A Systematic Investment Plan (SIP) is a wise, hassle-free instrument of investment. You can begin your investment into an SIP Mutual Fund with a certain amount of money periodically, say monthly or quarterly. This planned procedure of investment helps in maintaining self-discipline as well as ensures building a financial fund for a secured future. With every installment that you contribute, additional units of the schemes are brought at prevailing Net Asset Value and is added up to your account.
SIPs are considered to be better in comparison to lump sum investment but it is an interesting fact to note that there is no such hard and fast rule. When you opt for an SIP, for your investing needs, there’s absolutely no need for timing the market. The best SIP plans for you to invest are the ones that align with your financial goals. For example, if you wish to invest for a short-term goal, say for a period of three months, then you should opt for a plan that provides liquidity. On the other hand, if you have a long-term investment plan, say for your child’s higher education or for buying a house, then you should opt for a diversified multi-cap equity mutual fund in SIP.
SBI Blue Chip Fund
SBI Blue Chip Fund is one of the large cap funds that has overpowered all its peers and provided annualized returns of about 18% in the past 5 years. The objective of this scheme is to invest in stocks of companies whose market capitalization is closer to being equal or a little more than that of BSE 100 Index. It is a less risky fund with high returns to be expected. For example, if you would’ve invested Rs. 1 lakh about 5 years back, then you could expect an investment amount of Rs. 2.3 lakhs today. It is one of top most ranking mutual fund to invest for long-term of 10 to 20 years.
Aditya Birla Sun Life Frontline Equity Fund
This fund is again suitable for investors focusing on long-term capital growth, through a stock portfolio with a target allocation of 100% equity, by aiming to be diversified across sectors. This fund has again overpowered all its peers with an annualized return of 17.7% in the last 5 years and has also proven to be a good short-term fund which gave a return of 15% in the period of one year. This has been ranked 2nd as per Crisil and proves to be a great mutual fund investment for mid to long term of 10 to 20 years.
Though both the funds belong to the same category, yet; they differ on several parameters such as performance, their current NAV, and so on. Let’s consider these differences between the two, to gauge if they’re the right choice of investments.
To begin with the first difference, there’s a significant gap between the NAV of both the schemes. Basis their NAV calculation as of April, SBI Blue Chip Fund’s NAV was approximately Rs. 38 while that of Aditya Birla Sun Life Frontline Equity Fund was Rs. 216. Basis their Fincash rating, ABSL Frontline Equity Fund has been ranked as 4-star scheme while SBI blue chip fund has been ranked as a 3-star scheme. The minimum amount for an SIP investment for ABSL’s scheme is Rs. 1000, while it is Rs. 500 for SBI’s scheme.
Thus, basis a few parameters that have been considered above, it can be said that there are visible differences between the two schemes. As a result, investors should identify the functioning of respective schemes before investing.