13 Sep 2024 , 02:55 PM
Investing a lump sum amount in mutual funds can be a strategic way to grow your wealth, given the potential benefits of diversification and professional management. If you’re considering this route, understanding the nuances of lump-sum investments in mutual funds is crucial. On that note, let’s explore the best mutual funds for lumpsum investment, their benefits, returns, and factors to consider for making informed investment decisions.
Investing a lump sum amount in mutual funds involves a straightforward process, but it’s essential to follow a systematic approach:
Clearly define your financial objectives, such as retirement planning, education, or wealth accumulation. This will help in selecting the appropriate mutual fund.
Understand your risk appetite, as it will guide you in choosing between equity, debt, or hybrid mutual funds.
Research and choose a mutual fund that aligns with your investment goals and risk profile. You can use online platforms or consult a financial advisor.
Ensure you have completed the Know Your Customer (KYC) process, which is mandatory for investing in mutual funds in India.
Invest your lumpsum amount either through the fund house’s website or through a mutual fund distributor.
Regularly track the performance of your mutual fund investments and make adjustments as necessary to stay aligned with your financial goals.
The following is a list of the best mutual fund for lumpsum investment, arranged from highest to lowest, based on their 5-year CAGR:
| Fund Name | Fund Category | 3Y CAGR | 3Y Avg Annual Rolling Returns | 5Y CAGR |
| Quant Small Cap Fund | Small Cap Fund | 35.61 | 52.38 | 43.52 |
| Quant Infrastructure Fund | Sectoral Fund – Infrastructure | 37.70 | 48.37 | 38.45 |
| Quant Mid Cap Fund | Mid Cap Fund | 35.79 | 40.91 | 37.16 |
| Bank of India Small Cap Fund | Small Cap Fund | 28.61 | 38.76 | 35.67 |
| Quant ELSS Tax Saver Fund | Equity Linked Savings Scheme (ELSS) | 28.47 | 38.44 | 35.30 |
| Nippon India Small Cap Fund | Small Cap Fund | 34.13 | 44.09 | 34.23 |
| Quant Flexi Cap Fund | Flexi Cap Fund | 29.17 | 37.66 | 33.84 |
| Canara Rob Small Cap Fund | Small Cap Fund | 29.08 | 39.38 | 32.64 |
| Quant Active Fund | Multi Cap Fund | 26.25 | 34.62 | 32.26 |
| Invesco India Infrastructure Fund | Sectoral Fund – Infrastructure | 37.37 | 37.42 | 32.24 |
Choosing the best lumpsum mutual funds for investment depends on several factors, including your financial goals, risk tolerance, and investment horizon. As of 2024, some of the top contenders include:
Known for its diverse range of funds, ICICI Prudential offers several options suitable for lumpsum investments. Their equity funds, in particular, are popular for their potential high returns.
The growth option of the Bank of India Small Cap Fund has a net asset value (NAV) of Rs 44.57. The trailing returns of the fund have been 30.69% since debut, 25.73% over 3 years, 32.26% over 5 years, and 46.84% over 1 year. The fund has an expense ratio of 0.62% and manages assets valued at Rs. 6,920.17 cr.
If units exceeding 10% of the investment are redeemed within a year, there is a 1% exit load. A minimum SIP investment of Rs 1,000 and a minimum lumpsum investment of Rs 5,000 are needed. Such sustainability is why this company is among the best lumpsum mutual fund 2024.
Aditya Birla offers a variety of mutual funds, including equity and hybrid funds, which can be ideal for lumpsum investments. Their funds are well-regarded for their robust performance and management.
These mutual funds are recognized for their strong track records, professional management, and potential to deliver significant returns.
A Multi-Cap mutual fund, Quant Mutual Fund offers Quant Active Fund. It’s a medium-sized fund with ₹9,790.64 crores in assets under management (AUM). The fund’s 0.62% expense ratio is comparable to other Multi-Cap funds. It has produced returns of 55.35% in the last year and has averaged 22.58% yearly returns since its start. The fund has produced returns that are twice as high every two years.
The net asset value (NAV) of the Canara Robeco Small Cap Fund is Rs 38.16. The fund has performed as follows over different periods: it has returned 39.64% over a year, 25.92% over three, 29.23% over five, and 27.78% since its launch.
The fund has an expense ratio of 0.42% and manages assets valued at Rs 10,429.89 cr. A one-year redemption window has an exit load of one percent. SIPs require a minimum investment of Rs 1,000, whereas the minimum investment is Rs 5,000.
The net asset value (NAV) of the Growth option of the Regular plan of Invesco India Infrastructure Fund is Rs 67.04. Since its introduction, it has demonstrated trailing returns of 12.16%, 36.41%, 30.97%, and 82.47% over the last year.
The fund has an expense ratio of 0.79% and manages assets valued at Rs 1,063.01 cr. Units exceeding 10% of the investment have an exit load of 1% if redeemed within a year. The minimum amounts required are a lump sum investment of Rs 1,000 and a SIP investment of Rs 500.
Investing in the best lump sum mutual fund in 2024 offers several advantages:
Mutual funds pool money from multiple investors to invest in a diversified portfolio of assets, reducing the risk compared to investing in individual stocks.
Funds are managed by experienced professionals who make informed decisions based on market research and analysis.
Investing in mutual funds is straightforward and less time-consuming compared to managing individual investments.
Particularly with equity mutual funds, there’s a potential for high returns, especially if invested in growth-oriented funds.
Mutual funds offer various schemes tailored to different investment needs, allowing you to choose according to your risk appetite and investment goals.
Returns on mutual funds are typically calculated based on the net asset value (NAV) of the fund. The performance is measured through several metrics:
The total percentage increase in the value of the investment over a specific period.
The compounded annual growth rate (CAGR), which provides a more accurate picture of the fund’s performance over time.
Returns are often compared with relevant benchmarks to evaluate how well the fund has performed relative to its peers.
For instance, the performance of ICICI Prudential Equity Fund and Aditya Birla Sun Life Equity Fund can be compared with major indices like Nifty 50 or Sensex to gauge their relative performance.
Selecting the best fund for lumpsum investments involves evaluating various factors:
Choose between equity, debt, hybrid, or other types of mutual funds based on your risk tolerance and investment goals.
Analyze the past performance of the fund, but remember that past performance is not always indicative of future results.
Lower expense ratios can lead to better net returns. Compare the expense ratios of different funds to make an informed decision.
A skilled and experienced fund manager can significantly impact the fund’s performance. Research the fund manager’s history and expertise.
Opt for funds from reputed fund houses with a strong track record, such as ICICI Prudential and Aditya Birla.
Lumpsum investments in mutual funds can be suitable for various types of investors:
Those with a long-term investment horizon who can withstand market fluctuations may benefit from lumpsum investments in equity mutual funds.
Individuals who have a significant amount of surplus funds and want to invest it for potential high returns can consider lumpsum investments.
Investors with experience in managing their portfolios and understanding market dynamics may prefer lumpsum investments for better returns.
Investing in the best lumpsum mutual funds 2024
involves certain risks:
Equity mutual funds are subject to market volatility, which can impact returns.
Debt mutual funds are affected by changes in interest rates, which can influence their performance.
In debt funds, there is a risk of default by the underlying securities.
Some funds may have exit loads or liquidity constraints, affecting the ease of withdrawing investments.
The Union Budget 2024-25 introduced several changes to the taxation of mutual funds:
Gains exceeding ₹1lakh in a financial year are taxed at 10% without indexation benefits.
Gains on investments held for less than one year are taxed at 15%.
Equity mutual funds are eligible for tax benefits under Section 80C if they are part of Equity-Linked Savings Schemes (ELSS).
Before making a lump-sum investment, consider the following factors:
Align your mutual fund choice with your financial objectives and investment horizon.
Ensure that the mutual fund’s risk profile matches your risk tolerance.
Evaluate the fund’s historical performance and compare it with its benchmark.
Understand the fees, including management fees and exit loads, which can affect your returns.
Consider the current market conditions and economic outlook when investing.
To Wrap It Up…
Investing a lump sum amount in mutual funds can be a smart way to grow your wealth, especially if you choose the best mutual fund for lumpsum investment. Funds like ICICI Prudential Mutual Funds and Aditya Birla Mutual Funds offer a range of options that can suit different investment needs and goals. By understanding the benefits, risks, and factors involved, you can make informed decisions and maximize your investment potential.
Investment in the best lumpsum mutual fund 2024 is a powerful strategy for those with a large capital base. It offers the opportunity for enhanced returns, professional management, and diversification. However, investors must carefully assess their financial goals, risk tolerance, and market conditions before choosing the correct fund. Whether you’re a seasoned investor or someone with sudden wealth, lumpsum investments can provide long-term benefits when done thoughtfully.
Frequently Asked Questions (FAQs) on the Best Mutual Fund for Lumpsum Investment
Some of the best mutual funds for lumpsum investment in 2024 include ICICI Prudential Mutual Funds and Aditya Birla Mutual Funds, known for their strong performance and diverse offerings.
– Evaluate the fund’s performance, expense ratio, manager’s track record, and how well it aligns with your investment goals and risk tolerance.
Risks include market risk, interest rate risk, credit risk, and liquidity risk.
Yes, long-term capital gains exceeding ₹1 lakh are taxed at 10%, while short-term gains are taxed at 15%. ELSS investments offer tax benefits under Section 80C.
Regularly review the fund’s performance, stay informed about market conditions, and adjust your portfolio as needed to stay aligned with your financial goals.
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