While the SIP route is arguably the best way to invest in mutual funds, where would you invest if you received a considerable sum of money as a bonus, inheritance, or from selling other investments? If you wish to invest this windfall in a mutual fund scheme, lumpsum, or one-time investment is an option you could consider.
However, you should consider the market situation and select the scheme that best fits your risk profile if you choose the lumpsum investment method. If you get the process right, this can be a good opportunity to diversify your portfolio and optimize your returns. We have compiled a list of the best mutual funds for lumpsum investment. Take your pick.
What are the best mutual funds for lumpsum investment?
When it comes to investments, there is no one-size-fits-all solution as investments are personal and need to be tailored to meet one’s investment goals and risk appetite. Selecting the best mutual funds for lumpsum investment would depend on your investment goal, investment horizon, and risk appetite.
Diversification is an important factor when considering investment alternatives. To find out the best mutual funds for lumpsum investment, you can use the mutual fund portfolio overlap tool to find out the overlaps between two different schemes.
Choosing a scheme with less than 25% overlap is advisable as it will lead to meaningful diversification in your investments, benefiting you in the long run.
Mutual fund schemes are broadly divided into three categories—Equity, Debt, and Hybrid. These schemes serve varying investment purposes and are suitable for different categories of investors. Read on to understand each mutual fund category, with the best schemes listed for the categories based on their five-year CAGR. This will help you decide where to invest a lumpsum amount to optimize returns.
Best mutual funds for lumpsum investment
Selecting mutual funds for investment involves considering factors such as:
- Risk appetite
- Investment goal
- Investment horizon
- Desired portfolio structure
- Portfolio diversification
The best mutual fund schemes for lumpsum investment will vary from individual to individual based on factors mentioned above. We understand this and have listed some of the most popular as well as highest return-generating schemes from major mutual fund categories.
You can use the lumpsum calculator on Lemonn to estimate the value of your investment.
Equity Funds
Equity mutual fund schemes invest in shares of companies. These funds can be actively managed or can follow the passive management style. The actively managed funds will conduct research and select investments based on research. On the other hand, passively managed funds aim to replicate an index composition such as Nifty 50 or Sensex and aim to achieve the index return barring some tracking error.
Equity mutual funds are also categorized based on the market capitalization of the companies they invest in. They can be large-cap, mid-cap, small-cap, or micro-cap funds. Further, equity mutual fund schemes are also classified by themes/sectors in which they invest in.
We have listed the four most popular equity mutual fund schemes for lumpsum investment. You can head to the Lemonn app to invest a lumpsum amount in any of the following schemes.
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| Name | AUM | 5-year CAGR | Exp. Ratio |
| Quant Small Cap Fund Direct Growth | Rs. 24,530 Cr | 49.25% | 0.64% |
| Quant Flexi Cap Fund Direct Growth | Rs. 7436 Cr | 37.08% | 0.59% |
| UTI Nifty 50 Index Fund Direct Growth | Rs. 18,345 Cr | 18.04% | 0.18% |
| Quant Active Fund Direct Growth | Rs. 11,249 | 34.51% | 0.58% |
Overview of equity mutual fund schemes
1. Quant Small Cap Fund Direct Growth
This is an equity fund that invests in listed small-cap stocks. The fund is known for giving high returns, but also has high risk associated with it as it invests in volatile small-cap stocks. As an investor, you can make a lumpsum investment in Quant Small Cap Fund Direct Growth if you have a long investment horizon or have a high risk appetite. Alternatively, you can also split lumpsum investment and put a portion of your investment in this high-risk, high-return mutual fund.
2. Quant Flexi Cap Fund Direct Growth
The equity mutual fund has the flexibility to invest in large-, mid-, and small-cap companies. This allows the fund manager to invest in well-performing companies. Furthermore, it helps the fund diversify across market caps and sectors, rationalizing the risk factor. While a flexi cap fund in theory is relatively less risky than a small cap fund, it still poses considerable risk. The fund can beat inflation in the long-run and hence investing in this fund would be ideal for people with medium to long investment horizon with a high risk appetite.
3. UTI Nifty 50 Index Fund Direct Growth
The scheme, which mimics the Nifty 50 index, has the investment objective to replicate the returns generated by the index. The index funds are the least risky equity mutual funds and this makes UTI Nifty 50 Index Fund Direct Growth ideal for mid-to-low risk takers who want their investment to grow while taking calculated risks.
4. Quant Active Fund Direct Growth
This is a multi-cap equity fund that benchmarks the Nifty 500 index. The scheme aims to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio of large-cap, mid-cap, and small-cap companies. Lumpsum investment in this scheme is ideal for investors with medium to high-risk profile and long investment horizon.
Debt Funds
Debt mutual funds invest in debt securities or fixed-income securities such as corporate and government bonds, corporate debt securities, and money market instruments that give regular income at a fixed interest rate on your investment. These securities offer capital appreciation. Debt funds are also referred to as fixed income funds or bond funds.
Debt mutual funds are ideal for risk-averse investors who prefer regular income. Debt funds are less volatile and, hence, considered less riskier than equity funds. If you have been investing in traditional fixed-income products like bank deposits and looking for steady returns with low volatility, debt mutual funds could be a better option.
We have listed three stable debt funds with low expense ratios and reasonable returns over 5 years.
| Name | AUM | 5-year CAGR | Exp. Ratio |
| HDFC Corporate Bond Fund Direct Growth | Rs. 29,726 Cr. | 7.09% | 0.36% |
| DSP Gilt Fund Direct Growth | Rs. 1,016 Cr. | 7.58% | 0.54% |
| Nippon India Nivesh Lakshya Fund Direct Growth | Rs. 8,037 Cr. | 6.69% | 0.3% |
Overview of debt mutual fund schemes
1. HDFC Corporate Bond Fund Direct Growth
This is an open-ended debt mutual fund scheme that invests in corporate debt rated AA+ and above. The fund aims to build a diversified fixed income portfolio to generate returns for investors. The scheme is ideal for risk-averse investors looking for capital protection. Investors with a short-to-medium term investment horizon can consider this fund as it doesn’t put capital at risk.
2. DSP Gilt Fund Direct Growth
This funds invests 100% of its corpus in sovereign debt, or securities issued by the government of India. Debt backed by the GoI is considered to be a safe haven even during periods of economic turmoil as they carry little risk of default. This makes DSP Gilt Fund Direct Growth most suited for risk-averse investors such as retired individuals who prefer capital protection above capital appreciation.
3. Nippon India Nivesh Lakshya Fund Direct Growth
The long-duration debt fund invests in bonds maturing in more than seven years. The aim is to earn better returns than bank fixed deposits of a similar duration. This fund is also ideal for risk averse investors looking for capital protection, making it ideal for retired or near-retirement individuals looking to invest their retirement corpus in lumpsum.
Hybrid Funds
Hybrid funds blend stocks and fixed-income securities, providing a diversified investment. Catering to different risk preferences, these funds offer a balanced mix of growth potential and stability, managed by financial professionals for a well-rounded investment strategy.
The hybrid funds also blend in the risk profile of both debt and equity and thus are riskier than debt funds, but are less risky compared to equity mutual funds.
These funds are suitable for moderate risk-takers who are looking for growth but are averse to the degree of risk that equity mutual funds pose.
We have listed the best mutual fund for lumpsum investments. But these aren’t the only schemes available in the market. You can head to the Lemonn app to explore multiple hybrid mutual fund schemes and select the ones that suit your goals.
| Name | AUM | 5-year CAGR | Exp. Ratio |
| Quant Multi Asset Fund Direct Growth | Rs. 2,605 Cr. | 30.01% | 0.62% |
| HDFC Balanced Advantage Fund Direct Growth | Rs. 94,048 Cr | 22.31% | 0.73% |
| ICICI Prudential Equity & Debt Fund Direct Growth | Rs. 39,091 Cr | 24.21% | 1% |
Overview of hybrid mutual fund schemes
1. Quant Multi Asset Fund Direct Growth
This is a hybrid scheme investing in instruments across three asset classes: Equity, Debt, and Commodity. The scheme balances risk between equity and debt. This makes it ideal for medium risk appetite investors looking for capital appreciation.
2. HDFC Balanced Advantage Fund Direct Growth
This is an open-ended balance advantage fund investing in equity and debt instruments. The debt-equity mix at any point of time will be a function of interest rates, equity valuations, medium-to-long term outlook of the asset classes, and risk management. The asset mix balances the risk profile of the portfolio, reducing the risk compared to an equity fund. This makes HDFC Balanced Advantage Fund Direct Growth ideal for moderate risk takers.
3. ICICI Prudential Equity & Debt Fund Direct Growth
An open-ended hybrid scheme investing predominantly in equity and equity-related instruments. This makes it ideal for the moderate risk seeker looking for both capital preservation and appreciation with less risk compared to equity mutual funds.
We have listed the top 10 best mutual funds for lumpsum investment from all three mutual fund categories with different risk profiles and investment goals. You can head to the Lemonn app to know more about these funds and make an informed investment decision.
Things to consider while investing in lumpsum funds
The purpose of investment is growth. When investing a lumpsum amount in a mutual fund scheme, you need to consider the following factors.
1. Performance of the fund
Checking the performance of the mutual fund scheme and comparing it with the relevant benchmark will help you ascertain the growth the scheme has delivered in the past and how it fares vis-a-vis similar schemes.
While past performance does not guarantee future performance, it can provide valuable insights into how the fund has performed during different market conditions.
2. Expense Ratio
Mutual fund houses charge a fee for managing the funds and for other operational expenses. Investors should check the expense ratio of the fund as a higher expense ratio can eat up the returns in the long run.
3. Exit Load
Mutual fund houses charge a fee for redeeming your investment within a specific time. This is called exit load, which is typically calculated as a certain percentage of the redemption value. Hence, you should consider this while making an investment decision.
4. Timing the market
Lumpsum investments do not provide the averaging benefits of SIPs and thus timing the market becomes an important aspect of lumpsum investment. While buying at the lowest price is not always possible as you can’t predict market movements, investors would do well to keep tabs on market cycles and wait for a dip to make the lumpsum investment.
5. Investment goal and horizon
Investment goal plays an important role in deciding the investment scheme. If the investment goal is retirement, the investor can opt for risky funds such as small-cap mutual funds. Likewise, a mid-risk fund such as an index fund or a hybrid mutual fund would be suitable for a medium-term financial goal. It is advisable to play it safe and invest in schemes that focus on capital protection if the investment goal is short-term, say for a year or less.
An investor looking to invest in the best lumpsum mutual fund scheme should consider the above factors before selecting a scheme.
Conclusion
Lumpsum investments can help you grow your corpus, provided you know the market tactics and can time your investments to benefit from the dips. But before you invest a lumpsum amount in a mutual fund scheme, it is important to understand your financial goal, risk appetite, and time horizon. Ascertaining your goals will help you pick the best mutual fund scheme for investment.
