How Step-up SIP in mid-cap funds helps to achieve larger corpus and higher returns than a normal SIP

Indian investors are more acquainted with the benefit of systematic investment plans (SIP) to invest in mutual funds (MFs). Now, almost Rs 25,000 crore is the monthly SIP contribution in MFs, which is expected to increase in the future. SIP enables you to regularly invest small sums in MFs to build wealth and reach your financial goals.
Learning how to make the most of the SIP facility is crucial if you want to build your corpus in double quick time. MF companies provide a variety of SIP options to help you accumulate a sizeable corpus and achieve your financial objectives at the earliest. One of these is ‘step-up SIP’, which differs marginally from ‘normal SIP’.

Under ‘normal SIP’, you invest a fixed amount at a regular interval. The ‘step-up SIP’ allows you to gradually increase your contributions, which are in direct proportion to your rising income. It makes use of your rising income to build a larger corpus in a relatively brief span of time.
‘Step-up SIPs’ are especially advantageous for salaried individuals who get regular salary hikes or bonuses. As your salary increases annually, it is always a good idea to increase your contributions once a year.
Here, we compare ‘step-up SIP’ with ‘normal SIP’ in the best-performing mid-cap schemes for investments made over the past 10 years. With 10 per cent annual step-up, the SIP has grown significantly, as compared to ‘normal SIP’. Data shows that the ‘step-up SIP’ delivered higher returns than the ‘normal SIP’ under most circumstances (except those in a prolonged bear market).
Source: ACEMF

Motilal Oswal Midcap Fund
Fund Managers: Niket Shah, Ajay Khandelwal, Santosh Singh and Rakesh Shetty

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Quant Mid Cap Fund
Fund Managers: Ankit Pande, Vasav Sahgal and Sanjeev Sharma

Nippon India Growth Fund
Fund Managers: Rupesh Patel

Edelweiss Mid Cap Fund
Fund Managers: Trideep Bhattacharya, Dhruv Bhatia and Raj Koradia

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HDFC Mid-Cap Opportunities Fund
Fund Managers: Chirag Setalvad

Kotak Emerging Equity Fund
Fund Managers: Atul Bhole

Invesco India Midcap Fund
Fund Managers: Aditya Khemani and Amit Ganatra

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Tata Mid Cap Growth Fund
Fund Managers: Satish Chandra Mishra

Axis Midcap Fund
Fund Managers: Shreyash Devalkar, Nitin Arora and Krishnaa N

HSBC Midcap Fund
Fund Managers: Cheenu Gupta and Venugopal Manghat

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PGIM India Midcap Opp Fund
Fund Managers: Sharma Vivek, Utsav Mehta, Vinay Paharia and Puneet Pal

SBI Magnum Midcap Fund
Fund Managers: Bhavin Vithlani

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