HomeMoney3 five-star rated equity funds turn SIP of ₹10,000 to over...

3 five-star rated equity funds turn SIP of ₹10,000 to over ₹9 lac in 3 years

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When it comes to equity mutual funds, investors should think about investing for the long term rather than pursuing merely higher returns owing to the risk involved. Equity mutual funds are ideal for investors with a long-term investment perspective of at least 5 years, investors targeting capital appreciation, and investors with a keen understanding of the market. However, before investing in mutual funds, you must be in tune with your investment horizon and risk profile. Equity mutual funds are an excellent way to diversify your portfolio, and the coolest part is that equity funds have proven the ability to provide inflation-beating and alpha returns for investors adhering to the rupee cost averaging strategy. Here, we’ve used three 5-star-rated equities mutual funds as an example, which have turned a monthly SIP of 10,000 to more than 9 lakh in only three years.

Quant Tax Plan – Direct Plan

The fund was established on January 1, 2013, and it has a 5-star rating from Value Research and Morningstar. Consequently, this fund has been in force around for more than nine years. As of June 30, 2022, Quant Tax Plan Direct-Growth had assets under management (AUM) at Rs. 1787.29 crores, and as of September 16, 2022, the fund’s NAV was Rs. 269.23. The fund’s expense ratio, which is 0.57%, is lower than the majority of other ELSS funds. According to Value Research data, the fund has produced an annualised return of 47% over the past three years. As a result, if an investor had made an initial investment of 1 lakh and a monthly SIP investment of 10,000 three years ago, the total value of his\her investment over the past three years would have been 10,05,531. 

The fund has generated an absolute return of 17.83 over the past year, outpacing both its benchmark index and category average returns. The fund is benchmarked against the S&P BSE 500 TRI. The fund allocates money to the services, consumer goods, materials, financial, and construction sectors. Ambuja Cements Ltd., State Bank of India, ITC Ltd., Larsen & Toubro Ltd., Adani Ports, and Special Economic Zone Ltd. are the fund’s top 5 holdings. In domestic equities, the fund has a 96.12% exposure, of which 64.81% are large-cap companies, 20.2% are mid-cap stocks, and 11.11% are small-cap stocks.

Bank of India Small Cap Fund – Direct Plan

The fund was introduced on December 19, 2018, and as of right now, Value Research has given it a 5-star rating. This fund has been operational for three years. As of June 30, 2022, the Bank of India Small Cap Fund Direct – Growth had assets under management (AUM) at 353.51 crores, and as of September 16, 2022, the fund’s NAV was 29.01. The expense ratio for the fund is 1.12%, which is higher than the majority of other funds in the same category. As per the data of Value Research, the fund has generated an annualized return of 43.25% in the last 3 years. The total value of the investor’s investment over the last three years would have been 9,45,874 if he or she had invested 1 lakh upfront and 10,000 through a systematic investment plan each month three years before. 

The fund is benchmarked against S&P BSE 250 SmallCap TRI, and in the last 1 year, the fund has generated an absolute return of 7.33% higher than both the category average return of 5.90% and benchmark return of 2.68%. The capital goods, financial, materials, chemicals, and automobile industries are the focus of the fund’s sector allocation. ICICI Bank Ltd., Timken India Ltd., City Union Bank Ltd., Home First Finance Company India Ltd., and Phoenix Mills Ltd. are the fund’s top 5 holdings. 95.48% of the fund’s investments are made in domestic equities, with 5.73% of those investments being large-cap companies, 20.5% being mid-cap stocks, and 69.25% being small-cap stocks. Government securities make up 0.04% of the fund’s investment in debt.

Canara Robeco Small Cap Fund – Direct Plan

The fund was introduced on February 15th, 2019, and as of right now, Value Research has awarded it a 5-star rating. This fund has been operating for more than 3 years. The assets under management (AUM) for Canara Robeco Small Cap Fund Direct – Growth were 3455.06 Cr Crores as of June 30, 2022, while the fund’s NAV was 26.9 on September 16, 2022. The fund’s expense ratio is 0.47%, which is lower than the majority of other funds in its category on average. If an upfront or initial investment of 1 lakh and a monthly SIP of 10,000 had been made three years ago, it would have grown to 9,82,585 now thanks to the fund’s annualised return of 45.46%. 

The fund has produced an absolute return over the past year of 10.52%, which is higher than the category average of 5.90% and the benchmark index of 2.68%. The fund is benchmarked against S&P BSE 250 SmallCap TRI. The top five holdings of the fund are City Union Bank Ltd., Schaeffler India Ltd., Can Fin Homes Ltd., Grindwell Norton Ltd., and Cera Sanitaryware Ltd. The fund has a sector allocation towards the services, financial, capital goods, materials, and construction industries. The fund invests in domestic equities to the tune of 93.73%, of which 6.48% are large-cap companies, 20.65% are mid-cap stocks, and 66.6% are small-cap stocks.

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