SIP (Systematic Investment Plan) are increasingly becoming a favorite of investors as they tend to more or less smoothen out the anxiety related to market volatility. There are several investments where investors can invest a small sum of ₹500 – ₹1000 every month and build a solid mutual fund portfolio.

One great benefit of mutual funds is that they allow you to start investing with very low amounts. So if you want to invest  ₹2000 monthly, explore the best funds mentioned below from every mutual fund category.

Large Cap Fund

Large-cap companies are big, well-established companies of the equity market. These companies are strong, reputable and trustworthy. Large-cap companies generally are top 100 companies in a market. When mutual funds invest their capital in large-cap companies then these funds are called Large Cap equity funds. The best fund to invest in this category with ₹2000 monthly are:

1.SBI Bluechip Fund

This is a Large Cap Equity Oriented Mutual Fund launched on February 14, 2006. It is a fund with moderately high risk and has given a return of 11.69 % since its launch.

  • This fund has been rated as a 4-star fund by Groww.
  • AUM of close to ₹ 17869 Cr.
  • Age is nearly 10 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark BSE S&P 100 since its launch.
  • The top portfolio holdings of the fund include SBI, HDFC Bank Ltd., ITC, Mahindra & Mahindra Ltd., HPCL, Hero MotoCorp Ltd., IndusInd Bank Ltd., Larsen & Toubro Ltd., CBLO ( CCIL ), etc.
  • The holdings are balanced across various sectors with maximum weight given to financial services ( 34.3 % ) followed by Automobile ( 11.2 % ) and Consumer Goods ( 9.9 % ).

  • Minimum SIP = ₹ 500
  • Equity share = 91.3 % , Debt share = 0.7 % and Cash = 7.9 %

  • Large Cap share= 85.7 % , Mid Cap share = 14.3 % and Small Cap share = 0 %

This fund is one of the most popular large-cap funds available in the market. But, returns from this large cap fund is lesser as compared to other popular fund in this category.

So, if you are thinking of investing a lump sum amount or for a longer duration, this large-cap fund is just the perfect choice for you.

2.Reliance Large Cap Fund

This is a fund launched on August 08, 2007. It is a fund with moderately high risk and has given a return of 11.89 % since its launch.

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹4149 Cr.
  • Age is nearly 10 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark S&P BSE 200 Fund since its launch.
  • The top portfolio holdings of the fund include Divis Laboratories Ltd., HDFC Bank Ltd., Larsen & Toubro Ltd., IOCL, SBI, Infosys Ltd., ITC Ltd., Tata Steel Ltd., Axis Bank Ltd. etc.
  • The holdings are balanced across various sectors with maximum weight given to the Financial Services ( 32.3 % ) followed by Energy ( 10.3 %).

  • Minimum SIP = ₹ 100
  • Equity share = 95.3 % , Debt share = 0.2 % and Cash = 4.5 %

  • Large Cap share= 84.6 % , Mid Cap share = 15.4 % and Small Cap share = 0 %

This fund is one of the best large-cap fund available in market.

Why Large-Cap Funds Perform Better Than Index Funds?

Large-cap funds may give you good returns on your lump sum investment over the long term. The companies in the large-cap fund’s portfolio are steady compounders and pay a dividend on a regular basis.

Mid Cap Fund

Here, the mutual fund invests in stocks of mid-size companies.

Mid-caps are compact companies of the equity market, falling somewhere between small and large cap companies and are 100-250 companies by market capitalization.

10 Best Small and Mid Cap Mutual Funds to Invest in

The best fund to invest in this category with ₹2000 monthly are :

3.L&T Midcap Fund

This is a Mid Cap Equity Oriented Mutual Fund launched on August 09, 2004. It is a fund with high risk and has given a return of 21.75 % since its launch.

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 1323 Cr.
  • Age is nearly 13 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark Nifty Free Float Midcap 100 since its launch.
  • The top portfolio holdings of the fund include Mphasis Ltd., CBLO ( CCIL ), The Ramco Cements Ltd., Emami Ltd., Mindtree Ltd., Engineers India Ltd., Jindal Steel and Power Ltd., Sundaram Finance Ltd. etc.
  • The holdings are balanced across various sectors with maximum weight given to Financial Services ( 18.5 % ) followed by Construction ( 13.5 % ) and Industrial Manufacturing ( 12.5 % )

  • Minimum SIP = ₹ 500
  • Equity share = 86.6 % , Debt share = 0 % and Cash = 13.4 %

  • Large Cap share= 14.8 % , Mid Cap share = 79.2 % and Small Cap share = 6 %

 

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Small Cap Fund

In these types of funds, the fund manager invests a major portion of the investors’ money in stocks of small-cap companies.

Small-cap stands for small companies of the stock market and are all the companies apart from large and mid-cap companies in a market. The best fund to invest in this category with ₹ 2000 monthly is:

4.HDFC Small Cap Fund

This is a Small Cap Equity Oriented Mutual Fund launched on April 03, 2008. It is a fund with high risk and has given a return of 16.60 % since its launch.

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 2152 Cr.
  • Age is nearly 10 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark Nifty Free Float Small cap 100 since its launch.
  • The top portfolio holdings of the fund include Sonata Software Ltd., CBLO ( CCIL ), Redington India Ltd., Aarti Industries Ltd., KEC International Ltd., Dilip Buildcon Ltd., Balkrishna Industries Ltd., etc.
  • The holdings are balanced across various sectors with maximum weight given to Industrial Manufacturing ( 16.8 % ) followed by Automobile ( 16.5 % ) and Construction ( 11.5 % )

  • Minimum SIP = ₹ 500
  • Equity share = 85.9 % , Debt share = 0 % and Cash = 14.1%.

  • Large Cap share = 0.8 % , Mid Cap share = 62.4 % and Small Cap share = 36.8%

5.L&T Emerging Businesses Fund

This is a Small Cap Equity Oriented Mutual Fund launched on May 12, 2014. It is a fund with high risk and has given a return of 30.98 % since its launch.

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  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 4286 Cr.
  • Age is nearly 3 years. So its performance can be difficult to judge on a longer run. Though its a relatively new fund, it has made its mark with a high return on investment.
  • Has consistently outperformed its benchmark S&P BSE Small Cap since its launch.
  • The top portfolio holdings of the fund include Sobha Ltd., CBLO ( CCIL ), Rane Holdings Ltd., Aarti Industries Ltd., Future Supply Chain Solutions Ltd., Dilip Buildcon Ltd., IPCA Laboratories Ltd., Nocil Ltd., etc.
  • The holdings are balanced across various sectors with maximum weight given to Industrial Manufacturing ( 21.9 % ) followed by Financial Services ( 14.9 % ) and Consumer Goods ( 10 % )

  • Minimum SIP = ₹ 500
  • Equity share = 86.9 % , Debt share =2 % and Cash = 11.1%

  • Large Cap share = 0 % , Mid Cap share = 67.7 % and Small Cap share = 32.3 %

This fund has exponential growth potential and has given high returns on investment.

It is best suited for investors with a high-risk appetite or for seasoned investors. This is a new fund and has performed really well, giving more than expected return in the last 3 years.

Also, this best for investors who have very good ideas of mutual funds and the risks associated with them. Associated with this fund for some good numbers of years for getting the benefit of its high return on investment.

Multi-Cap Cap Fund

These funds are used to minimize the risk and diversify the investment. In these funds, capital is invested in companies across different sectors and of different capitalization. The best fund to invest in this category with ₹ 2000 monthly is :

6.DSP BlackRock Equity Opportunities Fund

This is a  Multi-Cap Equity Oriented Mutual Fund launched on May 16, 2000. It is a fund with moderately high risk and has given a return of 18.91 % since its launch. Returns per annum over the years from this fund are :

  • DSP BlackRock Opportunities Fund has been rated as a 5-star fund by Groww and ranked 2 in Diversified fund category by Crisil (for the quarter ending December 2017).
  • AUM of close to ₹ 4805 Cr.
  • Past 3 years return is 15.19 % per annum.
  • Has consistently outperformed its benchmark Nifty 500 since its launch.
  • The top portfolio holdings of the fund include SBI, HDFC Bank Ltd., ICICI Bank, CBLO ( CCIL ), Gail (India) Ltd., HPCL, BPCL, Larsen & Turbo Ltd., Tata Steel Ltd., Divis Laboratories Ltd., Vedanta Ltd. etc.
  • The holdings are balanced across various sectors with maximum weight given to Financial Services ( 30.8 %) followed by Energy ( 11.3 %) and Construction ( 9.9 % ).

  • Minimum SIP = ₹ 1000.
  • Equity share = 96 % , Debt share = 0.1 % and Cash = 3.9 %

  • Large Cap share= 59.6 % , Mid Cap share = 39 % and Small Cap share = 1.4 %.

DSP BlackRock Opportunities Fund is one of the best-performing multi-cap funds in the market today. With returns that are competitive with other multi-cap funds and an experienced fund manager.

ELSS Funds

ELSS is a dedicated mutual fund scheme that allows investors to save tax. It also provides an opportunity for long-term capital appreciation.

An ELSS fund manager invests in a diversified portfolio, predominantly consisting of equity and equity related instruments that carry high-risk and have the potential to deliver high returns. The best fund to invest in this category with ₹ 2000 monthly is :

7.Aditya Birla Sun Life Tax Relief 96

This is an Open Ended ELSS fund with a lock-in of 3 years and launched on March 06, 2008. It is a fund with moderately high risk and has given a return of 25.65 % since its launch.

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 4759 Cr.
  • Age is nearly 10 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark S&P BSE 200 Fund since its launch.
  • The top portfolio holdings of the fund include Sundaram Clayton Ltd., Honeywell Automation India Ltd., Gillette India Ltd., Bayer CropScience Ltd., Reliance Industries Ltd., Pfizer Ltd. etc.
  • The holdings are balanced across various sectors with maximum weight given to the Consumer Goods ( 19.6 % ) followed by Financial Services ( 17.3 % ) and Automobile ( 14.9 % ).

  • Minimum SIP = ₹ 500
  • Equity share = 98.8 % , Debt share = 0 % and Cash = 1.2 %

  • Large Cap share= 39.7 % , Mid Cap share = 60.2 % and Small Cap share = 0.2 %

This fund is one of the best ELSS fund available in the market which you can invest in with minimum SIP of ₹ 500. Associate with this fund, if you are thinking of investing in ELSS for a longer duration.

Sector Fund

A sector fund is a type of a mutual fund which invests in stocks of companies that operate in a particular industry or sector of the economy. The best fund to invest in this category with ₹ 2000 monthly is :

8.UTI Transportation and Logistics Fund 

This is a Sector Equity Oriented Mutual Fund launched on March 9, 2004. It is a fund with high risk and has given a return of 19.77 % since its launch. Returns per annum over the years from this fund are :

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 1540 Cr.
  • Age is nearly 13 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark UTI Transportation & Logistics Index since its launch.
  • The top portfolio holdings of the fund include Maruti Suzuki India Ltd., Tata Motors Ltd., Mahindra & Mahindra Ltd., Hero MotoCorp Ltd., Adani Ports, and Special Economic Zone Ltd. etc.
  • Being a sector mutual fund, the holding is confined to the transportation sector only with maximum weight Automobile ( 77.8 % ) followed by Services ( 13.6 % ) and Industrial Manufacturing ( 6.9 % ).

  • Minimum SIP = ₹ 500
  • Equity share = 95.5 % , Debt share = 0.3 % and Cash = 4.2 %

  • Large Cap share= 68.3 % , Mid Cap share = 26.4 % and Small Cap share = 5.3%

The performance of this fund is dependent on the performance of the whole Transportation and Logistics industry in India. Associated with this fund for some good numbers of years for getting the benefit of its high return on investment.

Balanced Fund

Balanced funds are investment instrument, where an asset management company invest the money gather into both debt and equity.

These are diversified mutual funds having the perfect balance between risk and returns on investment and are the most popular mutual funds these days. The best fund to invest in this category with ₹ 2000 monthly is :

9.Reliance Equity Hybrid Fund – Balanced 

This is a Hybrid Equity Oriented Mutual Fund launched on June 08, 2005. It is a fund with moderately high risk and has given a return of 14.37 % since its launch.

  • This fund has been rated as a 5-star fund by Groww.
  • AUM of close to ₹ 11334 Cr.
  • Age is nearly 12 years. So its performance can be easily judged.
  • Has consistently outperformed its benchmark Crisil Balanced Fund Aggressive since its launch.
  • The top portfolio holdings of the fund include HDFC Bank Ltd., 9 Yes Bank Ltd., Grasim Industries Ltd, Infosys Ltd. ICICI Bank Pvt Ltd., Bharat Financial Inclusion Ltd., Larsen & Toubro Ltd., IOCL, etc.
  • The holdings are balanced across various sectors with maximum weight given to the Financial Services ( 41.8 % ) followed by Energy ( 10.4 %)

  • Minimum SIP = ₹ 100
  • Equity share = 71.6 % , Debt share = 26.6 % and Cash = 1.8 %

  • Large Cap share= 82.3 % , Mid Cap share= 15.8 % and Small Cap share= 1.8 %

This type of funds also provides the fund manager with the flexibility of changing the debt and equity proportion depending upon the market situation. So in a bullish market, a higher proportion will be attributed to equity rather than debt.

Things to Remember

Don’t just run for returns from investment for investing in mutual funds. There are a lot of factors you should look into before selecting a fund which will match your investment goals.

Following the 3 things you should always remember before investing in Mutual Funds :

  • Higher rates: don’t blindly invest in the fund with the highest returns. Invest based on the duration you want to invest for.
  • Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.
  • Review your investment from time to time but not too often. Once a few weeks is good enough.

To ensure that the fund is in good hands, choose a fund house having fund manager with a good amount of experience managing small/mid-cap funds and associated with these funds for some good numbers of years.

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.