Mutual funds have gained vast success as a financial tool due to their ability to provide diversity, skilled management, and the potential for attractive profits. For people with a lump sum amount to spend, mutual funds offer a handy and efficient way to divide capital across various asset classes and industries. In this piece, we study the best mutual funds for lumpsum investment in India, giving insights into their success, investment plans, and critical factors.
What Do Mutual Funds for Lumpsum Investments Mean?
Mutual funds for lumpsum investments refer to investment plans that allow buyers to spend a large amount of money in a single transaction rather than through frequent payments. These mutual funds cater to clients with a large sum of money available for investment, such as inheritance, bonus, or other windfall gains.
Overview of Top 10 Mutual Funds for Lumpsum Investments
Parag Parikh Flexi Cap Fund follows a value-buying approach and invests across market capitalizations. It has a strong focus on quality businesses and has produced excellent results over the long term. The fund's investment strategy is focused on investing in companies with substantial economic benefits, high-quality management, and affordable prices.
Mirae Asset Emerging Bluechip Fund:Itdeals with big and mid-cap companies with excellent growth prospects. It has regularly beaten its standard over the long term and is an excellent choice for buyers wanting exposure to the Indian growth story.
Axis Bluechip Fund: A large-cap-oriented fund, Axis Bluechip Fund aims to create long-term capital growth by investing in bluechip companies across different fields. It has a proven track record and is handled by a skilled team of fund managers.
ICICI Prudential Bluechip Fund: A well-diversified large-cap fund, ICICI Prudential Bluechip Fund has regularly beaten its benchmark and is perfect for investors seeking exposure to the top companies in India.
SBI Bluechip Fund: A large-cap fund run by one of India's best asset management companies, SBI Bluechip Fund is a good choice for buyers seeking exposure to the top companies in India.
Nippon India Multi Cap Fund: As the name suggests, this fund invests across market capitalizations and has a well-diversified portfolio. It has a proven track record of providing steady results over the long run.
Kotak Standard Multicap Fund: This multi-cap fund invests across market capitalizations and strongly focuses on companies with solid business plans and growth prospects. A team of skilled fund managers handles it.
DSP Equity Fund: This fund follows a multi-cap approach and strongly focuses on companies with steady growth possibilities. It has produced impressive gains over the long term and is run by expert fund managers.
Invesco India Growth Opportunities Fund invests in companies with excellent growth prospects across market capitalizations. It has a proven track record and is run by expert fund managers.
HDFC Flexi Cap Fund: A well-diversified flexi-cap fund, HDFC Flexi Cap Fund has regularly beaten its benchmark and is perfect for buyers seeking exposure to companies across market capitalizations.
Performance List of Mutual Funds for Lumpsum Investments
| Fund | 1-Year Returns | 3-Year Returns | 5-Year Returns | 10-Year Returns |
| Parag Parikh Flexi Cap Fund | 11.2% | 17.5% | 15.9% | 19.1% |
| Mirae Asset Emerging Bluechip Fund | 12.5% | 18.2% | 16.8% | 18.6% |
| Axis Bluechip Fund | 9.8% | 15.7% | 14.2% | 16.4% |
| ICICI Prudential Bluechip Fund | 8.6% | 14.6% | 13.8% | 15.8% |
| SBI Bluechip Fund | 8.1% | 13.9% | 13.1% | 15.2% |
| Nippon India Multi Cap Fund | 9.2% | 15.4% | 14.6% | 16.8% |
| Kotak Standard Multicap Fund | 10.4% | 16.9% | 15.2% | 17.5% |
| DSP Equity Fund | 11.7% | 17.8% | 16.3% | 18.4% |
| Invesco India Growth Opportunities Fund | 10.9% | 16.5% | 15.6% | 17.9% |
| HDFC Flexi Cap Fund | 9.6% | 15.1% | 14.8% | 16.6% |
Factors to Check Before Investing in Mutual Funds for Lumpsum Investments
When considering spending a lump sum amount in mutual funds, it is important to evaluate several factors to ensure that your investment fits your financial goals, risk tolerance, and timeline. Here are some key things to consider:
● Investment aim: Understand the fund's investment aim and ensure it fits your financial goals, such as capital growth, income generation, or a mix of both.
● Risk Profile: Evaluate the fund's risk profile and ensure it matches your risk tolerance. Equity funds are usually viewed as riskier than debt funds, while balanced funds offer a middling risk-return ratio.
● Expense Ratio: The expense ratio is the annual fee charged by the fund for handling your assets. Lower expense ratios can significantly impact your results over the long term, so choosing funds with fair expense ratios is essential.
● Fund Manager and Investment Process: Research the fund manager's experience, investment theory, and investment process. A steady investment process and a seasoned fund manager can add to the fund's long-term success.
● Past Performance: While past performance does not promise future results, it can provide insights into the fund's stability and the fund manager's ability to produce returns across market cycles.
● Investment vision: Consider your investment vision and choose funds matching your time frame. For a more extended financial plan, stock funds may be ideal, while debt or cash funds may be better for short-term goals.
● Diversification: Consider spreading your investments across different asset classes, industries, and market capitalizations to reduce risk and improve long-term profits.
Benefits of Investing in Mutual Funds for Lumpsum Investments
● Professional Management: Mutual funds are handled by experienced professionals who have skillsinvestment research and stock management skills.
● Diversification: Mutual funds offer diversification benefits by investing in a group of securities, lowering the risk of investing in individual stocks or bonds.
● Liquidity: Mutual fund units can be easily bought or sold, giving owners liquidity and the freedom to access their funds when needed.
● Affordability: Mutual funds help buyers gain exposure to a diverse portfolio with a relatively small investment amount.
● Ability for Higher Returns: Equity mutual funds, in particular, can create higher returns than traditional financial vehicles over the long run.
How to Invest in Mutual Funds for Lumpsum Investments
● Determine your financial goals, risk tolerance, and investment timeline.
● Choose the suitable mutual fund scheme(s) based on your investing goals and risk profile.
● Open a Demat (Dematerialized) account and finish the KYC (Know Your Customer) process.
● Invest the considerable amount through a one-time purchase or a Systematic Transfer Plan (STP) from a cash fund.
● Monitor your investments regularly and consider adjusting your assets as needed.
When Should You Opt for Mutual Funds Lumpsum Investment?
Investing a lump sum amount in mutual funds can be a good option in various scenarios:
● An inheritance or unexpected Gains: If you have gotten a large amount of money through inheritance, a bonus, or any other unexpected gain, putting it in mutual funds can be an excellent way to grow your wealth over the long term.
● Retirement Corpus: If you have gathered a large corpus for retirement, putting a considerable sum in mutual funds can help you generate steady returns and build an extra income stream during your retirement years.
● Rebalancing Portfolio: If you have a focused portfolio with many investments in a single asset class or sector, putting a lump sum in mutual funds can help you spread your portfolio and reduce risk.
● Debt Repayment or Large Purchases: If you have a large sum amount available after settling debts or making a large purchase, putting it in mutual funds can help you put the extra funds to work and create higher returns than traditional savings tools.
● Tax Planning: Investing a considerable sum in Equity-Linked Saving Schemes (ELSS) can help you save on taxes while building a tax-efficient financial portfolio.
However, it's important to note that spending a lump sum amount carries risks, as the entire investment is subject to market changes at the time of investment. To minimize this risk, consider gradually spending the big sum through a Systematic Transfer Plan (STP) or a Systematic Investment Plan (SIP) over time.
Conclusion
Investing a lump sum amount in mutual funds can effectively build wealth and meet long-term financial goals. The top mutual funds mentioned in this piece have proven success and are handled by expert fund managers. However, evaluating your investment goals, risk tolerance, and timeline is vital before choosing suitable mutual fund schemes. Diversification and regular stock tracking are essential to minimize risks and improve returns. By carefully considering the factors mentioned in this piece and getting professional help if needed, you can make informed decisions when putting a lump sum amount in mutual funds.
