Lumpsum investment is a method of investment in mutual funds wherein you invest a big chunk of money in one go. If you have a large corpus of cash, received a bonus, or made any cash gains, you can use the lump sum method. But you need to be mindful of the market timings while doing lumpsum investments. However, there are certain mutual funds that can be used for lumpsum investments.
By carefully selecting the right mutual fund for lumpsum investment, you can diversify your portfolio and optimize your returns in the long term. But with the multiple mutual funds available in the market, how can you identify the best scheme that fits your requirements?
In this blog, we’ll explore some of the top mutual funds suitable for lump-sum investment and the key factors to consider while choosing a mutual fund.
In the table below, we have listed the top ten mutual fund schemes (a blend of equity, debt, and hybrid funds) according to 5-year returns.
| Schemes | Category | 5 – Year Return |
Quant Small Cap Fund | Equity | 42.46% |
Quant Infrastructure Fund | Equity | 37.79% |
Quant Tax Plan | Equity | 34.35% |
Axis Small Cap Fund | Equity | 29.01% |
Aditya Birla Sun Life Medium Term | Debt | 8.91%. |
Nippon India Nivesh Lakshya Fund | Debt | 9.38% |
SBI Magnum Gilt Fund | Debt | 8.39% |
Quant Multi Asset Fund | Hybrid | 30.04% |
Quant Absolute Fund | Hybrid | 26.08% |
Hybrid | 24.18% |
Equity Funds
1. Quant Small Cap Fund
Quant Small Cap Fund is the equity-oriented scheme offered by Quant Mutual Fund. It was launched on 01-Jan-2013 and currently has an AUM of Rs 9,089 crore (As of 30-Sep-2023). If we talk about the fund return, the fund has given a stellar return of 29.69% in 5 years.
The fund’s primary objective is to aim for capital appreciation and offer long-term growth opportunities by investing in a diversified portfolio of small-cap companies. This fund comes with an exit load of 1% if redeemed within 1 year.
2. Quant Infrastructure Fund
Quant Infrastructure Fund is another equity scheme offered by Quant Mutual Fund. It was launched on 01 January 2013 and currently has an AUM of Rs 980 crore (As of 30-Sep-2023). It has given a return of 28.38% in the last 5 years.
The primary objective of the funds is to give you capital appreciation and long-term growth opportunities by investing in a diverse portfolio of infrastructural companies. The fund has an exit load of 0.5% if redeemed within 90 days.
3. Quant Tax Plan
Quant tax plan is an equity-linked saving scheme (ELSS) offered by the Quant mutual fund. It was launched on 01-Apr-2000 and currently has an AUM of Rs. 4,925 Crore (As of 30-Sep-2023). It has given a return of 27.57% in the last 5 years.
This investment scheme aims to increase your capital by mainly investing in a diverse portfolio of equity shares with good growth potential. Also, it comes with a lock-in period of 3 years, which means you can not redeem this fund before 3 years. Hence, there is no exit load.
4. Axis Small Cap Fund
Axis small cap fund is an equity scheme offered by the Axis Mutual Fund. It was launched on 29-Nov-2013 and currently has an AUM of Rs. 16,175 crore (As of 30-Sep-2023). It has given an impressive return of 27.22% in the last 5 years.
The scheme aims to grow your capital in the long term by investing in a diverse portfolio primarily made up of equity and equity-related instruments of small-cap companies. This fund has an exit load of 1% if redeemed within 365 days.
Debt Funds
5. Aditya Birla Sun Life Medium Term
Aditya Birla Sun Life Medium Term is a debt-oriented scheme offered by the Aditya Birla Sun Life Mutual Fund. It was launched on 25-Mar-2009 and currently has an AUM of Rs. 1,897 crore (As of 30-Sep-2023). This fund has given a return of 8.91%.
This scheme aims to provide a steady income and increase your capital by mainly investing in a portfolio of medium-term debt securities. It has an exit load of 2% that applies to units exceeding 15% if redeemed within 365 days and 1% if redeemed after 366 days but within 730 days.
6. Nippon India Nivesh Lakshya Fund
Nippon India Nivesh Lakshya Fund is the debt-oriented mutual fund scheme offered by the Nippon India Mutual Fund. It was launched on 06-Jul-2018 and currently has an AUM of Rs 6,361 crore (As of 30-Sep-2023).
The main goal of this scheme is to provide regular income and capital appreciation by primarily investing in debt and money market Instruments. It has an exit load of 1% that applies to units exceeding 15% if redeemed within 365 days.
7. SBI Magnum Gilt Fund
SBI magnum gilt fund is a debt-oriented scheme offered by SBI Mutual Fund. It was launched on 30-Dec-2000, and currently, AUM stands at Rs 7,268 crore (As of 30-Sep-2023). This fund has given a return of 8.62% in the previous five years.
This scheme aims to provide investors with regular income and long-term capital appreciation by investing in debt securities issued by the Central Government or State Government(s). This fund has zero exit load
Hybrid Funds
8. Quant Multi Asset Fund
Quant Multi Asset Fund is a multi-asset allocation fund offered by the Quant mutual fund. It was launched on 21-Mar-2001 and currently has an AUM of Rs 1,020 Crore (As of 30-Sep-2023). It has given a return of 22.39% in the last 5 years.
The main goal of this scheme is to generate income and capital appreciation by investing in the government securities issued by the Central Government and/or State Governments. This fund has an exit load of 1% if redeemed within 15 days.
9. Quant Absolute Fund
Quant Absolute Fund is an aggressive hybrid fund offered by the Quant Mutual Fund. It was launched on 01-Jan-2013 and has an AUM of Rs 1,378 Crore (As of 30-Sep-2023). This fund has given a return of 21.84% in the last 5 years.
The aim of this scheme is to create income and capital appreciation by mainly investing in equity and equity-related instruments while also having moderate exposure to debt securities and money market instruments. Fund has an exit load of 1% if redeemed within 15 days.
10. Bank of India Mid & Small Cap Equity & Debt Fund
Bank of India Mid & Small Cap Equity & Debt Fund is a hybrid category fund offered by Bank of India Mutual Fund that invests in a mix of equity, debt, and other instruments. It was launched on 20 July 2016, and currently, it has an AUM of Rs. 492 crore (As of 30-Sep-2023). The fund has given an average return of 19.15% in the last five years.
The scheme aims to offer investors both capital appreciation and income through a portfolio that includes mid and small-cap stocks, equity-related securities, and fixed-income securities. This fund has an exit load of 1% if redeemed within 3 months.
Things To Consider While Investing In Lumpsum Funds
Investing a lump sum amount is a significant financial decision as you invest a large portion of your savings in one go. Hence, evaluating your lumpsum investment based on multiple factors is crucial to making informed decisions.
Here are the key factors to consider before investing a lump sum amount in a mutual fund scheme:
- Performance of the fund: Before investing in any mutual fund scheme, it is important to consider the fund’s performance. Here, you can check a fund’s past performance and compare it with the benchmark performance. While past performance does not guarantee that future performance will also be better, it can provide valuable insights into how the fund has performed during different market conditions.
- Expense Ratio: It is the cost charged by the fund houses for managing the funds and covers other operational expenses. Before investing in a mutual fund, you should check the expense ratio of the fund, as a higher expense ratio can deteriorate your return in the long term.
- Exit Load: The fee charged by the fund houses when you redeem your mutual fund investment within a specified time frame. Hence, you should consider this while making an investment decision, as a small fraction of the exit load can affect your total return.
- Market Predictions: To invest via lumpsum mode, you must time the market, as investing at the correct timing can help you yield more return. So, you should be aware of the market’s ups and downs.
- Financial Goals: You should also consider your investing goal and estimate whether the future proceeds will be sufficient to achieve your goal. For example, if making an investment for a down payment on a car, you should check whether the investment will help you achieve this goal.
You can use the lumpsum calculator to calculate the future value of your lumpsum investment to know whether it will help you achieve your goals.
Conclusion
In conclusion, lumpsum investment in mutual funds can help you earn higher returns if you know the market tactics. But before investing via lumpsum mode, it is mandatory to clearly understand your financial goal, risk tolerance, and time horizon and select the one that best suits your requirements.
Mutual funds are subject to market fluctuations, so there will be ups and downs in your investment value; hence here it is important to remain patient and committed to your financial goals for the long term.
