In the realm of lumpsum investment for 2024, finding the best mutual funds is crucial for amplifying your financial success. Our guide cuts through the complexity by bringing you a list of standout funds offered by reputable fund houses, ensuring you have access to the best mutual funds for lumpsum investment in 2024 under the purview of regulatory bodies like SEBI. Navigate through clear, analytical comparisons and strategic advice that speak directly to your investment potential and objectives.
Lump sum investments in mutual funds mean putting a large amount of money into a fund at once instead of spreading it out over several smaller payments. This type of investment is suitable for those who have a significant amount of money ready to invest and are looking for a way to grow this money over time. When you invest a lump sum, your money starts working for you all at once, potentially growing through the fund’s activities and the overall movements of the market.
For example, consider Priya, who got ₹10 lakh from a relative. After consulting with a stock broker like lakshmishree, she decides to invest the entire lump sum in a well-performing mutual fund that aligns with her goal of long-term capital growth. A mutual fund invests in a diversified portfolio to grow the lump sum investment over time, offering benefits like professional management and liquidity. Over the years, the market has had its ups and downs, but because Priya’s investment horizon is over 10 years, she stays invested. Over time, her initial investment grows significantly, showing the potential benefits of lump sum investing in mutual funds for those who can afford to wait out the market’s volatility.
As we enter 2024, let’s highlight the 10 best lumpsum mutual funds, considering 'fund performance' as a key criterion for selection. Each fund’s unique strategy and asset allocation promises to cater to different investor profiles and financial goals.
| 10 Best Mutual Funds(Lumpsum Investment) | 5Yr Return |
|---|---|
| 1. Invesco India Infrastructure Regular Fund | 251.4% |
| 2. Aditya Birla Sun Life PSU Equity Fund DG | 219.5% |
| 3. SBI PSU Direct Plan-Growth | 197.9% |
| 4. JM Flexicap Fund Direct Plan Growth | 192.3% |
| 5. Parag Parikh Flexi Cap Fund DG | 188.4% |
| 6. HDFC Flexi Cap Direct Plan-Growth | 145.7% |
| 7. HDFC Flexi Cap Direct Plan-Growth | 140.0% |
| 8. Canara Robeco Bluechip Equity Fund DG | 132.1% |
| 9. Nippon India Large Cap Fund DG | 129.5% |
| 10. Edelweiss Large Cap Fund DG | 124.1% |
Here is an overview of the 10 best lumpsum mutual funds and their Expense Ratio, NAV, and Returns.
Invesco India Infrastructure fund is one of the best mutual funds for lumpsum investment; targeted at capital growth, this fund invests primarily in stocks related to infrastructure. It is designed for investors looking to capitalize on the growth potential of India's infrastructure development.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 73.9 | 161.5 | 251.4 |
This mutual fund is designed to invest predominantly in Public Sector Undertakings (PSUs) across India. The fund seeks to capitalize on these entities' stability and growth potential by focusing on government-backed companies.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 48.9 | 94.3 | 219.5 |
The SBI PSU Fund Direct Plan-Growth is the best SBI mutual fund for lumpsum investment; this mutual fund primarily invests in public sector undertakings (PSUs) across India. It focuses on companies that the government either partially or fully owns. Here are some key features of this fund:
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 92.0 | 198.7 | 197.2 |
Aiming to provide capital appreciation, this fund invests in a dynamically balanced portfolio across large, mid, and small-cap stocks. It's suitable for investors looking for diversified exposure within the equity market.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 61.9 | 120.5 | 192.3 |
This Flexi cap fund invests across market capitalizations and sectors, including a portion in international stocks. It is known for its value investing approach and aims for high-risk-adjusted returns.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 38.3 | 83.4 | 188.4 |
This diversified fund invests across various market caps and sectors, aiming to offer flexibility and capital appreciation. It adjusts its portfolio based on market conditions and growth prospects.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 43.5 | 112.7 | 145.7 |
It is one of the best mutual funds for lumpsum investment; aiming to generate long-term capital growth, this fund primarily invests in large-cap stocks across various sectors. It's known for a robust portfolio that targets leading companies with a stable performance record.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 44.7 | 91.9 | 140.0 |
This fund focuses on equity and equity-related securities of large-cap companies. With a strategy to invest in quality blue chip stocks, it seeks to offer investors sustainable returns over the long run.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 32.5 | 63.01 | 132.01 |
Aiming to generate long-term capital growth, this fund primarily invests in large-cap stocks across various sectors. It's known for a robust portfolio that targets leading companies with a stable performance record.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 44.53 | 105.3 | 129.5 |
Managed by Edelweiss, this fund invests predominantly in large-cap stocks aiming for capital appreciation. It targets stable and well-established companies, making it suitable for risk-averse equity investors.
Returns:
| 1Y Return (%) | 3Y Return (%) | 5Y Return (%) |
| 35.1 | 73.1 | 124.1 |
Focusing on the top tier, the Top 5 mutual funds for lumpsum investment in 2024 offer a blend of dynamism and stability with 1 yr Highest Growth.
The top investment options for 2024 are:
| Top 5 Mutual Funds (lumpsum investment) 2024 | 1Yr Return |
|---|---|
| 1. SBI PSU Direct Plan-Growth | 92.0% |
| 2. Invesco India Infrastructure Regular Fund | 73.9% |
| 3. Aditya Birla Sun Life PSU Equity Fund Direct-Growth | 61.9% |
| 4. Franklin India Flexi Cap Fund Direct-Growth | 48.9% |
| 5. HDFC Flexi Cap Direct Plan-Growth | 44.7% |
Suresh, a 50-year-old marketing consultant, invested ₹20 lakh in a high-growth mutual fund with an aggressive growth strategy, targeting an annual return of 15%. He planned to start his consulting firm in 10 years using the proceeds from this investment.
To calculate the future value of Suresh’s investment at a 15% annual return over 10 years, we use the formula for compound interest:
For Suresh, the calculation would be:
Future Value= ₹20,00,000×(1+0.15)10
Breaking down the calculation:
This calculation shows that Suresh’s initial investment of ₹20 lakh could grow to about ₹80.91 lakh in 10 years with a 15% annual return, approximately 4 times the original amount. The growth factor of approximately 4.04575 confirms that a 15% annual return effectively quadruples the investment in a decade due to the power of compounding. This clarifies how such returns over a decade can substantially increase the initial capital.
| Feature | Lump Sum Investment | SIP (Systematic Investment Plan) |
|---|---|---|
| Definition | A one-time investment of a large sum of money. | Lower initial capital is suitable for investors who prefer or need to invest gradually. |
| Investment Timing | Requires significant capital upfront and carefully selecting the best mutual funds for lumpsum investment. | It allows for the spread of investment over time, reducing the financial burden in one go. |
| Market Timing | More sensitive to market timing; risks and rewards can be higher depending on the market entry point. | Reduces the risk of poor timing through dollar-cost averaging, potentially lowering the impact of market volatility. |
| Capital Requirement | Investors with a lump sum available and a higher risk tolerance are looking for direct exposure to market timing. | Investors who wish to build their investment gradually are suitable for regular income earners. |
| Risk | Higher market risk exposure at a single point in time. | Potentially lower risk due to spreading out the investment entry points. |
| Returns | A high initial capital is required. | Returns are averaged over time; individual investments may have varying rates of return. |
| Ideal For | Each instalment has its compounding period; earlier instalments have more time to grow, benefiting from compounding. | Each installment has its compounding period; earlier installments have more time to grow, benefiting from compounding. |
| Compounding Effect | Compounding starts immediately on the full amount, which can lead to significant growth over long periods. | Each instalment has its compounding period; earlier instalments have more time to grow, benefiting from compounding. |
Choosing between a lump sum investment and a Systematic Investment Plan (SIP) largely depends on your financial circumstances, investment goals, and risk tolerance. Here’s a breakdown to help you decide which might be better suited to your needs:
Lump Sum Investment:
Systematic Investment Plan (SIP):
Eager to get started? Investing your lump sum in the top mutual funds is straightforward. Here’s how:
1. Lump sum investments in mutual funds involve investing a significant capital amount all at once, offering immediate market exposure and leveraging compounding for wealth accumulation.
2. The top 10 mutual funds for lump sum investments in 2024 cater to various investor profiles with strategies ranging from aggressive growth in niche segments to balanced income generation across small-cap equities and medium-term debt securities.
3. Investors should evaluate mutual fund categories based on their financial goals and risk appetite, consider key performance metrics, and understand tax implications to make informed lump-sum investment decisions.
When deciding where to invest your lump sum, it’s worth noting that mutual funds provide a range of categories, each with its unique characteristics and investment objectives. From growth-oriented equity funds to steadier debt funds and middle-ground hybrid funds, your choice should be guided by your financial goals, risk appetite, and investment horizon.
Exchange-traded funds (ETFs) also emerge as a viable option, offering liquidity and exposure to a diversified portfolio on stock exchanges, aligning well with lump sum investments in India.
Equity mutual funds are a type of investment where your money is put into stocks of various companies. The main goal of these funds is to grow your money over time as the value of these stocks increases.
Equity mutual funds are the king of the investment world, channelling funds into company shares and boasting the potential for substantial growth. These funds are particularly attractive for those with a high-risk tolerance and an eye for higher returns. They are suitable for investors who can stomach potential volatility in pursuit of good returns.
With benefits like tax-exempt capital gains up to a certain limit, they can be a lucrative option for lump sum investors.
Debt funds are mutual funds that invest primarily in fixed-income securities such as bonds, corporate debentures, government securities, and money market instruments. These funds are popular among investors looking for a stable income with a relatively lower risk level than equity funds.
Hybrid funds combine both stocks and bonds in their investment portfolio. This mix allows them to offer a balance of growth through stocks and income through bonds
Hybrid funds offer the following benefits:
Whether through dynamic asset allocation or multi-asset funds, hybrid funds aim to provide a moderated approach to capital growth, combining the best attributes of both worlds. Their tax treatment follows the lead of their equity exposure, adding another layer for investors to consider.
Strategic planning is crucial for balancing potential returns with risks when considering a lump sum investment. Here are streamlined strategic considerations for investors thinking about lump sum investments:
1. Timing the Market: Assess current economic conditions and market trends to choose an optimal entry point. Avoid investing all at once during volatile periods.
2. Asset Allocation: Diversify your investments across different asset classes to mitigate risk and potentially enhance returns. Regularly rebalance your portfolio to adapt to changing market conditions.
3. Risk Assessment: Align your investment with your risk tolerance and investment horizon. Longer investment periods can usually absorb more volatility.
4. Research and Due Diligence: If choosing mutual funds or ETFs, examine their performance, fees, and management quality. For stocks, evaluate the financial health and market position of companies.
5. Tax Considerations: Understand the tax implications of your investments and consider using tax-advantaged accounts to optimize returns.
6. Professional Advice: For significant investments, seeking advice from a financial advisor can tailor a strategy to your personal goals and financial situation.
7. Emergency Fund: Ensure you maintain an adequate emergency fund that covers 3-6 months of expenses, accessible without financial penalty.
When investing in mutual funds through a lump sum investment, it's important to consider the taxes and expenses involved, as they can significantly affect the returns on your investment. Here’s a brief overview:
1. Expense Ratio: This is a fee that mutual funds charge annually for managing your money. It includes administrative costs, management fees, and other operational expenses. The Expense ratio is expressed as a percentage of the fund's average assets under management (AUM) and is deducted from the fund’s assets, thus affecting overall returns. For those investing a lump sum in the best mutual funds, a higher expense ratio can eat into the profits, especially if the fund does not outperform significantly.
2. Exit Load: Some mutual funds charge an exit load—a fee for withdrawing your investment within a certain period, typically within one year from the date of investment. This fee, a percentage of the amount being withdrawn, is meant to discourage short-term withdrawals and can impact the overall profitability of lump sum investments.
3. Capital Gains Tax: The profits you earn from your mutual fund investments are subject to capital gains tax, which varies depending on the duration of the investment. For equity funds, if you sell your investment after more than one year, you will be subject to a long-term capital gains tax (LTCG) of 10% on gains exceeding ₹1 lakh annually without the benefit of indexation. If sold within a year, the gains are considered short-term and are taxed at 15%. For debt funds, the LTCG tax is 20% with indexation if the investment is held for more than three years; otherwise, short-term gains are added to your income and taxed according to your income tax slab.
4. Securities Transaction Tax (STT): STT is levied on every purchase or sale of equity-oriented mutual funds in India. The current rate is 0.001% on the sell-side for equity mutual funds.
Savvy investors can leverage tax-saving strategies to enhance the efficiency of their lump-sum investments in mutual funds. One prime option is the equity-linked saving scheme (ELSS), offering tax deductions under Section 80C. By wisely investing in ELSS, one can reduce the taxable income by up to ₹1,50,000 annually. However, it’s important to note that the lock-in period and tax on long-term capital gains exceeding ₹1,00,000 per year must be considered.
Each investment portion in ELSS through SIPs or lump sums carries its tax implications, emphasizing the need for strategic investment planning.
Embarking on a lump-sum investment journey in mutual funds demands a blend of strategic planning, market understanding, and an eye for detail. From recognizing top-performing funds to navigating tax implications and managing expenses, a well-informed investor is better equipped to capitalize on the opportunities that 2024 offers. As illustrated through success stories and guided by preparatory steps, committing your money is not just about the investment itself but the comprehensive approach that envelopes it. Carry forward the insights from this guide to chart your course towards financial growth and stability.
With careful consideration of the factors discussed in this article about the Best Mutual Funds for Lumpsum Investment, investors can harness the potential of mutual funds to achieve their financial goals and navigate the ever-changing landscape of the investment market.
1. Invesco India Infrastructure Regular Fund
2. Aditya Birla Sun Life PSU Equity Fund Direct-Growth
3. Franklin India Flexi Cap Fund Direct-Growth
4. HDFC Flexi Cap Direct Plan-Growth
5. HDFC Flexi Cap Direct Plan-Growth
1. Invesco India Infrastructure Regular Fund
2. Aditya Birla Sun Life PSU Equity Fund DG
3. JM Flexicap Fund Direct Plan-Growth
4. Parag Parikh Flexi Cap Fund DG
5. HDFC Flexi Cap Direct Plan-Growth
A lump sum investment in mutual funds means investing significant money into a fund at once rather than making regular interval investments through SIP. Often used with the best mutual funds for lumpsum investment, this strategy allows for potential capital appreciation and eliminates the need for regular investment decisions.
Investing in an Equity Linked Savings Scheme (ELSS) can help you save on taxes by allowing deductions under Section 80C of the Income Tax Act. This means you can deduct investments up to ₹1,50,000 per year in ELSS from your taxable income, potentially reducing your tax liability.
Yes, the tax implications for lump sum and SIP investments in mutual funds are generally similar. Still, the holding period of the investments can affect the calculation of capital gains and applicable taxes.
When selecting a mutual fund for a lump sum investment, consider its performance history, expense ratio, fund manager track record, asset allocation, and risk profile to ensure it aligns with your investment goals and risk tolerance. This is particularly important when choosing the best mutual funds for lumpsum investment.
Yes, diversifying your lump sum investment across different mutual fund categories, such as equity, debt, and hybrid funds, can help balance risk and optimize potential returns based on your financial goals and risk appetite. This approach is often recommended when investing a lump sum in the best mutual funds.
