Top 5 Mutual Funds for Lumpsum Investment in 2024

September 26, 2024 Mutual Fund

For individuals with considerable disposable income, the lumpsum investment option in mutual funds offers a convenient solution to diversify investment across various asset classes and sub-categories within them.

The lumpsum mode of investing in mutual funds allows you to make a one-time investment of a large amount of money into the schemes of your choice, rather than investing a fixed sum at regular intervals. This mode of investment is particularly useful to park the windfall money received as a result of significant cash gains/profits or bonus, or to capitalise on market corrections.

By carefully selecting the right mutual fund for lumpsum investment, one can create a diversified portfolio and optimise their returns in the long run. Out of around 254 equity schemes considered across sub-categories 246 schemes more than doubled lumpsum investment in the last five years, data from ACE MF shows.

In this article, we will explore the top 5 mutual funds based on 5-year lumpsum returns that rewarded investors with extraordinary gains, surpassing their respective benchmark and the peers.

Top-performing lumpsum investment #1: Quant Small Cap Fund

Launched in October 1996, Quant Small Cap Fund is an actively managed Small Cap Fund that has recorded extraordinary performance in the last few years and has found a place among the top performers in the category across time frames. The fund follows an active investment approach whereby it constantly hunts for attractive opportunities, resulting in higher portfolio turnover compared to peers. Its higher exposure to certain sectors such as Financials, Engineering, Infrastructure, and Consumption proved to be extremely rewarding over the last couple of years.

Though the volatility registered by the fund is higher than the benchmark and many of its peers, the remarkable returns generated by the fund have helped it score high on risk-reward parameters.

Performance of Quant Small Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 23, 2024
Returns are CAGR in percentage. Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last five years, Quant Small Cap Fund has registered growth at a CAGR of 49.1%, the highest in its category. A lumpsum investment of Rs 1 lakh in the fund five years back would have now appreciated to Rs 7.39 lakh.

Top holdings of Quant Small Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

Quant Small Cap Fund’s current top holdings include Reliance Industries, JIO Financial Services, HFCL, Aegis Logistics, and Bikaji Foods International. Sectorwise, it currently has higher exposure in Healthcare, Finance, Petroleum, Consumption, and Telecom, among others.

Top-performing lumpsum investment #2: Bank of India Small Cap Fund

Launched in December 2018, BOI Small Cap Fund aims to capitalise on opportunities in under-researched and emerging businesses. It focuses on investing in companies with sustainable business models, high profit growth potential, high ROE, and are run by competent management. The fund holds many of its stocks with a short to medium-term view and does not hesitate to churn a portion of its portfolio to benefit from the available opportunities.

BOI Small Cap Fund registered category-topping performance during the 2020 market crash and also outpaced most of its peers in the ongoing bull phase. This has enabled it to generate substantial alpha over the benchmark and the category average.

Performance of Bank of India Small Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 23, 2024
Returns are CAGR in percentage. Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last five years, BOI Small Cap Fund has registered growth at a CAGR of 39.9%. A lumpsum investment of Rs 1 lakh in the fund five years back would have now appreciated to Rs 5.37 lakh.

Top holdings of Bank of India Small Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

BOI Small Cap Fund’s current top holdings comprise Vijaya Diagnostic Centre, PCBL, Castrol India, Granules India, Eris Lifesciences. In terms of sectors, its portfolio is skewed towards Auto & Ancillaries, Healthcare, and Engineering, along with exposure to Finance, Consumption, Textiles, and Infotech, among others.

Top-performing lumpsum investment #3: Quant Infrastructure Fund

Launched in August 2007, Quant Infrastructure Fund is a Thematic Fund. It aims to identify companies and sectors that are positioned to benefit from India’s infrastructure boom. The fund follows a bottom-up stock selection approach, emphasising companies with strong fundamentals, competitive advantages, and sustainable growth prospects within the infrastructure sector. Quant Infrastructure Fund shows consistent outperformance across all time horizons compared to the benchmark.

The fund invests across various sub-sectors within infrastructure, such as construction, power, transportation, and telecommunications. This diversification helps in mitigating risks associated with investing in a single category of stocks. The fund managers use a blend of qualitative and quantitative research to identify companies with robust financial health, experienced management teams, and significant growth potential.

Performance of Quant Infrastructure Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 23, 2024
Returns are CAGR in percentage. Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last five years, Quant Infrastructure Fund has registered growth at a CAGR of 39.7%. A lumpsum investment of Rs 1 lakh in the fund five years back would have now appreciated to Rs 5.33 lakh.

Top holdings of Quant Infrastructure Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

Its top stock holding comprises Reliance Industries, Samvardhana Motherson International, Tata Power Company, LIC of India, and Adani Power. Sectorwise, the fund prefers Power, Petroleum, Auto & Ancillaries, Iron & Steel, and Construction, among others.

Top-performing lumpsum investment #4: Quant Mid Cap Fund

Incepted in February 2001, Quant Mid Cap Fund was initially launched by Escorts Mutual Fund, which was later acquired by Quant Group in 2018. Quant Mid Cap Fund follows an active investment approach whereby it constantly hunts for attractive opportunities by focusing on ‘buy on dips’ strategy.

The fund is sector and benchmark agnostic. This means the weightage of stocks and sectors in the portfolio is guided by the benchmark index. Its relatively small corpus gives it the advantage of easy liquidation and the ability to quickly shift allocation to capitalise on the various opportunities present in the market. The fund’s strategy of timely identifying attractive-looking stocks and sectors and taking higher exposure in them has worked extremely well in its favour in the last few years, which helped it record extraordinary growth.

Performance of Quant Mid Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 23, 2024
Returns are CAGR in percentage. Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last five years, Quant Mid Cap Fund has registered growth at a CAGR of 38.1%. A lumpsum investment of Rs 1 lakh in the fund five years back would have now appreciated to Rs 5.02 lakh.

Top holdings of Quant Mid Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

The fund is currently bullish on Aurobindo Pharma, Reliance Industries, Container Corporation of India, IRB Infrastructure Developers, and Steel Authority of India, among others. Its portfolio is skewed towards the Pharma sector, followed by Metals, Petroleum, Logistics, and Infrastructure, among others.

Top-performing lumpsum investment #5: Nippon India Small Cap Fund

Having a corpus of Rs 61,000 crore, Nippon India Small Cap Fund is currently the largest scheme in the Small Cap Fund category. Since its inception in September 2010, Nippon India Small Cap Fund has done well across market phases and built an impressive track record of superior performance. This has resulted in the scheme becoming popular among aggressive investors.

The fund uses diversification as a risk-mitigation technique and holds a large portfolio of over 200 stocks spread across sectors. Nippon India Small Cap Fund aims to identify small-sized companies with high-growth potential that are available at relatively attractive valuations. Nippon India Small Cap Fund now stands among the top quartile performers in the Small Cap Fund category across time frames and has generated market-beating returns.

Performance of Nippon India Small Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 23, 2024
Returns are CAGR in percentage. Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last five years, Nippon India Small Cap Fund has registered growth at a CAGR of 37.8%. A lumpsum investment of Rs 1 lakh in the fund five years back would have now appreciated to Rs 4.97 lakh.

Top holdings of Nippon India Small Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

The fund’s top stock holdings is spread across market caps and includes names such as HDFC Bank, Tube Investments of India, Multi Commodity Exchange of India, Voltamp Transformers, and Apar Industries. Its sectoral exposure is inclined towards Engineering, followed by Banking & Finance, Infotech, Pharma & Healthcare, Auto Ancillaries, and Chemicals, among others.

Things to consider when investing via the lumpsum mode

Lumpsum investments can yield high returns provided you get the market timing right. Since lumpsum investments require you to allocate a large sum in one go, it is important to tread with caution, especially when markets are at an all-time high, due to the possibility of high downside risk.

Before opting for the lumpsum mode of investment ensure that you clearly understand your financial goals, risk appetite, and investment horizon to select the best schemes that align with your requirements.

You can use PersonalFN’s Mutual Fund Calculator to estimate the future value of your lumpsum investment.

To select the best mutual funds schemes from each sub-category, evaluate the fund’s past performance relative to the benchmark and the category peers. Additionally, assess the fund’s risk-adjusted returns, portfolio characteristics, as well as the quality of the fund management and the investment process.

Being market-linked, mutual funds are subject to volatility and risks. Hence, before investing, one should understand the various risks involved and remain patient till the investment objective is achieved.

Watch this video to find out which among CAGR and XIRR is a better tool to evaluate mutual funds returns:

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

This article first appeared on PersonalFN here