Have you ever thought that by saving a small amount every month, you can one day create a big corpus? This is what a mutual fund SIP (Systematic Investment Plan) does. In this write-up, we will review the performance of some top-performing funds from HDFC Mutual Fund based on their annualised SIP returns over the last 10 years.
HDFC Mutual Fund, India’s 3rd largest fund house in terms of assets under management (AUM), has many such schemes that have given annual returns ranging from 15% to 21% on 10 years of SIP investment. Imagine if you had done a SIP of Rs 10,000 every month in one of its top-performing funds, today your fund could have been more than Rs 36 lakh.
SIP: Small savings every month can create a big fund
Many of us think that a large amount is needed for investment, but SIP changes this thinking. In this, you invest a fixed amount every month — say Rs 500 or Rs 1,000. This not only builds an investment habit but also builds a large corpus over time.
The biggest advantage of SIP is that you do not need to catch the market movement. Whether the market is up or down, you invest the same amount every month. This ensures that your units are purchased at the right price on average — this is called rupee cost averaging.
Apart from this, SIP teaches you discipline in investing. The habit of investing month after month makes you financially strong. And the biggest thing — the magic of compounding. The longer the period, the bigger the benefit.
But it is important to keep some things in mind in SIP
Although SIP is a great method, it also has some limitations. Mutual funds are linked to the market; that is, if the market remains weak for many years, then your returns can also be affected. Many times, people stop SIP in a falling market out of fear, which can be a big mistake.
Some of HDFC’s SIP schemes have proved to be a boon for investors who have been patient and continued investing. Let’s take a look at the top 5 SIP schemes of HDFC Mutual Fund that have performed the best in the last 10 years.
1. HDFC Mid-Cap Opportunities Fund
10-year SIP returns (annualised): 21.21%
The fund would have turned Rs 10,000 monthly SIP into nearly Rs 37 lakh in 10 years.
10-year returns (lump sum): 18.31%
2. HDFC Small Cap Fund
10-year SIP returns (annualised): 21.21%
An SIP of Rs 10,000 started 10 years ago would be worth Rs 36.73 lakh now.
10-year returns (lump sum): 19.15%
3. HDFC Flexi Cap Fund
10-year SIP returns (annualised): 19.78%
In this fund, a monthly SIP investment of Rs 10,000 would have turned into Rs 34 lakh after 10 years.
10-year returns (lump sum): 16.12%
4. HDFC Focused 30 Fund
10-year SIP returns (annualised): 19.31%
An investment of Rs 10,000 per month in an SIP for 10 years would be worth Rs 33.15 lakh now.
10-year returns (lump sum): 15.64%
5. HDFC Infrastructure Fund
10-year SIP returns (annualised): 18.47%
An SIP of Rs 10,000 would be worth Rs 31.67 lakh now after 10 years of investment.
10-year returns (lump sum): 11.99%
(Source: Value Research)
Also read: 5 Equity Mutual Funds with Low Expense Ratio
All five HDFC mutual fund schemes have performed equally well over the 3- and 5-year periods. Though these funds’ past performances have been exemplary, it’s not necessary that the same story will get repeated in the next 10 years.
So, before investing, choose a scheme keeping in mind your needs, risk-taking capacity, and time frame.
Summing up…
If you want to fulfil long-term dreams like retirement, children’s education or buying a house, then SIP can be the right step. Many schemes of HDFC Mutual Fund have shown that disciplined investing can create a large fund over time. But yes, it would not be wise to blindly invest in any scheme. Do thorough research before investing, and if needed, talk to a financial advisor.