Systematic Investment Plans (SIPs) have emerged as one of the most popular and disciplined ways of investing in mutual funds. It offers a convenient way to invest in the Indian market for Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) to grow wealth over time. In this article, we look into SIP for NRI, how to invest in SIP as NRI, best SIP for NRI in 2024 and top SIP funds with highest returns in 2024.
What is a Systematic Investment Plan (SIP)?
Systematic Investment Plan (SIP) is a form of mutual fund investment where the investor can choose to invest a fixed amount in the mutual fund scheme in a periodical manner, i.e. weekly, monthly, or quarterly. This is in stark contrast to the lump sum investment where the investor has to invest a large sum of money at once.
Mutual Fund SIP investment allows NRI investors to start their investing journey with a small sum of money and build wealth in the long run. This ease of entry in investment helps bring a higher number of investors into the market and hence is preferred by many residents as well as NRI investors. Furthermore, mutual fund SIPs are very simple and flexible as each month the fixed SIP amount gets debited from your bank account as per the SIP frequency and invested into the mutual fund SIP scheme that you’ve chosen.
Also read: 10 Mutual Funds That Doubled Wealth In 5 Years
How to Invest in SIP as NRI/OCI?
Investing in SIP mutual funds as an NRI has a slightly different procedure than that of residents. For that, you need a NRO/NRE account and Mutual Fund KYC to start your SIP investment in Indian mutual funds. Furthermore, certain regulations of the FEMA Act need to be adhered to as an NRI investor in mutual funds. This is a prime reason why NRIs from the US and Canada can only invest in a few mutual fund schemes whereas NRIs from other countries can choose to invest in a variety of mutual fund schemes. To know more about NRI mutual fund investment procedure, steps, and rules, please refer here.
That being said, once your documentation and procedures are done, you can start investing in mutual fund SIPs with ease. There are more than 2000+ mutual fund schemes available for NRIs to choose from where they can invest either in SIP or lump sum as per their preference.
Also read: Step-by-Step Guide for NRIs to Pick a Winning Mutual Fund
Investment tools for NRIs to invest in SIP Mutual Funds
Majorly there are two options for any basic NRI investment in India, which are:
- Non Resident External (NRE) Account: To invest on a repatriable basis
- Non Resident Ordinary (NRO) Account: To invest on a non-repatriable basis
An NRI/OCI can invest in Mutual Funds In India using the above-mentioned accounts.
Top 10 Best SIP Mutual Funds for NRIs to Invest in 2024
| Fund Name | AUM (In Crores) | Expense Ratio | 1 YR | 3 YR | 5 YR |
| Quant Small Cap Fund Growth for NRI | 24,530 Cr | 1.8% | 56.18% | 32.72% | 49.46% |
| HDFC Small Cap Fund Growth for NRI | 33,182 Cr | 1.6% | 37.80% | 27.42% | 30.29% |
| Nippon India Small Cap Fund-Growth for NRI | 60,373 Cr | 1.6% | 49.66% | 33.09% | 38.68% |
| HDFC Mid-Cap Opportunities Fund Growth for NRI | 75,383 Cr | 1.5% | 46.60% | 30.15% | 30.77% |
| Tata Small Cap Fund Growth for NRI | 8,449 Cr | 1.8% | 46.87% | 28.23% | 34.39% |
| Quant Mid Cap Fund Growth for NRI | 9,283 Cr | 1.9% | 57.66% | 32.03% | 37.24% |
| Nippon India Growth Fund – Growth for NRI | 32,971 Cr | 1.7% | 53.40% | 28.95% | 31.72% |
| SBI Magnum Midcap Fund Growth for NRI | 21,128 Cr | 1.8% | 39.04% | 24.45% | 29.69% |
| Canara Robeco Small Cap Fund Growth for NRI | 12,029 Cr | 1.7% | 42.39% | 26.88% | 36.16% |
| Motilal Oswal Midcap Growth for NRI | 14,446 Cr | 1.8% | 69.98% | 38.58% | 34.26% |
Benefits of Investing in the Best SIP Mutual Funds for NRI/OCI
- Can Enter with Small Capital: Mutual fund is a great investment option to generate high returns and grow your wealth over time. But not every investor can put in the big amount right away in the form of a lump sum payment. This is why SIPs in mutual fund 2024 is a great choice as it allows NRI investors to start investing with even a small capital as low as Rs 100. This will create an investing habit and bodes well for making consistent investments over time.
- Rupee Cost of Averaging: With mutual fund SIP in 2024, you can leverage the rupee cost of averaging factor allowing you to time the market right. The concept of rupee cost of averaging works as, when the market falls, you get more units allotted with the same amount of SIP in mutual funds. Similarly, when the prices rise, the purchased units will be lesser. This factor helps in navigating the volatility of the market at times.
- Flexible in Nature: SIP investment in mutual funds is flexible as it allows you to pick your investment amount, and period of SIP, i.e., weekly, monthly, or quarterly. It also allows you to modify or increase your investment amount in mutual funds. This certain flexibility coupled with other factors like modification and more makes SIP investment for NRIs a flexible pick.
- Compounding Effect: SIP investments in mutual funds for NRI are meant for long-term investment. The principle of compounding allows you to harness higher returns with a longer tenure and SIPs keep on compounding over the years to deliver higher returns. You’ll not only be investing the SIP amount, but the increase in value of the fund will also continue to generate returns making it a sizeable corpus for the future investment goals for NRIs.
- Build Investing Discipline: Starting a SIP investment as NRI allows you to instill investing discipline into your life. A thing to note is that it’s not always about timing the market, but the time spent in the market. SIP mutual funds investment works exactly in this manner allowing you to continue a investing habit over time whilst generating returns and building wealth.
Also read: Best Equity Mutual Funds for NRIs to Invest in 2024
Taxation on SIP Mutual Fund Investments for NRI/OCI
For NRIs and OCIs, taxation on SIP mutual fund investments in India is governed by the Income Tax Act and the Double Taxation Avoidance Agreement (DTAA) between India and their country of residence. Short-term capital gains (STCG) on equity investments within a year are taxed at 15%, while long-term gains (LTCG) are tax-free up to Rs 1.25 lakh after the recent Budget 2024 announcement. Any LTCG after 1.25 lakh on equity investments will be taxed at 12.5% while any gains made on debt mutual funds investment will now attract taxation on applicable slab rates of the investor’s income bracket.
Another major relief for mutual fund investors is the removal of the Tax Deducted at Source (TDS) on mutual fund withdrawals onwards after Budget 2024. Previously, a TDS of 20% was applicable on repurchases by mutual funds or the sale of units. This change is designed to enhance liquidity for investors and simplify the tax process for mutual fund transactions. Investors will now be able to withdraw their funds without the hassle of TDS deduction at the time of redemption.
Also read: NRI Mutual Fund Taxation in India 2024 Explained
Wrapping Up
Investing in SIPs offers NRIs and OCIs a strategic way to participate in India’s growth story while enjoying the benefits of regular investments and potential long-term wealth creation. The top 10 SIP mutual fund plans listed above are some of the best options available in 2024, catering to various risk appetites and investment goals. Whether you’re seeking growth, stability, or tax efficiency, there’s a SIP plan to suit your needs.
Invest in Best SIP for NRI Mutual Funds with SBNRI
NRIs can now download the SBNRI App and choose to invest in best SIP for NRI mutual fund schemes in India with ease. You can also get detailed mutual fund advice from experts at SBNRI. Also, visit our blog and YouTube channel for more details.
SBNRI is an authorized Mutual Fund Distributor platform & registered with the Association of Mutual Funds in India (AMFI). ARN No. 246671. NRIs willing to invest in mutual funds in India can download the SBNRI App to choose from 2,000+ mutual fund schemes or can connect with the SBNRI wealth team to better understand Mutual Fund investments.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.
FAQs
Which is the safest SIP to invest in?
It is suggested that the safest SIP to invest in are debt mutual funds as they invest in money market instruments, bonds, etc. Hence, the risks associated with these mutual funds are less. You can find different schemes under debt funds like dynamic bond funds, liquid funds, ultra short-term funds, gilt funds, etc.
Can NRI withdraw SIP anytime?
Yes, NRI investors who have invested in SIP mutual funds can withdraw funds anytime. However, for certain cases like ELSS, the funds come with a lock-in period of three years.
Which is the best SIP for NRI to invest in 2024 for the highest return?
Motilal Oswal Midcap Growth for NRI is the best SIP mutual fund scheme for NRI to generate the highest return in 2024. The fund’s return is 69.98% for 1-Year and 38.58% for 3-Year.
What are the maximum and minimum amounts that an NRI can invest in SIP in 2024?
NRI investors can start SIP mutual fund investment with a minimum amount of Rs 100. However, there is no upper limit on the maximum amount of investment that a NRI can make in SIP.
Is SIP tax-free for NRI?
No, all SIP investments are not tax-free. Only investments in the Equity Linked Savings Scheme (ELSS) come under the purview of tax benefits up to Rs 1.5 lacs under Section 80 C of the Indian Income Tax Act, 1961.
Is SIP better than FD for NRI?
SIP performance based on the historical data showcases at least 2x returns than Fixed deposit. Investing in SIP as NRI can help you beat inflation and generate high returns in comparison to the traditional FD/RD scheme.
Which is the best SIP plan for NRI for 5 years?
Below mentioned are some of the best SIP plans for NRI based on last 5 years returns:
- Quant Small Cap Fund-Growth for NRI – 32.72% return p.a. in 5 years
- Nippon India Small Cap Fund-Growth for NRI– 33.09% return p.a. in 5 years
- Axis Small Cap Fund Regular Growth for NRI– 29.57% p.a. returns in 5 years
- Quant Active Fund Growth for NRI– 33.62% returns p.a. in 5 years
- Tata Digital India Fund Regular Growth for NRI– 27.95% returns p.a. in 5 years
- Parag Parikh Flexi Cap Regular Growth for NRI– 26.36% p.a. returns in 5 years
Can NRIs invest in SIP mutual funds in India?
Yes, NRIs can invest in SIP mutual funds in India. They can do so through their NRE or NRO accounts, complying with the Foreign Exchange Management Act (FEMA) regulations.
What are the tax implications for NRIs investing in SIPs?
NRIs are subject to capital gains tax on their SIP investments in India. Long-term capital gains (LTCG) on equity funds are taxed at 12.5% if gains exceed INR 1.25 lakh, while short-term capital gains (STCG) are taxed at 15%. Debt funds have different tax rates taxed at the individual slab rates.
How can NRIs repatriate their SIP investment returns?
NRIs can repatriate their SIP investment returns, provided the investment was made using an NRE account. Investments made through NRO accounts are subject to certain restrictions on repatriation, allowing only up to USD 1 million per financial year.
Are SIP returns guaranteed for NRIs?
No, SIP returns are not guaranteed for NRIs. SIPs invest in mutual funds, and the returns are subject to market fluctuations. However, SIPs offer the potential for significant long-term gains.
How do NRIs open an SIP account in India?
NRIs can open an SIP account in India through mutual fund platforms like SBNRI that cater to NRI investors. They need to provide KYC (Know Your Customer) documents, including proof of NRI status, and must use an NRE or NRO account for the investment. Once the Mutual Fund KYC is completed, NRIs/OCIs can choose to invest from more than 2000 mutual fund schemes in India.
Can NRIs invest in tax-saving mutual funds through SIPs?
Yes, NRIs can invest in tax-saving mutual funds, such as Equity Linked Savings Schemes (ELSS), through SIPs. These funds offer tax benefits under Section 80C of the Income Tax Act, helping NRIs save on taxes while growing their wealth.
What are the benefits of SIPs for NRIs?
SIPs offer NRIs the benefits of rupee-cost averaging, disciplined investing, and potential long-term wealth creation. Additionally, SIPs provide easy access to the Indian market and can help NRIs diversify their investment portfolios.
Can OCIs invest in SIPs in India?
Yes, OCIs (Overseas Citizens of India) can invest in SIPs in India, similar to NRIs. They must follow the same investment procedures, including using an NRE or NRO account and complying with FEMA regulations.
