A Systematic Withdrawal Plan (SWP) in mutual funds allows investors to withdraw a fixed amount at regular intervals offering consistent income without selling the entire investment. Read the article to explore the top 10 and best performing SWP Mutual Funds in India.
What is SWP Meaning in Mutual Funds?
It’s important to understand the meaning and operation of a SWP (Systematic Withdrawal Plan) before going into the top-performing funds. In simple terms, a mutual fund provision known as a systematic withdrawal plan (Swiss WARNING PLAN) permits investors to take out a certain quantity of their shares on a regular basis.
With a systematic withdrawal plan (SwP), in comparison to a systematic investment plan (SIP), you make regular withdrawals, which gives you a reliable source of income.
The investor has the option of choosing the amount to be withdrawn and to set it for monthly, quarterly, or annual intervals. Importantly, SWP provides flexibility; you can change the amount of the withdrawal or stop it completely without the need to sell the entire investment.
The capacity of SWP to help investors avoid market swings by allowing them to regularly withdraw a fixed amount instead of selling a large amount of capital during periods of unfavorable market conditions is one of its main advantages. This is especially helpful for people who need a consistent source of income, like retirees. This detailed article will also cover the best SWP Mutual Fund List.
Why Consider Best SWP Mutual Funds?
You should think about using SWP mutual funds as part of your investment strategy for a number of reasons.
Regular Income Stream: One of SWP’s primary benefits is that it offers a consistent income stream, which is advantageous for retirees or other people who depend on their assets for an ongoing supply of cash.
Flexibility: SWP is a highly customizable option that gives investors the freedom to select the withdrawal amount, frequency, and timing. Investors can modify their withdrawal plan by their requirements and the current condition of the market.
Tax Efficiency: Because only the profits part is taxed, investors in SWP are able to remove a portion of their investment, which could reduce their capital gains tax burden. Because of this, it’s a more tax-efficient method of making money.
Control Over Investments: SWP offers more stability and predictability by giving you control over when and how much you withdraw, in comparison to dividend-based mutual funds, where the payout is not guaranteed.
Top 10 and Best Performing SWP Mutual Funds in India
After going over the fundamentals of SWP mutual funds, let’s explore the top performing SWP mutual funds in India. These funds have a reputation for delivering reliable income streams and consistent returns. The following list shows the top SWP Mutual Funds in India which gives the best result in 2024:
1. HDFC Balanced Advantage Fund
3-year Returns: 12.5%
5-year Returns: 10.8%
Fund Size: ₹50,000 crore+
Risk Level: Moderate
Why It’s a Top Performer: HDFC Balanced Advantage Fund is ideal for conservative investors looking for stability and moderate growth. With a balanced portfolio of equity and debt instruments, it offers the potential for capital appreciation while ensuring steady withdrawals.
2. ICICI Prudential Multi-Asset Fund
3-year Returns: 13.2%
5-year Returns: 11.1%
Fund Size: ₹30,000 crore+
Risk Level: Moderate to High
Why It’s a Top Performer: This fund provides diversification across equity, debt, and gold, making it an excellent option for investors seeking multiple avenues of income. Its performance in the last 5 years has been consistent, making it a favorite for SWP.
3. SBI Equity Hybrid Fund
3-year Returns: 11.8%
5-year Returns: 9.7%
Fund Size: ₹40,000 crore+
Risk Level: Moderate
Why It’s a Top Performer: SBI Equity Hybrid Fund is suitable for investors who want exposure to both equity and debt. It balances risk and reward, making it a solid choice for investors using SWP as a regular income source.
4. Kotak Standard Multicap Fund
3-year Returns: 14.5%
5-year Returns: 12.2%
Fund Size: ₹25,000 crore+
Risk Level: High
Why It’s a Top Performer: For investors with a higher risk appetite, Kotak Standard Multicap Fund offers robust returns over both the short and long term. It has outperformed the market consistently, making it ideal for aggressive investors using SWP.
5. Axis Bluechip Fund
3-year Returns: 15.1%
5-year Returns: 13.6%
Fund Size: ₹20,000 crore+
Risk Level: Moderate to High
Why It’s a Top Performer: This fund focuses on large-cap stocks, which tend to be less volatile. Its strong performance in recent years makes it a suitable option for investors who want high returns along with steady withdrawals through SWP.
6. Mirae Asset Hybrid Equity Fund
Type: Hybrid (Equity & Debt)
3-year Returns: 13.8%
5-year Returns: 11.4%
Fund Size: ₹18,000 crore+
Risk Level: Moderate
Why It’s a Top Performer: This fund provides a solid balance of equity and debt with consistent performance, making it a reliable option for SWP withdrawals.
7. Franklin India Equity Hybrid Fund
Type: Hybrid (Equity & Debt)
3-year Returns: 10.5%
5-year Returns: 9.0%
Fund Size: ₹10,000 crore+
Risk Level: Moderate
Why It’s a Top Performer: This fund’s hybrid nature ensures a lower-risk portfolio, which is suitable for investors who want regular, moderate-income through SWP.
8. Tata Balanced Advantage Fund
Type: Hybrid (Equity & Debt)
3-year Returns: 12.1%
5-year Returns: 10.3%
Fund Size: ₹8,000 crore+
Risk Level: Moderate
Why It’s a Top Performer: Known for its dynamic allocation between equity and debt, this fund ensures consistent performance with a balanced risk-reward ratio.
9. DSP Dynamic Asset Allocation Fund
Type: Hybrid (Dynamic Allocation)
3-year Returns: 11.6%
5-year Returns: 10.2%
Fund Size: ₹6,000 crore+
Risk Level: Moderate to High
Why It’s a Top Performer: This fund adjusts its allocation dynamically between equity and debt based on market conditions, ensuring optimal returns for SWP investors.
10. Edelweiss Balanced Advantage Fund
Type: Hybrid (Equity & Debt)
3-year Returns: 12.0%
5-year Returns: 10.5%
Fund Size: ₹5,000 crore+
Risk Level: Moderate
Why It’s a Top Performer: The fund’s ability to manage market volatility while generating consistent returns makes it an excellent choice for SWP investors looking for steady income.
Factors to Consider When Choosing Top Performing SWP Mutual Funds
Choosing the right selection in SWP mutual funds is essential to ensuring consistent profits and lowering risk. The following are the most important details to remember:
- Fund Performance: To see how the fund performs in different market conditions, look at its performance over a range of time possibilities, such as three and five years.
- Risk Tolerance: There are various types of risks for SWP funds, from aggressive equity-oriented funds to conservative debt-oriented funds. Select a fund based on how much risk you are ready to take.
- Expense Ratio: In the long run, especially, the ratio of expenses can have a big impact on your results. In general, funds with smaller spending ratios are better managed.
- Tax Impacts: The gains part of withdrawals from the SWP is subject to pro-rata taxes. Optimizing your withdrawal strategy will be made easier if you are aware of the tax implications.
- Withdrawal Strategy: Watch out that you don’t take out more money than the fund can grow at, as this may ultimately take away your investment.
Benefits of Investing in Best Performing SWP Mutual Funds in India
There are many advantages to investing in top-performing SWP mutual funds, especially for people who want to generate a consistent income stream from their assets:
Regular Income: You can make consistent income using SWP without having to sell all of your investments. For retirees who wish to continue building their savings but still require a monthly income, this may be helpful.
Reduces Market Risk: You can reduce the risk of taking withdrawals during market downturns by regularly taking smaller withdrawals. This protects you against financial loss during temporary swings in the market.
Tax Efficiency: Compared to other investment choices such as fixed deposits, which are subject to taxes at the investor’s slab rate, SWP provides tax advantages.
How to Start a Top Performing SWP Mutual Funds
Here’s how to get started with investing in an SWP plan if you’re ready:
Pick a Fund: Pick a mutual fund based on your risk tolerance and investing goals. Consider notice of the past performance of the fund and its potential for consistent returns.
Set Your Withdrawal Amount: Choose the amount you must withdraw on a regular basis and make sure it is affordable in the long run.
Decide on Withdrawal Frequency: Depending on your needs, decide if you would like to withdraw money on a monthly, quarterly, or annual basis.
Begin your SWP by completing the necessary paperwork from your mutual fund provider, making sure to include the frequency and amount of your withdrawals. These are flexible and can be changed at any moment to suit your needs.
SWP vs SIP: Which is Better for You?
The best option for you will depend on your financial goals as both SWP and SIP have different purposes.
- SWP is a fantastic choice for retirees or anyone with low-risk tolerance because it’s perfect for people searching for consistent income.
- SIP is a good option for building wealth over time, especially for younger individuals who have a lengthy investment vision.
- Combining the two methods can, for many, provide the best of both worlds: consistent income from SWP while building up wealth through SIP.
Also Read:
What is OTM (One Time Mandate) in Mutual Fund?
Top Mutual Fund Success Stories
Conclusion
In summary, Systematic Withdrawal Plans (SWP) offer a flexible and cost-effective approach to consistently getting income from your mutual fund investments. Investors may expect consistent profits and stability from the top-performing SWP mutual funds in India, like the ICICI Prudential Multi-Asset Fund and the HDFC Balanced Advantage Fund.
Make sure the top SWP Mutual Fund you choose fits your long-term financial objectives, withdrawal requirements, and risk tolerance. You can have a consistent income stream without running out of funds too soon if you choose and manage your SWP investments wisely. Always get advice from a financial expert to determine the best course of action for your unique circumstances.