Top Mutual Funds for Lumpsum Investment in India for 2024: How to Choose Between Lumpsum and SIP?
Investing a substantial sum in a mutual fund in one go, known as lumpsum investment, is a strategic approach. Whether you’ve received a windfall, a bonus, or experienced a financial gain, this method allows you to invest a significant amount at once. However, considering market fluctuations, timing is crucial when opting for lump sum investments. Yet, specific mutual funds are well-suited for this approach.
In this blog, we will identify the best mutual fund for lumpsum investments in India and outline the key factors to guide your selection. Choosing the right mutual fund for lump sum investment is pivotal for portfolio diversification and long-term returns optimisation. With numerous options in the market, identifying the ideal scheme may seem daunting.
List of Best Mutual Funds for Lumpsum Investment in India for 2024
Here is the list of the best mutual funds for lumpsum investment based on their 5-year CAGR, sorted from highest to lowest:
| Fund Name | Fund Category | AUM (in Cr.) | CAGR 3Y (%) | 3Y Avg Annual Rolling Return (%) | CAGR 5Y (%) |
|---|---|---|---|---|---|
| Quant Small Cap Fund | Small Cap Fund | 26,330.82 | 25.83 | 40.99 | 47.35 |
| Bank of India Small Cap Fund | Small Cap Fund | 1,516.96 | 23.75 | 32.10 | 38.44 |
| Nippon India Small Cap Fund | Small Cap Fund | 61,027.03 | 27.35 | 37.10 | 36.15 |
| Quant Infrastructure Fund | Sectoral Fund - Infrastructure | 3,599.01 | 23.41 | 41.23 | 35.33 |
| Canara Rob Small Cap Fund | Small Cap Fund | 12,323.74 | 21.04 | 31.64 | 35.30 |
| Tata Small Cap Fund | Small Cap Fund | 9,319.04 | 25.51 | 33.31 | 34.35 |
| Quant Mid Cap Fund | Mid Cap Fund | 8,940.54 | 24.20 | 36.73 | 34.24 |
| Edelweiss Small Cap Fund | Small Cap Fund | 4,292.71 | 22.97 | 31.55 | 34.23 |
| Motilal Oswal Midcap Fund | Mid Cap Fund | 20,055.68 | 32.57 | 38.45 | 33.23 |
| Quant Flexi Cap Fund | Flexi Cap Fund | 7,513.82 | 19.31 | 31.82 | 32.99 |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the list is from 13th November, 2024. This data is derived from the Tickertape Mutual Funds Screener.
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Top 10 Mutual Funds for Lumpsum Investment: An Overview
Here is a brief overview of the 10 best mutual funds for lumpsum listed above:
Quant Small Cap Fund
Managed by Quant Money Managers Limited (QMML), which was incorporated in 1995 and authorised as an Asset Management Company (AMC) in 2017. This fund’s Net Asset Value (NAV) stands at ₹284.09, with a minimum SIP investment requirement of ₹1,000 and an expense ratio of 0.64%, making it a competitive choice among small-cap funds.
Bank of India Small Cap Fund
Operated by Bank of India Investment Managers, a subsidiary of Bank of India founded in 1906 and nationalised in 1969. With a robust 14-year track record in fund management, it caters to diverse investor needs. The fund’s NAV is ₹53.20 with an expense ratio of 0.48%, showcasing efficiency in cost management.
Nippon India Small Cap Fund
A prominent offering by Nippon India Mutual Fund, with assets under management (AUM) totalling ₹2,79,431 Crores. Sponsored by Nippon Life Insurance, this fund has a NAV of ₹191.37 and a low minimum SIP investment of ₹100. The expense ratio is 0.68%, reflecting a focus on balancing growth with affordability.
Quant Infrastructure Fund
Another fund from Quant Money Managers Limited, known for its extensive experience in fund management since 1995. The Quant Infrastructure Fund features a NAV of ₹41.91, a minimum SIP requirement of ₹1,000, and an expense ratio of 0.66%, targeting investors interested in infrastructure-oriented growth.
Canara Rob Small Cap Fund
Managed by Canara Robeco Asset Management Company Ltd., a joint venture with Robeco Groep N.V. This small-cap fund has a NAV of ₹43.30, a minimum SIP of ₹1,000, and a low expense ratio of 0.44%, appealing to investors seeking cost-effective exposure in small-cap markets.
Tata Small Cap Fund
Offered by Tata Asset Management, established in 1994 and known for its 25+ years of investment management expertise. The fund’s NAV is ₹46.89, with a slightly higher minimum SIP requirement of ₹1,500. The expense ratio is 0.29%, providing a low-cost structure within this category.
Quant Mid Cap Fund
Managed by Quant Money Managers Limited, this mid-cap fund features a NAV of ₹244.90 and an expense ratio of 0.44%. With a track record dating back to 1995, QMML brings a seasoned approach to mid-cap investments, appealing to investors aiming for diversified growth within this segment.
Edelweiss Small Cap Fund
Offered by Edelweiss Asset Management Limited, part of the Edelweiss Group, known for its rapid growth. This fund has a NAV of ₹47.85, a minimum SIP of ₹100, and a low expense ratio of 0.38%, making it accessible and cost-effective for small-cap investors.
Motilal Oswal Midcap Fund
Operated by Motilal Oswal Asset Management Company Ltd., a reputable firm established in 2008 under the Motilal Oswal Financial Services umbrella. The fund’s NAV is ₹118.30, with a minimum SIP of ₹1,500 and an expense ratio of 0.58%, designed for investors seeking mid-cap exposure with solid growth potential.
Quant Flexi Cap Fund
Another fund by Quant Money Managers Limited, the Quant Flexi Cap Fund offers a NAV of ₹107.83 and an expense ratio of 0.59%. This flexi-cap fund provides diversified market exposure, leveraging QMML’s extensive experience across multiple market segments.
How to Invest a Lumpsum Amount in Mutual Funds?
Understanding how the best mutual funds operate is crucial for making informed decisions when exploring the realm of lumpsum investments. These funds leverage a strategic approach to deploying large, one-time investments. Unlike systematic investment plans (SIPs), lumpsum investments involve committing a substantial amount upfront.
The top-performing mutual funds in this category carefully allocate funds across a diversified portfolio, aiming for optimal returns. They often focus on a mix of equities, debt instruments, and other assets to balance risk and reward. Rigorous market analysis, skilled fund management, and proactive adjustments to market trends are hallmarks of these funds, ensuring they adapt to the dynamic investment landscape.
Investors can benefit from the potential for higher returns and faster capital appreciation, making lumpsum investments in mutual funds an attractive option for those looking to deploy a significant amount of capital efficiently. As you explore your investment options, keep an eye on historical performance, fund objectives, and the expertise of fund managers to align your lumpsum investment strategy with your financial goals.
Is Lumpsum Investment Suitable for Inexperienced Investors?
A lumpsum investment involves committing a substantial amount at once, so it’s essential to assess one’s comfort with market fluctuations. For inexperienced investors, a lumpsum strategy can be challenging if they aren’t familiar with market cycles. Beginners might find it easier to start with SIP, which gradually exposes them to the market and averages out the highs and lows.
Is Lumpsum Investment Profitable?
Yes, lumpsum investments can be profitable, especially in a bullish or rising market. When markets are climbing, investing a significant amount at once can amplify gains since the entire investment benefits from compounding from the start. Additionally, when invested in high-growth equity funds with a long-term horizon, a lumpsum investment can outperform other modes of investment. However, profits can vary based on market timing and fund selection. Investing during a downturn could yield high returns when the market recovers, but it also requires patience to wait out low phases, reinforcing the need for a long-term commitment.
How Do I Choose Between Lumpsum and SIP?
Choosing between lumpsum and SIP largely depends on the investor’s financial situation and market outlook. If you have a substantial sum and are investing for the long term, lumpsum could be beneficial, allowing you to benefit from compounding. On the other hand, SIP suits those with a regular income and limited funds at hand, offering flexibility and reducing the impact of market volatility.
Can I Switch from SIP to Lumpsum in the Same Mutual Fund?
Yes, investors can switch from SIP to a lumpsum investment within the same mutual fund, though the process is not as direct as transferring funds. You can stop your SIP at any point and then invest an additional lumpsum amount into the same fund. Keep in mind that this won’t merge your SIP units with lumpsum units; both will have different NAVs (Net Asset Values) and will be treated separately for tax purposes. Always consult with your fund provider or a financial advisor to understand any tax implications or exit load that may apply.
How Does Market Timing Affect Lumpsum Investments?
Market timing is a critical factor for lumpsum investments, as they involve investing a large sum in one go. Ideally, lumpsum investments work best in bear markets or during market corrections, as you can buy more units at a lower cost. This potentially increases gains when the market rebounds. However, timing the market perfectly is difficult, even for seasoned investors. Those investing through lumpsum should ideally have a longer-term horizon and invest in phases if they wish to mitigate risk.
What are the Best Mutual Funds for Lumpsum Investment?
Investing a lump sum in mutual funds means committing a substantial amount of money in a single transaction, differing from the regular contributions of systematic investment plans (SIPs). This approach involves buying fund units at the current Net Asset Value (NAV), calculated by dividing the total fund assets by outstanding units. Opting for a lump sum method allows investors to enter the market with a significant investment, potentially capitalising on market trends and fund performance.
This strategy suits those with substantial savings, sizable inheritances, bonuses, or specific financial goals. It offers accelerated wealth growth, capital appreciation, and portfolio diversification.
Recognising that mutual funds provide diverse options like equity, debt, and balanced funds, each with distinct risk-reward profiles, objectives, and asset allocation strategies is crucial. Therefore, aligning your investment goals, risk tolerance, and time horizon with a fund’s characteristics is vital when selecting the best mutual fund for one time investment in mutual funds.
Benefits of Investing in the Best Mutual Fund for Lumpsum Investments
Exploring the realm of lumpsum investments through mutual funds unveils several advantages worth considering:
- Enhanced Returns: Opting for top-tier mutual funds ensures a strategic approach to potentially amplify returns, maximising the efficiency of your lumpsum investment.
- Diversification: The best mutual funds spread investments across diverse sectors, mitigating risk and fostering potential long-term growth by avoiding overreliance on a single asset class.
- Professional Fund Management: Proficient fund managers with leading mutual funds bring expertise. Consequently by consistently analysing market dynamics to make informed decisions on your investment.
- Transparent Performance Metrics: Regular updates and detailed reports will keep you abreast of your investment’s performance, fostering transparency and providing insights into the trajectory of your lumpsum investment.
- Liquidity and Adaptability: The liquidity and flexibility offered by top mutual funds enable easy access to your funds. Consequently, allowing you to navigate changing financial requirements with agility.
What are the Returns on the Best Mutual Fund for Lumpsum Investments & How are they Calculated?
Calculating returns is crucial when evaluating the performance of the best mutual funds for lumpsum investments. Understanding this process empowers investors to make informed decisions. The returns on these funds are determined by assessing the Net Asset Value (NAV) change over a specific period.
Here’s a simplified breakdown of the calculation:
- Initial NAV: The investment begins with the lumpsum amount at the prevailing NAV. This marks the starting point for return calculations.
- Final NAV: At the end of the investment period, the NAV is reassessed. The difference between the initial and final NAV reflects the capital appreciation or depreciation.
- Dividends and Distributions: Some funds may offer dividends or distributions. These should be factored into the total returns.
- Time Factor: Returns are annualised to provide a standardised measure. This helps in comparing the performance of mutual funds with different investment durations.
How to Choose the Best Mutual Fund for Lumpsum Investments for investing?
When making lumpsum investments, selecting the right mutual fund is crucial for maximising returns and minimising risks. Follow these key steps to ensure you pick the best mutual fund for your lumpsum investment:
- Define Your Financial Goals: Start by clearly outlining your financial objectives. Whether your goals are wealth creation, long-term growth, or short-term gains, knowing your goals will guide your mutual fund selection.
- Assess Risk Tolerance: Understand your risk appetite. Different mutual funds carry varying levels of risk. Evaluate your comfort with market fluctuations and choose a fund that aligns with your risk tolerance.
- Research Fund Performance: Analyze the historical performance of potential mutual funds. Look for consistent returns over different market conditions. A track record of steady growth is a positive indicator.
- Diversification Matters: Opt for mutual funds that offer diversification across sectors and asset classes. This helps spread risk and enhances the potential for returns.
- Fund Manager Expertise: Evaluate the fund manager’s expertise and experience. A seasoned manager with a successful track record is likely to make more informed investment decisions.
- Expense Ratio Consideration: Pay attention to the expense ratio, as lower fees can significantly impact your overall returns. Choose funds with reasonable expenses to optimise your investment.
- Check for Exit Load: Be aware of any exit loads associated with the mutual fund. Some funds charge fees for redeeming units within a specific time frame. Factor this into your decision-making process.
Who Should Invest in the Best Mutual Fund for Lumpsum Investments?
The best mf for lumpsum investments are tailored for specific investor profiles. If you fall into any of the following categories, these funds might be the ideal choice for you:
- Sudden Wealth Recipients: Individuals who have received a windfall, such as a bonus, inheritance, or property sale, can benefit from the immediate growth potential of lump sum investments.
- Experienced Investors: If you’re well-versed in market trends and have a knack for strategic investment decisions, lump sum funds provide an opportunity to capitalise on your expertise.
- Risk-Tolerant Individuals: Investing the best lumpsum investment plans requires a higher risk tolerance, as the investment isn’t spread out over time. Investors comfortable with market fluctuations may find these funds suitable.
- Long-Term Investors: While lump sum of money investments can generate quick returns, they are most beneficial for individuals with a long-term financial outlook, allowing them to weather short-term market fluctuations.
Risks Involved While Investing in the Best Mutual Fund for Lumpsum Investments
Embarking on a lump sum investment journey in top mutual funds holds the potential for robust returns, yet navigating the associated risks is crucial. Here’s a comprehensive look:
- Market Volatility: Even the best-performing funds are susceptible to short-term losses owing to unpredictable market fluctuations. A sudden downturn can impact the fund’s value.
- Economic Factors: Unforeseen economic changes, whether on a global or local scale, can significantly influence the fund’s performance. External factors such as interest rate fluctuations or geopolitical events can also impact returns.
- Unforeseen Events: Unexpected events, such as natural disasters or global crises, can have an immediate and adverse effect on the fund’s value. These unforeseen circumstances are beyond the fund manager’s control but can impact investor returns.
- Management Changes: Shifts in fund management, whether due to retirements, resignations, or strategic decisions, can introduce uncertainties. A change in leadership may alter the fund’s investment strategy, potentially impacting its performance.
Taxability on Equity Mutual Fund for Lumpsum Investments After the Union Budget 2024-25
The best mutual funds for lumpsum investments have varying tax structures. Being aware of these tax implications is essential for making informed financial decisions. The Union Budget for 2024-25 has made significant changes to the taxation on equity mutual funds. Here we have listed these changes, along with the revised tax rates for equity mutual funds:
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
Dividend Distribution Tax (DDT)
The dividend distribution tax applies to mutual funds that declare dividends. However, it’s important to note that the mutual fund bears this tax before distributing dividends. Investors typically receive their dividends after the DDT deduction. The DDT was withdrawn during the Union Budget of 2020-21. According to the Union Budget of 2024-25, the DDT liability on companies and mutual funds remains withdrawn. Additionally, the 10% tax on dividend receipts exceeding Rs. 10 lakh for resident individuals, HUFs, and firms under Section 115BBDA also remains withdrawn.
Factors to Consider Before Investing in the Best Mutual Fund for Lumpsum Investments
When delving into the world of lump-sum investments, it’s crucial to consider various factors that can significantly impact the performance of your chosen mutual fund. Here’s a concise breakdown of key considerations:
Market Timing:
- Optimal Market Entry: The ideal time to deploy a lump sum into mutual funds is when market conditions are at their nadir but displaying signs of future growth. This strategic move capitalises on potential upswings, maximising returns for investors.
- Caution in Booming Markets: Exercising prudence is essential when the market is flourishing. Entering with a lump sum during the peak performance of even the best lumpsum investment options in India might lead to suboptimal returns or even losses. Stay vigilant and evaluate the market landscape before making significant investment decisions.
Long-Term Commitment
- Best for the Long Haul: Lumpsum investment options shine when viewed as long-term mutual funds for lumpsum investment. The potential benefits become substantial if you can commit your lump sum for an extended period, especially five years or more. The longer the horizon, the greater the potential for wealth accumulation.
- Decade-Long Rewards: Moving further, holding onto your investment for a decade or more can unlock tremendous benefits. The power of compounding and the resilience of well-chosen mutual funds can lead to impressive returns over an extended duration.
To Wrap It Up. . .
After reviewing the list of the top 10 mutual funds for lumpsum investments based on their returns and other fundamentals, interested investors can do their due diligence. They can analyse fund traits, align investments with their financial goals, and seek professional advice for informed decision-making!
Frequently Asked Questions (FAQs) on the Best Mutual Fund for Lumpsum Investment
A lumpsum investment in mutual funds is a one-time, bulk investment made by an investor into a mutual fund scheme, as opposed to smaller, periodic payments.
In a lumpsum investment, the entire amount is invested at once, purchasing fund units at the prevailing Net Asset Value (NAV), allowing the investment to grow or decline based on market performance.
Here are some of the features of a lumpsum investment:
– Single, upfront payment into the mutual fund scheme.
– Potential for higher growth by investing during favorable market conditions.
– Flexibility in choosing the entry point based on market trends.
In the ideal case, staying invested for the long term can help you reap the benefits of compounding. Therefore, staying invested for the long haul can generate higher returns than staying invested for the short term.
The best mutual funds for lump sum investments typically invest in a diversified portfolio of stocks, bonds, and other securities.
This is an educational list of the top 3 mutual funds for lumpsum investment in 2024 based on 5Y Return:
1. Quant Small Cap Fund
2. Bank of India Small Cap Fund
3. Quant Infrastructure Fund
Note: The data in the list was taken on 13th November 2024.
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