Best Mutual Fund for Lumpsum Investment in 2024

  • 12 May 2024
  • Read 21 mins read

A lump sum investment is a smart way to invest a large quantity of money in a mutual fund all at once, whether it's a windfall, bonus, or financial gain. Because of market swings, timing is critical, and some mutual funds are ideal for this strategy. Choosing the correct mutual fund for a lump sum investment is critical for portfolio diversification and maximising long-term gains. This article will explore the best mutual fund for lumpsum investment in India, as well as crucial variables to consider while making your decision.

What is the Best Mutual Fund for Lumpsum Investment?

Investing a lump sum in mutual funds involves a significant investment in a single transaction, unlike systematic investment plans (SIPs). This strategy allows investors to enter the market with a significant investment, potentially capitalising on market trends and fund performance. It is suitable for those with substantial savings, significant inheritances, bonuses, or specific financial goals, offering opportunities for wealth growth, capital appreciation, and portfolio diversification. Mutual funds offer diverse options like equity, debt, and balanced funds with distinct risk-reward profiles, objectives, and asset allocation strategies. Aligning investment goals, risk tolerance, and time horizon with a fund's characteristics is crucial when selecting the best mutual funds for lump sum investments.

 

List of Best Mutual Funds for Lumpsum Investment in India 2024

This is an informative list of the top mutual funds expected to be available in India in 2024. If you're looking for the best MF for lumpsum investment in 2024, you may want to look at our list:

Fund Name

Fund Category

5Y Returns

Quant Small Cap Fund

Equity

29.69%

Quant Infrastructure Fund

Equity

28.38%

Quant Tax Plan

Equity

27.57%

Axis Small Cap Fund

Equity

27.22%

Aditya Birla Sun Life Medium Term

Debt

8.91%

Nippon India Nivesh Lakshya Fund

Debt

8.75%

SBI Magnum Gilt Fund

Debt

8.62%

Quant Multi Asset Fund

Hybrid

22.39%

Quant Absolute Fund

Hybrid

21.84%

Bank of India Mid & Small Cap Equity & Debt Fund

Hybrid

19.15%

Disclaimer—The market capitalisation mentioned above is accurate as of the date 18, April 2024. However, it is important to conduct research before making any investment decisions in these stocks.

Top 10 Mutual Funds for Lumpsum Investment: An Overview

Here is an overview of top 10 mutual funds for lumpsum investment:  

Quant Small Cap Fund

Quant Mutual Fund was introduced on January 1, 2013. The equity-focused Quant Small Cap Fund has an AUM of Rs 9,089 crore. It has earned a remarkable 29.69% return over the last five years. The fund invests in various small-cap firms with the primary goal of achieving long-term and capital growth. The exit load is 1%, which applies if the fund is retrieved within a year. 

Quantitative Infrastructure Fund

The Quant Infrastructure Fund is offered by Quant Mutual Fund and was started on January 1, 2013, with an AUM of Rs 980 crore. This equity scheme has achieved a return of 28.38% over the last five years and spreads its investments across infrastructure businesses, trying to increase capital and long-term growth. It has become one of the top mutual funds for lump-sum investments. If returned within ninety days, there is a 0.5% exit load. 

Quantitative Tax Scheme

Quant Mutual Fund has introduced the Quant Tax Plan, an equity-linked savings scheme (ELSS) with an AUM of Rs 4,925 Crore that started on April 1, 2000. It has received a 27.57% return in the last five years. The fund is focused on capital appreciation and makes strategic investments in a wide range of high-growth equity shares. It's also one of our list's top mutual funds for lump sum investments because of its 3-year lock-in period, which restricts early redemption and removes any exit load!

The Axis Small Cap Fund

Axis Mutual Fund launched the Axis Small Cap Fund on November 29, 2013. It has made a 27.22% return over the last five years, with an AUM of Rs 16,175 crore. This fund aims to promote long-term capital growth and makes strategic investments in a varied portfolio mostly made up of stocks and securities related to stocks of small-cap firms. A 1% exit load applies if the reward is redeemed within a year. On our list, nonetheless, it's also among the greatest mutual funds for lump-sum investments for a year!

Aditya Birla Sun Life Medium Term

Aditya Birla Sun Life Mutual Fund introduced a debt program called Aditya Birla Sun Life Medium Term on March 25, 2009. It has an 8.91% return with an AUM of Rs. 1,897 crore. The fund mainly invests in a portfolio of medium-term debt instruments for building capital and producing a steady income. For units regained within 365 days and above 15%, there is an exit load of 2%. Moreover, 1% is given for redemptions in 366–730 days. 

Nippon India Nivesh Lakshya Fund

The Nippon India Nivesh Lakshya Fund began as a debt mutual fund on July 6, 2018, managed by Nippon India Mutual Fund, with an AUM of Rs 6,361 crore. This plan mainly invests in debt and money market instruments to generate steady income and capital growth. Units redeemed within 365 days and beyond the 15% level are subject to an exit load of 1%.

SBI Magnum Gilt Fund

SBI Magnum Gilt Fund is a debt scheme with an AUM of Rs 7,268 crore introduced by SBI Mutual Fund on December 30, 2000. It has made an 8.62% return over the last five years. The fund's main objective is to provide investors with steady income and long-term capital growth by allowing them to purchase debt securities issued by the federal or state governments. 

Quantum Multi-Asset Fund

The Quant Multi Asset Fund is a member of the Quant mutual fund, launched on March 21, 2001, and currently manages an AUM of Rs 1,020. It produced a 22.39% return in the last five years. The fund focuses on both income and capital growth and makes investments in government securities issued by the federal, state, or local governments. If redeemed within 15 days, a 1% exit load applies.

Quantitative Absolute Fund

Quant Absolute Fund is an aggressive hybrid offering from Quant Mutual Fund launched on January 1, 2013, and manages Rs 1,378 Crore. It has earned a good 21.84% return over the last five years. The fund aims to create income and capital appreciation through equities and equity-related investments with a balanced allocation to debt securities and money market instruments. If redeemed within 15 days, there is a 1% exit load. 

Bank of India Mid & Small Cap Equity & Debt Fund

Bank of India Mutual Fund offers a hybrid mid- and small cap equity & debt fund, a good investing choice introduced on July 20, 2016. Over the last five years, the fund, which has an amazing Rs. 492 crore in assets under management, has made an average return of 19.15%. This special fund makes strategic investments in fixed-income instruments, equity-related securities, and mid and small-cap stocks to give investors income and capital appreciation. Remember that redemptions within the first three months are subject to a 1% exit load. 

How Does the Best Mutual Fund for Lumpsum Investments Work?

Making informed judgments when investigating a lump sum investment requires having a solid understanding of how the mutual funds work. These funds use a calculated strategy for making significant, one-time investments. Lump sum investments require a substantial upfront commitment compared to systematic investment plans (SIPs).

To achieve fruitful results, the best mutual funds in this category properly distribute money over a diverse portfolio. They frequently concentrate on various stocks, financial instruments, and other assets to balance risk and reward. These funds are known for their diligent market research, expert fund management, and proactive responses to market developments, all of which help them adjust to the always-changing investment environment. 

Lumpsum investment in mutual funds might provide investors with quicker capital appreciation and potentially larger returns.

Who Should Invest in the Best Mutual Fund for Lumpsum Investments?

The best lumpsum mutual fund investments are made for particular types of investors. These funds might be the suitable option for you if any of the following apply to you:

Recipients of Sudden Wealth: Those who have gotten a windfall- a bonus, an inheritance, or the sale of real estate can take advantage of lump sum investments' quick growth potential.

Experienced Investors: Lump sum funds offer a chance to profit from your knowledge if you have a good sense of market trends and a flair for making calculated investment choices.

Risk-Tolerant People: Since lump sum investments in mutual funds aren't spread out over time, they require a higher risk tolerance. These funds can be appropriate for investors who are accustomed to market volatility.

Long-Term Investors: Although one makes lump sum investments that can earn quick profits, they are suited for people with long-term financial goals as they help them withstand short-term market swings.

Factors to Consider Before Investing in the Best Mutual Fund for Lumpsum Investments

There are several factors to consider when investing with lump sums because they can have a big impact on how well your selected mutual fund performs. Here's a summary of important factors to think about: 

Optimal Market Entry:

The best moment to invest a large sum of money in mutual funds is when the market is at its lowest point but showing indications of future growth. By taking advantage of possible upswings, this calculated action maximises returns for investors

Caution in Booming Markets: 

Caution is necessary when the market is doing well. Bringing a lump sum during the market's peak performance could result in less-than-ideal returns or losses. Be cautious and assess the market's state before making big investment judgments.

Long-Term Dedication:

Mutual fund investments do well when considered as a long-term mutual fund for lump sum investment. The rewards can be more if you can commit your lump payment for a long time, ideally five years or longer.  

Rewards Over a Decade:

Consider keeping your investment for ten years or more to maximise your returns. Over a long period, the strength of mutual funds and the compounding effect can earn great returns.

Risks Involved While Investing in the Mutual Fund for Lumpsum Investments

Here are the following risks involved:

Market Volatility:

Due to the unpredictability of market changes, even the highest-performing funds are vulnerable to temporary losses. A sudden decline may impact the fund's value. 

Economic Factors:

Unexpected shifts in the global or local economy might have a big impact on the fund's performance. Returns might be affected by external factors like changes in interest rates or developments in geopolitics.

Unexpected Events:

Unexpected events such as natural disasters or international crises may immediately negatively affect the fund's value. Although fund management has little control over these events, they may affect investment returns.
 

Changes in Management:

Changes in fund management, whether brought about by resignations, retirements, or other choices, can cause unpredictability. A shift in the fund's management could change its investment approach and affect its performance.

Benefits of Investing in the Best Mutual Fund for Lumpsum Investments

Investigating lump sum investments with mutual funds has a lot of benefits that are as follows: 

Enhanced Returns:

Investing in the best mutual funds maximises the efficiency of your lump sum investment by ensuring a systematic strategy to enhance returns potentially. 

Diversification:

The best mutual funds reduce risk and promote possible long-term growth by distributing investments across various industries to avoid excessive dependence on a single asset class.

Expert Fund Management:

Skilled fund managers affiliated with top mutual funds contribute their knowledge. As a result, you need to assess market conditions regularly to make wise investing selections

Metrics for Transparent Performance:

Track your investment's performance with frequent updates and thorough reports, which promote transparency and offer insights into the course of your lump sum investment.

Adaptability and Liquidity:

The flexibility and liquidity provided by the best mutual funds make it simple to access your money. As a result, you will be able to handle shifting financial obligations with flexibility.

How to Choose the Best Mutual Fund for Lumpsum Investments for Investing?

Choosing the appropriate mutual fund is essential when making lump sum investments to maximise rewards and minimise risks. To make sure you choose the ideal mutual fund for your lump sum investment, take the following crucial actions: 

Identify Your Financial Objectives:

Start by stating your financial goals clearly. Knowing your objectives will help you choose the right mutual fund, whether wealth development, long-term growth, or short-term gains. 

Evaluate Risk Tolerance: 

Recognise your level of risk tolerance. Diverse mutual funds have differing degrees of risk. Determine how comfortable you are with market swings and select a fund based on your level of risk tolerance.

Research Fund Performance:

Test prospective mutual funds' past results. Look for steady profits in a variety of market circumstances. A history of consistent growth is a good sign. 

Diversification:

Choose mutual funds that provide diversification among different asset classes and industry sectors. This increases the potential for profits and helps distribute risk.

Fund Manager Expertise:

Consider the fund manager's qualifications and background. A seasoned manager with a proven track record of success will probably make better-educated investment choices. 

Expenditure Ratio Consideration:

Pay close attention to the expenditure ratio since reducing fees might have a big effect on your total returns. Select funds with manageable costs to get the most out of your investment.

Inspect for Outflow Charges:

Recognise any outflow charges connected to the mutual fund. Certain funds impose fees on unit redemptions made within a given period. 

What are the Returns on Mutual Funds for Lumpsum Investments, & How are they Calculated?

An important consideration when assessing the performance of the top mutual funds for lump sum investing is return calculation. Investors can make wise selections by having a thorough understanding of this process. The change in Net Asset Value (NAV) during a certain period calculates the returns on these funds.

This is a brief explanation of the computation: 

Initial NAV: The lump sum investment is made at the going rate of return. This is where the return computations begin. 

Final NAV: The NAV is reevaluated after the investment period ends. The initial and final net asset value difference reflects capital appreciation or depreciation. 

Distributions and Dividends:  A few funds might provide distributions or dividends. These have to be included in the overall returns.

Time Factor: Returns are converted to a standard measure via annualisation, which makes it easier to compare how mutual funds perform against various investments.

Taxability on the Best Mutual Fund for Lumpsum Investments

Knowing the taxes is essential while getting into lump sum investments. The top mutual funds for lump sum investing have different tax structures and possible profits. To make wise financial decisions, one must be aware of these tax structures.

Capital Gains Tax

Capital gains tax applies to any gains earned on your lump sum investment. There are two categories for this tax: short-term and long-term, with separate rates for each. Long-term capital gains refer to preferential tax treatment, but short-term capital gains are taxed at the ordinary income tax rate.

Dividend Distribution Tax (DDT)

The dividend distribution tax applies to mutual funds that pay dividends. It's crucial to remember that the mutual fund itself pays this tax before dividend distribution. Normally, investors get their dividends after DDT is deducted.

Conclusion
If you understand market strategies, a lump sum investment in mutual funds can help you generate more significant profits. However, it is imperative that you have a clear understanding of your financial objectives, risk tolerance, and time horizon before making a lump sum investment and that you choose the option that best meets your needs. Choose a reliable stock market app for a smooth interface and easy understanding.

Because mutual funds are prone to market swings, the value of your investment will rise and fall. For this reason, it's critical to have patience and a long-term commitment to your financial objectives. 

FAQs on Mutual Funds for Lumpsum Investment

Before making a lump sum investment in an equity fund, ask yourself if you are prepared for the 5-7-year investing period.

Generally speaking, the top mutual funds for lump sum investments make a variety of stock, bond, and other security investments.

The best mutual fund for lump sum investing has different returns, which depend on the market's state. It can range from 5Y returns of 8-29%, as per the list.

When you have a sizable sum to invest such as money from selling your property, post-retirement assets, etc. you might purchase a lump sum.

SIPs usually have a consecutive three-year lock-in, whereas lump sum deposits allow for complete withdrawals following the three years.