UTI SIPs offer investors an opportunity to invest in mutual funds through periodic payments instead of a lump sum. UTI Systematic Investment Plans are hassle free modes of payment where an investor can have the monthly investment installment debited directly from the bank.
Find out which is the better investment mode – Lump Sum or SIP
Understanding UTI Systematic Investment Plans
SIPs allow the investor to spread the investment amount over a period of time s/he wants to stay invested in, Hence, instead of lump sum mode of payment, s/he can pay through small installments every month. It reduces the financial burden. Also, SIPs can provide more units of the mutual fund scheme in comparison to the lump sum (keeping the invested amount constant) as in SIPs the units allotted by the Asset Management Companies (AMCs) vary. In Lump sum, you purchase the units at once based on the Net Asset Value (NAV) of the fund that day. SIPs can get you more units when markets are down and NAV is lower.
Advantages of UTI SIP
SIPs mainly offer the below mentioned benefits:
Light on Pocket
SIPs help in dividing the entire investment amount into months and distributing it accordingly. This helps in lowering the average cost. One can start investing with minimum amount as low as ₹500 per month and various types of SIP such as Top Up SIP, Flexible SIP provide the benefit of changing the monthly installment amount
Rupee Cost Averaging
As the payment is spread over time, it also helps in encountering market volatility. When markets are down, one can purchase less units and vice-versa. When markets stabilise, these units will offer good returns. The balancing of purchase of units and its cost as per the market trends is called Rupee Cost Averaging.
Power of Compounding
In Lump sum, a certain amount is invested and returns are calculated on that. In SIP, the returns you get on the previous installment are reinvested along with the new installment and hence the principal keeps increasing and the returns get compounded. This is Power of Compounding
Long Term Capital Appreciation
Mutual Funds usually aim for wealth generation especially the Equity Funds. SIPs with its two major advantages as mentioned above – Rupee Cost Averaging and Power of Compounding further helps in capital appreciation and wealth accumulation in the long run
Calculate your SIP Returns on expected UTI SIP Rate of Interest (ROI) Here
Taxation
Taxation of any fund from any fund house is dependent on its portfolio construction. If the investment is higher in equity and equity-related instruments, then the fund will be taxed as per the norms of Equity Funds. If the fund is more exposed to debt and related securities, then it will be taxable as per rules of Debt Funds. These regulations are laid by SEBI (Securities & Exchange Board of India).
In Equity Funds, Long Term Capital Gains/LTCG (when you hold your investment for a minimum of 1 year) are exempted from tax up to ₹1 Lakh and above that these are taxed at 10%. Short Term Capital Gains/STCG is taxed at 15%. For Debt Funds, the minimum holding period of an investment to be considered as LTCG is 3 years and is taxed at 20% with indexation benefits. STCG over Debt Funds are calculated as per the investor’s tax slab.
How to Invest
- Go to the official site of UTI AMC and go to the section of ‘Invest With Us”. You will need to register with PAN and other details such as birth date, email id for the first time. From next time, you can log in with the registered id. Proceed to the dashboard and click on ‘New Transaction’. You will need to update the KYC or else you cannot proceed. Once done, you can have a look at a number of Systematic Plans for investing
- You can invest through any online mutual fund investment platform such as Paisabazaar.com where you can select the funds based on ratings and returns and also compare those to other funds from the same AMC or same category of funds from different fund houses
Best UTI Systematic Investment Plans (SIPs)
Below are some of the best performing open ended direct UTI funds arranged in descending order of their performance of 5 year returns of SIPs
| Fund Name | 3 Year Returns (%) | 5 Year Returns (%) |
| UTI Gilt Direct Fund | 9.15 | 9.06 |
| UTI Money Market Fund | 7.62 | 7.56 |
| UTI Liquid Cash Fund | 6.73 | 6.92 |
| UTI Arbitrage Fund | 6.67 | 6.66 |
| UTI Medium Term Fund | 3.46 | 5.46 |
(Source: Value Research, data as on April 8, 2020)