The Mutual Fund Show: What's The Best Category To Start An SIP?

For beginners, starting to invest in the mutual fund space, hybrid products like multi-asset funds can be a good option, say experts.

<div class="paragraphs"><p>(Source: Freepik)</p></div>
(Source: Freepik)

A few trends in the mutual fund industry include the rapid growth of SIPs, increasing involvement of Gen Z in investment through online apps (resulting in a rise of Do-It-Yourself investors), and preference for high-risk products, according to Vishal Kapoor, chief executive officer of Bandhan AMC Ltd.

For beginners, starting to invest in the mutual fund space, he suggests hybrid products like multi-asset funds.

Prableen Bajpai, founder of FinFix Research and Analytics Pvt., recommends the multi-cap fund as the ideal category to begin an SIP.

For investors with a high risk appetite and a long-term investment horizon, she suggests considering the Nippon India Multi Cap Fund. Another category to consider is a passive strategy fund, such as the Nifty Mid Cap 150 Index Fund.

According to Bajpai, the key highlights of the Nippon India Multi Cap Fund are:

  • Launched in 2015, Nippon India Multi Cap Fund is managed by Sailesh Raj Bhan and Ashutosh Bhargava.

  • It invests across large, mid and small caps.

  • It combines large-cap stability with mid and small-cap growth opportunities.

  • The fund is suitable for high-risk investors, who have a time horizon of 6–7 years.

While talking about the Nifty Mid Cap 150 Index Fund, Bajpai lists the key highlights as follows:

  • It is a passive fund that tracks the Nifty Midcap 150 index.

  • The index covers the companies ranked from 101st to 250th on the Nifty 500.

  • Only 4–5 funds have beaten the Nifty Midcap 150 index on a three-year rolling return basis.

In terms of the Bandhan Muti Asset Mutual Funds, Kapoor said, "The fund enables investors to stay invested for longer periods during market volatility."

Query 1: I want to create a corpus for my daughter's education (she is 3 months old) and a retirement corpus of Rs 2 crore over the next 15 years. Have I chosen the right funds to achieve my goals?

Name: Deep Sanbi | Age: 31 years

Prableen Bajpai: For Rs 2 crore corpus, you would need SIP of Rs 40,000, assuming 12% XIRR (Extended Internal Rate of Return). Hence, step up the SIP amount each year. Continue with the current portfolios. No need to add any other funds.

Query 2: I want to invest Rs 5 crore for the next five years and get 24-26% returns. What is the best course of action? Should I invest in mutual funds or stocks or both?

Name: Brijesh Patel | Age: 33 years

Prableen Bajpai: High-risk portfolio will be needed. If the goal is extendable, then risk can be undertaken. If the goal is fixed at five years, then it is better to lower return expectations. You can create a portfolio with moderate to high risk.

Watch the full video here:

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