4 Mutual Fund Systems With The Best 5 Year Returns, Should You Start SIPs?
Best returns over 5 years, open-ended plans, annualized
|Fund name||5-year returns, annualized|
|Tata Digital India Fund||33.38%|
|ICICI prudential technology fund||33.25%|
|Aditya Birla Sunlife Digital India||30.99%|
|SBI Technology Opportunities Fund||28.44%|
From the data we pulled, the top of the charts is the Tata Digital India Fund based on Morningstar data for 5-year annualized returns, followed by ICICI Prudential Technology Fund, Aditya Birla Sunlife Digital India and SBI Technology Opportunities. Fund. Interestingly, these are all tech funds, which have performed well, thanks to the tremendous rally in IT stocks.
Should you launch SIPs in these funds based on past performance?
We are not in favor of starting SIP in funds with large sums each month. This is simply because the markets have risen sharply and have a significant premium over long term averages. The Sensex has a 21% premium over long-term averages, which makes it expensive.
According to the A Motilal Oswal report, Nifty’s 12-month term P / E of 21.8x is greater than 21% from its long-term average of 18.0x. This means the markets are at least 21% above its long-term averages.
Having said that, a smaller amount of SIP would be the ideal way and a gradual increase if the markets fall is a better way to invest. For example, suppose you have savings of Rs 20,000 each month, which you would like to park in SIPs. We suggest you just put in small amounts of Rs 5,000 or Rs 10,000 and if the markets go down you can go up.
Always difficult to predict the ideal mutual fund system
Every investor wants the highest possible returns and it is difficult to choose the ideal. Sometimes you may need to rely on mutual fund ratings by reputable rating agencies. However, in practice, it is unlikely that a mutual fund will continue to offer the best returns year over year. There were times when HDFC mutual fund plans were the most sorted after. Nowadays, you have name programs like Mirae Asset Management and Axis Mutual Fund that rank well in the equity mutual fund space. Things change quickly in the stock markets and a fund manager doesn’t always do it right. A latecomer today may well be an excellent performer tomorrow.
The mutual fund returns mentioned in this story are taken from Morningstar. Please consult a professional advisor before investing in mutual funds. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors accept no responsibility for any loss and / or damage resulting from the information contained in the article. You have to be careful because mutual funds are subject to the risks associated with the stock markets.