I will first screen the top 15 funds in each category based on their returns to benchmark since inception. The funds who consistently beaten the benchmark are listed in that 15. Once I have the list in my hand, then I select the funds based on Risk-Return Analyzer.
Many simply select the funds based on eye-catching returns. However, at what cost the fund is giving you a better return? To what extent it protects my investment during a downturn is what differentiate from good fund to bad fund.
Again, I am not saying that these 1o funds alone be considered as “Top 10 Best SIP Mutual Funds to invest in India in 2018”. There may be fewer other funds, which are good to compete with these funds. However, I may be biased towards few Mutual Fund Companies (purely on their size and how long they are in MF business in India). Below are the metrics I used to arrive at finally selecting the funds.
If the fund cleared all these tests and given me around a minimum of 80% score since inception, will be added to my list.
- Beta-Volatility measure and tell how much the fund changes for a given change in the Index. Lower the beta, lower the volatility. Hence, your fund must have lower beta.
- Standard deviation-It tells us how for a given set of returns, how much do fund returns deviate from the average. Lower the standard deviation, lower the volatility. Hence, your fund must have lower beta.
- Alpha-It is the risk-adjusted measure. By taking risks, how much the fund manager generated the return over the benchmark. Higher the alpha, higher the outperformance of the fund.
- Sharpe Ratio-It is the risk-adjusted measure. Higher the Sharpe ratio, better is the performance.
- Sortino Ratio-It is the risk-adjusted measure. Higher the Sortino ratio, better is the performance.
- Treynor Ratio-It is also be known as reward ratio. Higher the Treynor ratio, better is the performance.
- Information Ratio-This is calculated by average excess return obtained compared to a benchmark and divides it by the standard deviation of excess returns. Higher the information ratio, higher the consistency in beating the benchmark.
- Omega Ratio- It is a risk-return performance measure of an investment asset.
- Downside deviation-This is also be called as BAD RISK.
- Upside potential-This is exactly the opposite of Downside deviation.
- R-squared- It is a measure of how correlated the fund’s NAV movement is with its index.
- SIP Returns-For how many times the fund’s returns are above the index when we invest in SIP.
- Lump Sum Returns-For how many times the fund’s returns are above the index when we invest in a lump sum.
Below are my selection in each category of funds.
Best SIP Mutual Funds to invest in India in 2018 -Large Cap
In this category, there are other funds also which are in my radar like SBI Bluechip Fund, Birla Sunlife Frontline Equity Fund. However, I found no reason to change my last year recommendations. Hence, I am continuing the same funds.
Best SIP Mutual Funds to invest in India in 2018 -Multi-Cap
In this category, I am bit skeptical with ICICI Pru Value Discovery as the fund underperforming since a year. Those who invested in this fund based on my recommendation must continue and watch this fund for another year or so. Along with this, you can check with the fund like SBI Magnum Multi Cap Fund also.
Best SIP Mutual Funds to invest in India in 2018 -Mid Cap
Last year I recommended HDFC Midcap Opp Fund and Franklin India Prima Fund. I am sticking to the same funds in this year also as I have not found any reason to change these funds. You can also have a fund like Mirae Asset Emerging Bluechip Fund.
Best SIP Mutual Funds to invest in India in 2018 -Small Cap
Last year, I recommended DSPBR Micro Cap Fund and Franklin India Smaller Companies Funds. However, DSPBR now not accepting the fresh investments. Hence, those who already have a SIP in that fund may continue in that fund without any worries. Fresh investors can use Franklin India Smaller Companies Fund.
Best SIP Mutual Funds to invest in India in 2018 -Equity Oriented Balanced Funds
Here also I am managing the same funds of last year. No change here also.
The final list of Top 10 Best SIP Mutual Funds to invest in India in 2018 are as below.
Conclusion:-You might have surprised that I did not change my funds this year also. Yes, because equity investment does not mean changing fund frequently. However, keeping an eye on fund performance is also a must. The fund I selected are old funds and consistently performed in all market cycles.