Here Is The Best Mutual Fund Scheme For Lump Sum Investment In India 2021

Best Mutual Fund Scheme For Lump Sum Investment In India 2021
Best Mutual Fund Scheme For Lump Sum Investment In India 2021

You want to invest the lump sum amount in a mutual fund but don’t know which mutual fund is best for you or confused about which mutual fund you should choose according to your investment plan.

Then don’t worry in this post I’ll show you the best mutual fund for lump sum investment in India that might give a good amount of returns to their investors in the long run.

But the funds that I have mentioned are categorized on the basis of the past 3 to 5 years performance so that you can compare the returns they have given to their investors.

Let me tell you one thing, Investors who have a large risk appetite do invest lumpsum in the mutual fund. or who has no guarantee of regular income or who does not have a fixed income.

Before investing lump sum investment in mutual funds, I want you to consider some important points.

If you want to make good money in the long run, then you should keep these points in your mind. After all, you are investing your blood and sweat money together, so don’t take these points for granted.

How To Choose The Best Mutual Fund For Lumpsum Investment In India 2021

You should know that there is no guarantee of returns in a mutual fund because the mutual fund is subject to market risk. Especially if you are investing a lump sum as it is riskier than SIP.

It is not mandatory that if the mutual fund has given good returns in the past, then it will surely give you good returns in the future also.

It depends upon so many factors like Size of the Mutual Fund, Age of the Mutual Fund, Experience of the Fund Manager, Performance of Mutual Fund, charges of Mutual Funds like Expense ratio, Exit Load, Risk Appetite of investor, etc.

Let’s deep dive into these points step by step!

Size of the Mutual Fund 

Before investing your lump sum money in the mutual fund always check what is the size of the fund in which you are willing to invest.

If the size of the fund is too large then it can be risky to invest your hard earn money in that fund. Because it pressures the fund’s manager to allocate that money.

Also if the size of the mutual fund is too small then it can also be risky so try to find out the Mutual Fund whose size is neither too big nor too small. Because the size of the mutual fund can affect the returns.

Clear Your Investment Goal

Before looking for the best lump sum investment plan you must have a goal and an objective cause of which you thought of investing in mutual funds.

It can be anything whether you want to purchase House or Educational Purpose, Children’s Education, Retirement Plan any such objective where you need money. And you want to grow that money by 10% to 15%.

Do you want to invest that money for the long term or the short term? Always define your time period of investment before investing your money in a mutual fund.

After which you should think about investing & how to choose a good mutual fund for a lump sum investment plan. Because every mutual fund scheme has different objectives & different purposes. All you have to do is to coincide with your purpose.

Risk Tolerance

It’s very important to do risk profiling by yourself, your income can be volatile or fixed, Every individual has a different income scenario, because of different income scenarios, every individual has a different risk-taking capability.

If you are thinking of investing in Mutual Funds then you should know your risk-taking capability. Because according to your risk capacity, you should choose your mutual fund.

There are many investors who have high-risk tolerance and focus only on generating high returns, but there are also many investors who have a low-risk appetite.

So investors who have a high-risk appetite can invest in equity asset classes like Mid Cap & Small Cap Funds. These types of funds are highly risky along with the high returns.

But if you don’t have high-risk capability then you can invest your money in a Large Cap Mutual Fund or Debt Funds which is lesser riskier than the Mid Cap & Small Cap Funds.

Performance Of Mutual Fund

It is very important to track the past performance of a mutual fund as it gives you an idea of how the mutual fund has performed in the past, how consistently it has given returns to its investors.

At least check the past performance of 5 to 7 years so that you get the true picture of how a mutual fund has performed in the past. also compare it with its peers. Because you get a better idea after comparing two mutual funds with each other.

Always remember, this does not mean that if the mutual fund has given good returns in the past, it will give equally good returns in the future.

Fund Manager Performance

Basically, your fund is managed in two ways first Actively in which the manager of the fund actively manages your fund, and the second is Passive Mutual Fund in which your money invests in an index that directly tracks the index like Nifty And Sensex.

So it is completely in your hands, how do you want to manage your fund?

The fund manager plays a critical role because the performance of the fund depends on the manager. one bad decision taken by the fund manager can affect your returns.

The most important thing is that if you are checking the performance of the last 5 to 7 years, then check whether the fund has changed its fund manager or not?

If yes you should look at how did the mutual fund perform after this change. Cause your returns heavily depend on the fund of the manager.

Therefore it becomes necessary that your fund manager should be experienced and who knows the market very well.

Also Read: Best Books On Stock Market That Every Indian Must Read

Expense Ratio Of AMC

Whenever you invest your money in a mutual fund they charge you some fees in terms of percentage annually to manage your fund.

It’s very important to understand the Expense Ratio of mutual funds because there can be many expenses which investors are not aware of.

It includes marketing cost, distribution cost, asset allocation fees, operating costs, portfolio management fees.

Therefore whenever you going to invest your money in a mutual fund, you should know its expense ratio, if the expense ratio is more than your return would be lesser, if the expense ratio is less your return would be more.

Exit Load

Exit load is fees taken by the Asset Management Company (AMC) If you take your money out or redeeming your fund units before the maturity period.

This exit load can affect your returns, Therefore it’s very important to consider the exit load before choosing any mutual fund.

Smart Way To Do Lump Sum Investment In Mutual Fund

1. By doing a lump sum investment in a mutual fund you’ll expose yourself to the higher risk. Because you invest a large chunk of money in a lump sum in one go and are more likely to lose money during a market crash and vice versa.

Most Financial expert advises that you shouldn’t invest in equity if you are going for the lumpsum investment rather than you should invest a lumpsum amount in a debt mutual fund.

2. Timing is a very important factor in lump sum investment.

Let suppose person “A” want to invest a 60K lump sum in HDFC equity fund and the day he invests the amount price of that mutual fund of one unit is very low which is 643.

And if he invests 60k in that mutual fund then he’ll get 93.3 unit of that mutual fund.

Now, suppose he is very unlucky and he chooses the day at which the price of a mutual fund is very high, then he’ll only get 79 units of that mutual fund at 60k.

Now you can see that this is a difference of 17%, which means that if you choose the wrong time, you may have to lose 17%.

That’s why I said the timing is important. But it’s not easy to time the market.

3. If you have made your mood to invest the lump sum amount in a mutual fund then invest your money for the longer horizon at least for 10 years. You have to give time in the market.

And if you make sure that you don’t want to see that money before the maturity period then lump sump is best for you.

Because it can panic you due to high volatility of the market cause of which you can take wrong decision. So don’t be an emotional fool stick to the plan.

If you know that you’ll be panic by seeing the volatility of the market then you shouldn’t invest in a lump sum then SIP is the best option for you.

4. Diversify your portfolio don’t rely merely on a single mutual fund or single investment let suppose If your fund does not perform well, it means that it would be a negative impact on your returns.

or maybe your entire portfolio would be wipeout, A diversified portfolio can hedge you against the financial crisis.

If you diversify your portfolio, Then you can also invest some chunk of your money in large-cap funds, debt funds, mid-cap funds.

There would be less impact on your portfolio if one of them underperformed.

And by diversifying reduces the risk of your portfolio. So it is always said that do not put all your eggs in a single basket.

5. You can do a Systematic Investment Plan(STP) it’s a mixture of SIP and lump sum. By doing STP you allow the fund house to transfer the amount of money from one mutual fund scheme to another mutual fund scheme periodically.

In STP your money transfer from a debt mutual fund to an equity mutual fund. By doing STP you can minimize your risk aversion but at the same time with it your return also reduces.

Best Mutual Fund For Lump Sum Investment India

Top 5 Equity Large Cap Funds 

Scheme Name

Fund Size (Cr)

NAV

Minimum Investment

Expense Ratio (%)

3Yr Return (%)

5Yr Return (%)

Axis Bluechip Fund Direct Plan Growth

23,496

43.12

5000

0.49

18

17.9

Canara Robeco Bluechip Equity Fund Growth

1,837

38.79

5000

0.58

18.8

18.0

BNP Paribas Large Cap Fund Growth

1,015

130.52

5000

1.02

14.9

14.8

Edelweiss Large Cap Fund Direct Growth

228

49.92

8473

1.11

14.6

15.4

Mirae Asset Large Cap Fund Growth

23.353

66.064

5000

1.64

13.8

16.3

Top 5 Equity Multi-Cap Funds

Scheme Name

Fund Size (Cr)

NAV

Minimum Investment

Expense Ratio (%)

3Yr Return (%)

5Yr Return (%)

Axis Flexi Fund Direct Growth

7,460

16.50

5000

0.53

17.73

-

PGIM India Midcap Opportunities Fund Growth

934

34.52

5000

0.55

20.4

19.2

UTI Flexi Cap Fund Direct Growth

15,746

222.55

5000

1.23

19.21

17.89

Quant Active Fund Growth Direct Growth

203

315.63

5000

0.57

21.57

20.87

Parag Parikh Flexi Cap Fund Direct Growth

7452

40.39

1000

0.96

20.68

18.78

Top 5 Equity Mid Cap Funds

Scheme Name

Fund Size (Cr)

NAV

Minimum Investment

Expense Ratio (%)

3Yr Return (%)

5Yr Return (%)

Axis Midcap Direct Plan Growth

9,757

60.82

5000

0.51

19.54

20.41

Edelweiss Mid Cap Fund Regular Plan

1,187.09

39.753

5000

2.22

11.79

16.88

HDFC Mid Cap Opportunities Fund

26,306.34

74.35

5000

1.79

10.27

15.37

PGIM Mid Cap Opportunities Fund Direct Growth

934

34.52

5000

0.55

20.38

19.20

DSP Midcap Regular Plan

10, 558.21

77.16

500

1.83

12.21

16.97

Top 5 Equity Small-Cap Funds

Scheme Name

Fund Size (Cr)

NAV

Minimum Investment

Expense Ratio (%)

3Yr Return (%)

5Yr Return (%)

Axis Small Cap Fund Direct Growth

4,165

48.42

5000

0.38

18.81

19.86

SBI Small Cap Fund Regular Growth

7,310.58

80.70

5000

1.83

13.68

20.7

Nippon India Small Cap Fund Growth

11,961

60.11

5000

1.84

11.52

19.62

Kotak Small Cap Fund Direct Growth

3,059

134.19

5000

0.60

17.64

20.01

ICICI Prudential Smallcap Fund Direct Plan Growth

1.991

39.10

5000

0.85

11.07

15.46

Top 5 Lump Sum Debt Liquid Funds

Scheme Name

Fund Size

NAV

Minimum Investment

Expense Ratio

3Yr Return (%)

5Yr Return (%)

Quant Liquid Fund

231.78

32.45

5000

0.97

6.18

6.55

Aditya Birla Sun Life Liquid Fund

33,604

329.41

500

0.33

5.46

6.26

Union Dynamic Bond Fund Direct Growth

131

19.57

5000

1.46

7.81

7.26

Tata Liquid Fund Regular Plan

14,981.55

3225.84

5000

0.33

5.73

6.25

IDBI Liquid Fund Direct Growth

785

2214.07

5000

0.13

5.96

6.41

Conclusion

If you are looking for the best mutual funds for the lumpsum investment in India you can consider the mutual fund which I have mentioned above, but before picking up any plan for lump sum investment do proper research analysis from your end.

Also, compare one mutual fund with another so that you can get a fair idea of which one would be best for you.

Lumpsum is considered best for long-term investing. Therefore, if you want to invest your money lump sum in a mutual fund then hold that money for at least 7 to 10 years.

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I love value investing, My goal is to create financial awareness in India For this I created a “unlockmyfinance” website and on this website, I teach people about finance & stock market

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