Best SWP Mutual Funds in India to Invest in April 2023 (2024)

A Systematic Withdrawal Plan (SWP) is a type of investment strategy in which a set amount of money is regularly drawn from a portfolio of investments, such as a mutual fund, to provide a regular income stream. SWP is Ideal for retirees seeking a regular source of income without having to redeem their investments.

In this blog, we have listed down the best SWP mutual fund schemes to invest in India. Read on!

Performance of 15 Best SWP Mutual Fund Plans in India 2023

Listed below are the 15 best SWP plan in India 2023 you can consider investing in:

Detailed Performance Overview of the Best SWP Mutual Fund Plans 2023

The details of the top SWP mutual funds 2023 are as follows:

1. Mirae Asset Tax Saver Fund – Direct Plan – Growth

Considered as one of the best systematic withdrawal plans, this equity-linked savings scheme was launched on December 28, 2015, and since then, has delivered 18.76% in average annualised returns. It invests 33.07% of its assets in the financial sector, 10.45% in energy and 9.20% in technology. It also has exposure in automobile, healthcare and other sectors. For more details, check below:

• NAV: ₹33.35
• Expense Ratio: 0.58%
• AUM: ₹14043.25 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹500, Lump Sum ₹500
• Type of Fund: ELSS (Equity Linked Savings Scheme)
• Annualised 1-Year Return: -0.8%
• Annualised 3-Year Return:34.5%
• Annualised 5 – Year Return: 15.3%

2. Canara Robeco Equity Tax Saver Fund – Direct Plan – Growth

Also considered to provide best SWP returns, the Canara Robeco Equity Tax Saver Fund is an equity-linked savings scheme that invests 33.44% in the financial sector, 9.47% in technologies, 7.09% in automobiles and 5.98% in healthcare stocks. This scheme also invests in energy and other sectors. Since its introduction on January 2, 2013, this mutual fund has delivered 15.01% average annualised returns. Check below for more details:

• NAV: ₹123.07
• Expense Ratio: 0.64%
• AUM: ₹4685.85 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹500, Lump Sum ₹500
• Type of Fund: ELSS
• Annualised 1-Year Return: 0.2%
• Annualised 3-Year Return: 31.5%
• Annualised 5-Year Return: 15.3%

3. Canara Robeco Bluechip Equity Fund

This large cap mutual fund invests 36.55% in the financial sector, 10.92% in technology, 8.27% in energy, 8.06% in consumer staples, 5.93% in automobiles and 30.27% in other sectors. The minimum amount for additional investment and SIP investment is ₹1,000 each. Since its introduction on January 2, 2013, Canara Robeco Bluechip Equity Fund has delivered 14.16% average annualised returns. Given below are more details:

• NAV: ₹45.78
• Expense Ratio: 0.48%
• AUM: ₹8672.96 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹1000, Lump Sum ₹5000
• Type of Fund: Large cap fund
• Annualised 1-Year Return: 2.63%
• Annualised 3-Year Return: 13.75%
• Annualised 5-Year Return: 12.41%

4. Axis Bluechip Fund – Direct Plan – Growth

This large cap mutual fund invests 39.57% in the financial sector, followed by 12.09% in technology, 7.99% in services, 4.82% in automobiles, 4.39% in energy and 31.14% in others. Axis Bluechip fund was introduced on January 2, 2013, and since then, it has delivered an average annualised return of 14.29%. Investors looking for capital appreciation in 3-4 years will prefer these funds. Given below are more details:

• NAV: ₹46.96
• Expense Ratio: 0.59%
• AUM: ₹33584.04 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹1000, Lump Sum ₹5000
• Type of Fund: Large cap fund
• Annualised 1-Year Return: 0.5%
• Annualised 3-Year Return: 27.8%
• Annualised 5 – Year Return: 14.3%

5. Edelweiss Balanced Advantage Fund – Direct Plan – Growth

This balanced advantage fund invests in equities and debt securities as well as in arbitrage opportunities to generate steady returns over time. It invests 24.42% in the financial sector and has exposure in energy, technology, consumer staples, automobiles and other sectors. Since its inception on January 22, 2013, the Edelweiss Balanced Advantage Fund has delivered 12.09% average annualised returns. More details are as follows:

• NAV: ₹40.04
• Expense Ratio: 0.63%
• AUM: ₹33049.77 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹500, Lump Sum ₹5000
• Type of Fund: Dynamic asset allocation or balanced advantage fund
• Annualised 1-Year Return: 3.1%
• Annualised 3-Year Return: 19.3%
• Annualised 5-Year Return: 12.0%

6. UTI Hybrid Equity Fund – Direct Plan – Growth

This is an aggressive hybrid fund with 25.31% exposure in the financial sector, 8.67% in technology, 7.65% in automobiles, 6.66% in construction, 5.33% in healthcare and 46.38% in other sectors. The UTI Hybrid Equity fund was introduced on January 2, 2013, and since then, it has generated average annualised returns of 11.96%. Check below for more details:

• NAV: ₹273.779
• Expense Ratio:1.35%
• AUM: ₹4286.95 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹500, Lump Sum ₹1000
• Type of Fund: Aggressive hybrid fund
• Annualised 1-Year Return: 4.0%
• Annualised 3-Year Return: 28.6%
• Annualised 5-Year Return: 9.8%

7. PGIM India Ultra Short Term Fund – Direct Plan – Growth

This is an ultra short duration fund which invests 15.51% in government securities and 80.78% in low-risk securities. This debt fund aims to achieve high liquidity and generate safe returns from short-term debt and money market instruments. The PGIM India Ultra Short Term Fund was introduced on January 2, 2013, and since then, it has delivered 8.10% average annualised returns. Take a look at the following details:

• NAV: ₹30.28
• Expense Ratio: 0.27%
• AUM: ₹405.21 Crore
• Risk: Low to moderate risk
• Minimum Investment: SIP ₹500, Lump Sum ₹5000
• Type of Fund: Ultra short duration fund
• Annualised 1-Year Return: 5.7%
• Annualised 3-Year Return: 5.0%
• Annualised 5-Year Return: 7.2%

8. ICICI Prudential Ultra Short Term Fund – Direct Plan – Growth

This is an ultra short duration fund which was launched on January 8, 2013. It invests 80.03% in low-risk securities and 5.44% in government securities. Risk-averse investors looking for short-term alternatives to bank deposits will find this fund suitable. Since its inception, it has delivered an average annualised return of 8.10%. More details are as follows:

• NAV: ₹25.31
• Expense Ratio: 0.39%
• AUM: ₹12447.39 Crore
• Risk: Moderate risk
• Minimum Investment: SIP ₹1000, Lump Sum ₹5000
• Type of Fund: Ultra short duration fund
• Annualised 1-Year Return: 5.8%
• Annualised 3-Year Return: 5.6%
• Annualised 5-Year Return: 6.7%

9. Quant Liquid Plan – Direct Plan – Growth

Quant Liquid Plan invests 66.24% in low-risk securities and 1.69% in government securities. This scheme was officially launched on January 5, 2013, and since then, it has delivered a 7.24% average annualised return. The minimum amount for both additional investment and SIP investment is ₹1,000. Check its details below:

• NAV: ₹36.27
• Expense Ratio: 0.29%
• AUM: ₹1561.92 Crore
• Risk: Low to moderate risk
• Minimum Investment: SIP ₹1000, Lump Sum ₹5000
• Type of Fund: Liquid fund
• Annualised 1-Year Return: 5.7%
• Annualised 3-Year Return: 4.9%
• Annualised 5-Year Return: 5.9%

10. Franklin India Liquid Fund – Direct Plan – Growth

The Franklin India Liquid Fund invests 78.74% in low-risk securities, 8.87% in government securities and 12.39% in cash and equivalent assets. The minimum amount required for additional and SIP investment is ₹1,000 and ₹500 each. This liquid fund aims to provide current income to investors with a very short investment horizon by investing 100% in debt securities. More details have been provided below:

• NAV: ₹3383.90
• Expense Ratio: 0.13%
• AUM: ₹1511.18 Crore
• Risk: Low to moderate risk
• Minimum Investment: SIP ₹500, Lump Sum ₹10,000
• Type of Fund: Liquid fund
• Annualised 1-Year Return: 5.8%
• Annualised 3-Year Return: 4.3%
• Annualised 5-Year Return: 5.4%

11. HDFC Hybrid Equity Fund – Direct Plan – Growth

This aggressive hybrid scheme invests 28.87% in the financial sector, 8.74% in energy, 6.96% in capital goods, 5.93% in technology, 5.49% in consumer staples and 44.01% in other securities. HDFC Hybrid Equity Fund was launched on January 1, 2013, and since inception, it has delivered 11.91% average annualised returns. Given below are more details:

• NAV: ₹90.55
• Expense Ratio: 1.09%
• AUM: ₹18729.59 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹100, Lump Sum ₹100
• Type of Fund: Aggressive hybrid fund
• Annualised 1-Year Return: 6.2%
• Annualised 3-Year Return: 28.4%
• Annualised 5-Year Return: 11.3%

12. Nippon India Equity Hybrid Fund – Direct Growth

This hybrid scheme was launched on January 2, 2013, and it has generated 11.37% in average annualised returns since inception. Nippon India Equity Hybrid Fund invests 24.79% in the financial sector, 9.44% in technology, 6.79% in energy, 5.44% in consumer staples, 5.28% in healthcare and 48.26% in other sectors. The minimum amount required for SIP investment is ₹100. Check the following data to get a more detailed overview:

• NAV: ₹76.81
• Expense Ratio: 1.32%
• AUM: ₹2764.57 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹100, Lump Sum ₹500
• Type of Fund: Aggressive hybrid fund
• Annualised 1-Year Return: 4.4%
• Annualised 3-Year Return: 27.7%
• Annualised 5-Year Return: 6.0%

13. SBI Equity Hybrid Fund – Direct Plan Growth

The SBI Equity Hybrid Fund invests 26.25% in the financial sector, 9.13% in healthcare, 5.54% in services, 4.97% in automobiles, 4.57% in communication and 49.55% in other sectors. This mutual fund was introduced in the financial market on January 2, 2013, and since its introduction, it has been able to deliver average annualised returns of 14.32%. More details are as follows:

• NAV: ₹216.43
• Expense Ratio: 0.79%
• AUM: ₹5442.98 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹500, Lump Sum ₹1000
• Type of Fund: Aggressive hybrid fund
• Annualised 1-Year Return: -2.3%
• Annualised 3-Year Return: 21.2%
• Annualised 5-Year Return: 10.7%

14. Tata Hybrid Equity Fund – Direct Plan – Growth

The Tata Hybrid Equity Fund invests 27.59% in the financial sector, 9.00% in technology, 8.39% in consumer staples, 7.56% in energy, 5.78% in services and 41.68% in other sectors. This aggressive hybrid scheme was officially launched on January 2, 2013, and since its launch, it has successfully generated average annualised returns of 13.16%. More details are as follows:

• NAV: ₹346.25
• Expense Ratio: 1.05%
• AUM: ₹3166.06 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹150, Lump Sum ₹5000
• Type of Fund: Aggressive hybrid fund
• Annualised 1-Year Return: 5.4%
• Annualised 3-Year Return: 25.3%
• Annualised 5-Year Return: 10.3%

15. Aditya Birla Sun Life Equity Hybrid 95 Fund – Direct Plan – Growth

The official launch date of this mutual fund was January 2, 2013. The scheme invests 22.30% in the financial sector, 9.27% in technology, 6.68% in healthcare, 6.19% in automobiles, 6.18% in capital goods and 49.38% in other sectors. Since its inception, this aggressive hybrid scheme has delivered 12.24% average annualised returns. Provided below are more details:

• NAV: ₹1125.34
• Expense Ratio: 1.01%
• AUM: ₹7046.35 Crore
• Risk: Very high risk
• Minimum Investment: SIP ₹100, Lump Sum ₹100
• Type of Fund: Aggressive hybrid fund
• Annualised 1-Year Return: -5.9%
• Annualised 3-Year Return: 23.9%
• Annualised 5-Year Return: 7.4%

Best SWP for Senior Citizens / Retired Person in India

Listed below are some of the best SWP mutual funds for senior citizens:

How Do Systematic Withdrawal Plans (SWP) Work?

Systematic withdrawal plans (SWPs) work by regularly withdrawing a certain amount of money from a portfolio of investments, such as mutual funds, to provide a regular income stream. Here’s how it typically works:

1. Determine the Withdrawal Amount

The investor decides how much they want to withdraw on a regular basis, such as monthly, quarterly, or annually.

2. Set up the Plan

The investor opens an SWP account with a mutual fund company and specifies the amount of the withdrawal and the frequency of the withdrawals.

3. Investment Portfolio

The SWP account is invested in a portfolio of mutual funds, stocks, bonds, or other investments.

4. Regular Withdrawals

On the specified date, the specified amount is automatically withdrawn from the portfolio and deposited into the investor’s bank account.

5. Adjustments

The withdrawal amount can be adjusted over time, depending on market conditions and the investor’s needs.

Example:

Ms. Aggarwal has invested a lump sum amount of Rs. 2 lakh in a fund with an NAV of Rs. 20. Thus, 10,000 fund units are allotted. She starts a monthly SWP of Rs. 5000 after a year from the investment date.

In the first month, the scheme has an NAV of Rs. 40. To generate Rs. 5000, the SWP will redeem 125 fund units (Rs. 5000/40), and 9875 units are left. For the second month, assuming the NAV is Rs. 50, the SWP redeems 197.5 fund units. Now, the balance left is 9677.5 fund units.

Benefits of SWP Mutual Funds

1. Flexible Income

Investors can choose the amount, frequency and dates for redeeming fund units automatically. They can also stop the investment or add further investment to suit their needs.

2. Tax Efficiency

By not redeeming the principal amount invested, you can lower your taxable income. Thus, SWPs are tax-efficient redemption plans. Moreover, no TDS is applicable on the SWP amount.

3. Regular Income

You can use an SWP as secondary income in times of need. If the rate of return on investment is high, you can get regular income without reducing the initial investments.

4. Helps Meet Financial Goals

You can use SWP to create a customised cash flow for reaching your financial goals. The money can supplement your main income in times of financial stress or market fluctuations.

Who Should Invest in SWP Mutual Funds?

Here are some situations where one may invest in SWP mutual funds:

• Those in the high tax bracket may use SWP to save capital gains tax for equity funds. Gains from debt funds will also have less tax applicable due to indexation benefits.
• You can also use SWP to redeem investments made through SIP (Systematic Investment Plan). If you have been investing for retirement, you can use the best systematic withdrawal plans to get a regular monthly flow over a long duration.
• SWPs can be beneficial for risk-averse investors. They can invest in low-risk mutual funds (for example- arbitrage funds) and receive only the capital gains via SWP.

How to invest in SWP Mutual Funds?

While choosing an amount for SWP, you can choose the withdrawal rate that will cover all your expenses. Another recommendation would be to check your cash flow requirement regularly for any changes caused by inflation or lifestyle changes.

Factors to Consider Before Investing in SWP Mutual Funds

1. Mutual Fund Type

The SWP is the choice of date, periodicity and amount of withdrawal from a mutual fund. You will want to do adequate research to choose the best mutual funds for SWP as the returns will depend on it. Remember to check if it suits your financial goals, risk profile, investment horizon, etc.

2. Market Situation

Market fluctuations directly impact mutual fund investments. When an individual is approaching a financial goal, investors may want to consider the market situation. This is to make sure that the fund returns do not erode if not withdrawn in time.

3. Pension Requirements

The best funds for SWP let you prepare an adequate retirement corpus. You will want to invest in a mutual fund suiting your risk profile. If well-planned, SWP is ideal for supplementing your income after retirement.

4. Your Financial Needs

With an SWP, you can time your withdrawals as per your financial requirements. If your financial goals require funds in a phased manner, you make sure that you will get funds at the right time.

5. Taxability

Every withdrawal through the SWP will be subject to capital gains tax. For equity funds, STCG (short term capital gains) tax will be applicable at a 15% rate for less than a year’s holding period. For a longer holding period, LTCG (long-term capital gains) tax is applicable at a 10% rate above Rs. 1 lakh tax exemption limit.

For debt funds, STCG will be applicable at income tax rates of individual investors for a holding period of less than 36 months. If the holding period is longer, LTCG is taxed at 20% with indexation benefits.

Taxation on SWP Mutual funds

When you redeem your SWP mutual fund investments, the capital gains will be subject to taxation depending on two factors– the type of underlying securities and the holding period of the investments.

Let us look at a few important points:

• If the holding period of equity or equity-oriented fund units is less than 12 months, the capital gains are classified as short-term capital gains (STCGs) and taxed at 15% plus 4% cess.
• On the other hand, if equity or equity-oriented fund units are held for more than 12 months, the capital gains are called long-term capital gains (LTCGs) and such gains are tax-exempt up to ₹1 lakh in a financial year. If LTCGs cross the tax-free amount, then the applicable tax rate is 10% plus 4% cess.
• If the holding period for non-equity fund units is less than 36 months, then short-term capital gains (STCGs) get added to the investor’s income and are taxed as per the applicable income tax slab rate.
• But, if the holding period of debt fund investments crosses 36 months, then the capital gains after redeeming the units are considered as LTCGs and taxed at 20% with indexation benefits.
• Individuals who have invested in ELSS can receive tax benefits under Section 80C of the Income Tax Act. LTCGs up to ₹1.5 lakh are tax-exempt. Capital gains above the threshold amount are taxed at a 10% rate with a 4% cess.

Final Word

If you wish to earn regular income from your mutual fund investments, you can consider investing in one of the best SWP mutual funds in India. A Systematic Withdrawal Plan helps you to effectively create a cash flow based on your financial requirements. To make an informed decision, go through the details of some of the best SWP plans 2023 that we have provided in the blog. But, before choosing a scheme, do not forget to assess your risk profile and investment objectives.

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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.

This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.