portfolio consists of top Chinese stocks. This fund has generated an average return of 21.77% on a SIP for 5 Years.
- AUM: ₹1,845 crores
- 5-year return: 21.77%
- Expense ratio: 2.41%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹14,67,941.
2. Franklin India Feeder - Franklin U.S. Opportunities Fund
This is an international feeder fund that invests in the master fund, Franklin U.S. Opportunities Fund, which includes top US stocks like Microsoft, Google, Apple, and more.
Franklin India Feeder - Franklin U.S. Opportunities Fund has generated an average return of 23.35% on a SIP for 5 Years.
- AUM: ₹3,838 crores
- 5-year return: 23.35%
- Expense ratio: 1.62%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹16,23,456.
3. Axis Small Cap Fund
This fund primarily invests in small-cap stocks. Axis Small Cap Fund has generated an average return of 20.51% on a SIP for 5 Years.
- AUM: ₹7,303 crores
- 5-year return: 20.51%
- Expense ratio: 1.99%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹13,49,935.
You can consult a Cube Wealth coach or download the Cube Wealth App
4. PGIM India Midcap Opportunities Fund
This fund primarily invests in mid-cap stocks. PGIM India Midcap Opportunities Fund has generated an average return of 19.20% on a SIP for 5 Years.
- AUM: ₹3,060 crores
- 5-year return: 19.20%
- Expense ratio: 2.29%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹12,32,618.
5. PGIM India Global Equity Opportunities Fund
This is an international fund that invests in stocks from around the world. PGIM India Global Equity Opportunities Fund has generated an average return of 22.43% on a SIP for 5 Years.
- AUM: ₹1,518 crores
- 5-year return: 22.43%
- Expense ratio: 2.43%
This means that a SIP of ₹30,000 for 5 years would’ve earned you a profit of approximately ₹15,31,858.
How To Invest In Mutual Funds SIP Online?
You can start investing in the best SIPs for 5 Years using an investment app or directly through an AMC. The process is more or less similar and requires you to follow these steps:
- Download investment app/visit AMC website
- Complete KYC process
- Analyse and select the best SIP mutual funds
- Start investing
A word of caution - selecting mutual funds is not easy and requires you to diligently research the market, the fund house, and the fund manager to get a better understanding of what you’re getting into.
Remember To Get Your Mutual Fund Portfolio Analysed!
5 years is a fair long time and a lot can change over that period. Certain stocks may gain or lose, the fund manager may change, or the fund may change its investment philosophy.
That’s why it is important to get your portfolio check-up done every quarter to know more about the health of your SIP mutual fund investments. There are multiple ways to go about this:
- Consult a trained professional like a Cube Wealth Coach
- Talk to a reliable financial advisor
- Allow computer algorithms to do a scan
Either way, it’s best to rely on someone who has a stellar track record and trust in the market before going for a portfolio analysis. You can get a flavour for this using the “Free Tools” section on top.
SIP Calculator For 5 Years
You can use an online SIP calculator to visualise the returns you can earn after 5 years. Follow these steps to get the best out of the SIP calculator for 5 years added below:
- Enter SIP amount
- Keep the years locked at 50
- Toggle the potential returns
- See how much you’ll earn
- You can consult a Cube Wealth coach or download the Cube Wealth App
FAQs
1. Can I change my SIP investment strategy during the 5-year period?
Ans. Yes, you can adjust your SIP strategy as your financial goals or risk tolerance change. However, it's essential to consult with a financial advisor before making significant changes to your investment plan.
2. Is it advisable to contemplate a balanced fund as part of a 5-year SIP strategy?
Ans. Balanced funds, which encompass a blend of both equity and debt elements, present a middle-of-the-road approach and are frequently regarded as appropriate for investors possessing a moderate risk tolerance and having a 5-year investment horizon.
3. Is it possible to initiate SIP investments with multiple mutual funds to achieve diversification?
Ans. Certainly, you have the option to construct a diversified portfolio by participating in multiple mutual funds that encompass varying investment goals and asset classes. This strategy serves to distribute risk and has the potential to enhance returns.
4. Can I start a SIP with multiple mutual funds for diversification?
Ans. Yes, you can create a diversified portfolio by investing in multiple mutual funds with different investment objectives and asset classes to spread risk and potentially enhance returns.
Conclusion
Choosing the optimal Systematic Investment Plan (SIP) for a 5-year investment horizon necessitates a deliberate approach. Elements such as your financial objectives, risk tolerance, and investment goals will be pivotal in ascertaining the most appropriate SIP for your unique requirements. It is vital to explore various SIP alternatives, which may encompass equity mutual funds, debt funds, or a well-balanced strategy that harmonizes with your specific financial needs.
Opting for a diversified and balanced SIP approach can serve to mitigate risk while potentially delivering reasonable returns. Furthermore, maintaining a consistent vigil over your investments and engaging in periodic reviews with a financial advisor can ensure that your SIP strategy remains in congruence with your ever-evolving financial aspirations.
Test it out for yourself here:
Note:
Facts & figures are true as of 27-10-2021. The funds mentioned are suggestions based on funds handpicked by Cube's expert Mutual Fund Advisory partner. Before investing please take Cube's Portfolio Planner feature to ensure the funds you see are right for your goals, life stage, risk level and finances. None of the information shared here is to be construed as investment advice.
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