Planning to do an SIP for 15 years? This is the easiest way to make a substantial amount of money—completely stress-free..

To build substantial wealth over the long term, consistent investing alone is not sufficient; choosing the right mutual funds is equally crucial. Investors often find themselves confused when considering adding a new fund to their portfolio—particularly when faced with diverse options such as actively managed funds versus factor-based index funds. In this context, for someone looking to initiate a Systematic Investment Plan (SIP) of ₹10,000 to ₹15,000 per month for the next 15 years, it is essential to understand where to invest to generate a significant corpus.

According to experts, two funds currently appear to be promising choices. The first is the Nippon India Multicap Fund, and the second is the Edelweiss Nifty 500 Multicap Momentum Quality 50 Index Fund. Both fall under the multicap category, yet their operational approaches are entirely distinct.

‘Factor Funds’ or Research-Based ‘Active Funds’?
The Nippon India Multicap Fund is an actively managed scheme wherein the fund manager makes investment decisions based on their own research. As per regulatory guidelines, this fund is mandated to invest at least 25% each in large-cap, mid-cap, and small-cap stocks; the remaining 25% of the capital can be allocated anywhere by the fund manager, based on their discretion and prevailing market conditions. Unlike formulaic approaches, this fund does not adhere to a fixed formula; instead, companies are selected based on the research conducted by the fund house.

Conversely, Edelweiss’s factor-based index fund operates on a fixed, rule-based strategy. From a broad universe of 500 companies, this fund selects only those 50 stocks that successfully meet specific criteria regarding ‘Momentum’ and ‘Quality.’ Simply put, it functions like a mathematical filter that automatically screens and selects stocks in alignment with market trends. However, while this approach is quite systematic, it may entail slightly higher risk and volatility during periods of market fluctuation.

What is the better option for the average investor?
Harshvardhan Ruia offers clear advice: the investment philosophies underlying these two funds are fundamentally distinct. Investors who possess a deep understanding of the nuances of "factor investing"—and who remain unperturbed by market volatility—may consider Edelweiss's index-based option. Conversely, for average investors who value simplicity and prefer to avoid the complexities of investing, adding an actively managed multicap fund—such as "Nippon India"—to their portfolio could prove to be a safer and more prudent decision. With a long-term horizon of 15 years, the most critical imperative is to accurately assess your risk appetite, steer clear of unnecessary complications, and maintain the consistency of your investments through every market cycle. This, indeed, is the true mantra for building substantial wealth over the long term.

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