Best Mutual Funds for Lumpsum Investments in 2025

In the ever-growing world, you have to be resilient to grow your money to hedge against inflation. To do that, you need to invest in assets that outperform based on your risk tolerance. If you have a lumpsum amount of money, you can invest in mutual funds for a better return to keep your money growing. In this article, we will understand lumpsum investment, then we will look at best mutual fund for lumpsum investment, why to invest, advantages and disadvantages, risks and others. Let us explore to understand more about the lump sum investment in mutual fund.

Understanding Lumpsum investment in Mutual Fund

A lumpsum investment in mutual funds means investing a large or significant amount of money in one go, rather than spreading it out over time like in a SIP (Systematic Investment Plan). This method is commonly used when you have a sudden inflow of funds, such as a savings, recurring deposit amount, salary bonus, family inheritance, or sale of an asset. These funds need to be parked and considering your risk appetite to earn a decent return, people can invest lumpsum investment in mutual fund.

Top 10 Mutual Funds for Lumpsum Investment 2025

As we understand the lumpsum fund investment in Mutual Fund, we will look at some of the top 10 best lumpsum mutual funds and here are as follows:

(Note: The above funds are shortlisted based on 3-year annualised returns as of 12th May 2025.)

Overview of the Best Mutual Funds for Lumpsum Investment 2025

The following are the funds based on 3-year annualised returns and recent data available are as follows:

1. Franklin India Opportunities Fund

The fund is categorised as an equity-thematic scheme, delivering a 3-year CAGR of 32.22%. Its top five holdings include Reliance Industries (6.58%), HDFC Bank (6.07%), Hindustan Unilever (4.05%), Bharti Airtel (3.86%), and Axis Bank (3.56%). The fund's equity section top allocations, sector-wise, include Financial Services (15.6%), Other Sectors (15.4%), Services (14.3%), Healthcare Services (11.8%) and Technology (9.9%).

2. SBI PSU Fund

This fund operates as an equity thematic scheme focusing on Public Sector Undertakings (PSUs) and delivered a 3-year CAGR of 31.43%. Its top five holdings include State Bank of India (13.43%), GAIL (India) Ltd. (9.67%), Power Grid Corporation of India Ltd. (9.24%), NTPC Ltd. (8.55%), and Bharat Electronics Ltd. (8.47%). The fund's equity section top allocations, sector-wise, are towards Energy (47.7%), Financial Services (29.1%), Capital Goods (8.8%), Insurance (7.9%), and Metals and Mining (5.3%).

3. Invesco India PSU Equity Fund

This fund operates as an equity thematic PSU scheme, delivering a 3-year CAGR of 30.63%. They primarily invest in equity and equity-related securities of companies where the central or state government holds a majority stake. Its top five holdings include Bharat Electronics (9.64%), Power Grid Corporation of India (8.58%), State Bank of India (7.93%), Bharat Petroleum Corporation (7.88%), and Hindustan Aeronautics (6.02%). The fund's equity section top allocations, sector-wise, include Energy (38.1%), Capital Goods (26.7%), Financial services (18.7%), Other sectors (10.8%), and Metals and Mining (5.7%).

4. HDFC Infrastructure Fund

This fund is classified as an equity sectoral infrastructure fund, delivering a 3-year CAGR of 30.49%. This scheme invests in companies engaged in the infrastructure sector. Its top five holdings are ICICI Bank (7.75%), HDFC Bank (5.63%), Larsen & Toubro (5.31%), J Kumar Infraprojects (3.92%), and Interglobe Aviation (3.29%). The fund's equity section top allocations, sector-wise, include Financial services (22.9%), Construction (22%), Other sectors (17.5%), Energy (15.7%), and Capital Goods (12.4%).

5. Nippon India Power & Infra Fund

This fund operates as an equity sectoral infrastructure fund, delivering a 3-year CAGR of 29.78%. This fund focuses its investments on companies in the power and infrastructure sectors. Its top five holdings include Reliance Industries (8.20%), NTPC (7.82%), Bharti Airtel (6.90%), Larsen & Toubro (6.39%), and Tata Power Company (4.21%). The fund's equity section top allocations, sector-wise, are Energy (30%), Capital Goods (25.9%), Other sectors (18.6%), Construction (17.6%), and Communication (7.9%).

6. Motilal Oswal Midcap Fund

This fund operates as an equity mid-cap fund, delivering a 3-year CAGR of 29.55%. The fund invests primarily in mid-sized companies. Its top five holdings are Persistent Systems (10.06%), Coforge (9.47%), Kalyan Jewellers India (8.09%), Polycab India (4.97%), and Dixon Technologies (India) (4.35%). The fund's equity section top allocations, sector-wise, include Technology (32.1%), Capital Goods (20.5%), Consumer Discretionary (12%), Services (9.8%), and Other Sectors (7.2%).

7. Franklin Build India Fund

This fund is classified as an equity sectoral-infrastructure scheme, delivering a 3-year CAGR of 29.24%. This fund focuses on companies involved in building India's infrastructure. Its top five holdings included Larsen & Toubro (8.15%), ICICI Bank (6.28%), Reliance Industries (6.19%), Interglobe Aviation (5.78%), and NTPC (5.37%). The fund's equity section top allocations, sector-wise, include Energy (27.6%), Construction (17.9%), Capital Goods (15%), Financial services (13%) and Services (12.1%). 

8. ICICI Prudential Infrastructure Fund

This fund operates as an equity sectoral infrastructure fund, delivering a 3-year CAGR of 29.00%. This fund invests in companies within the infrastructure sector. The top holdings include Larsen & Toubro (9.73%), Adani Ports and SEZ (4.13%), NCC (3.58%), Reliance Industries (3.15%), and NTPC (3.06%). The fund's equity section top allocations, sector-wise, include Construction (29.8%), Energy (16.2%), Financial Services (15.4%), Metals and Mining (14.2%), and Capital Goods (11.1%).

9. Aditya Birla Sun Life PSU Equity Fund

This fund is an equity thematic PSU fund, delivered a 3-year CAGR of 28.38%. This fund invests primarily in public sector undertakings. Its top five company holdings are State Bank of India (12.95%), NTPC (8.68%), Power Grid Corporation of India (8.19%), Oil and Natural Gas Corporation (5.56%), and PNB Housing Finance (5.34%). The fund's equity section top allocations, sector-wise, include Energy (46.4%), Financial Services (33.2%), Capital Goods (11%) and Other Sectors (9.3%).  

10. Bandhan Small Cap Fund

This fund operates as an equity small-cap fund, delivering a 3-year CAGR of 27.33%. This fund invests mainly in small market capitalization companies. Its top five holdings include Sobha (3.13%), LT Foods (2.38%), The South Indian Bank (2.33%), Cholamandalam Financial Holdings (2.19%), and PCBL Chemical (1.89%). The fund's equity section top allocations, sector-wise, are Other Sectors (23.8%), Financial Services (21.9%), Healthcare (13.7%), Construction (10.9%), and Services (10.2%).

Why to Invest in Lumpsum in Mutual Funds

• Capital Deployment: If you’ve received a savings, recurring deposit amount, salary bonus, family inheritance, or sale of an asset, investing the amount in a lump sum helps avoid idle cash, and channelling it into growth assets is rewarding.

• Long-Term Financial Goals: For goals like retirement or children's education, lump sum investing helps compounding early and creates wealth over a longer period.

• Undervalued Market: When markets are undervalued or below its intrinsic value or recovering after a correction, lump sum investing allows you to enter at attractive valuations.

• Minimal Tracking: If you don’t want to manage monthly SIPs or track markets regularly you may opt for lump sum to keep things simple and one-time.

• Better for Seasoned Investors: Experienced investors with a high-risk appetite and market awareness often prefer lump sum investments to act quickly to grab market downturn opportunities.

Important Things to do Before Investing Lumpsum

Before investing in the best mutual funds for lumpsum investment for long-term, make sure you have assessed all the needs and risks for your investment.

• Clarify why you're investing, like for buying a house, child’s education or retirement.

• Assess how much market risk you can handle and choose funds accordingly.

• Avoid investing lumpsum at market peaks, and you can consider STP (Systematic Transfer Plan) if markets are overheated.

• Ensure you have 3 to 6 months of emergency funds for unforeseen situations.

• Secure health and life insurance to avoid premature withdrawals during emergencies.

• Understand the capital gains tax and exit load applicable to your chosen mutual fund.

• Ensure all your personal and bank details are KYC-compliant to avoid issues.

Benefits of Lumpsum investments in Mutual Funds

Here are some of the benefits of investing in lump sum investment in Mutual Funds

• Market Exposure: Investing a lumpsum allows your entire capital to be deployed at once. This allows you to capitalise on market upswings immediately. This particular approach can be beneficial in an uptrend market while potentially leading to higher returns.

• Compounding Benefits: By investing a large amount upfront, your entire investment benefits start compounding from the initial stage. It can lead to significant growth over time, as returns are generated on existing returns.

• Simplified Investment Process: A lumpsum investment requires a one-time decision. It eliminates the need for constant monitoring or periodic contributions. This simplicity can be beneficial for investors who prefer a hands-off approach.

• Potential Cost Savings: Investing in the best mutual fund for lumpsum investment may keep transaction costs and fees associated to a minimum compared to multiple smaller investments. It can improve overall returns.

Limitations of Lumpsum Investments in Mutual Funds

As we looked into the benefits, there are some downsides and risks to it; here are some of those:

• Market Timing Risk: A large amount of Investment at once can expose you to the risk of market downturns shortly after your investment, which can lead to short-term losses. It requires market understanding to protect your capital.

• Emotional Stress: A sudden market decline or during volatility after a lump sum investment can cause anxiety and may lead to reckless decisions, such as premature withdrawal, or potentially booking losses can erode invested capital value.

• Requires Substantial Capital: Lump sum investing requires significant amount of capital available upfront, which may not be feasible for all investors.

• Reduced Flexibility: Once invested, reallocating or withdrawing funds from a lump sum investment can be less flexible compared to systematic investment plans, which can impact your liquidity position.

• Rupee Cost Averaging: Unlike SIPs, lumpsum investing doesn’t average your purchase cost over time. This can result in higher acquisition costs if markets correct after investment.

How to Choose the Best Mutual Funds for Lumpsum Investment

After looking at the benefits and limitations, we will understand on how to choose the best mutual funds for lumpsum investment:

• Align with your Investment Horizon: Choose funds that match your financial timeline. If you have a long-term horizon like 5 years or more, then equity mutual funds are better suited because they can weather short-term market volatility and grow with the economy. For shorter horizons, you can consider looking at debt or hybrid funds.

• Assess Risk Tolerance and Fund Category: Match your risk profile to the type of mutual fund you invest in. Conservative investors can stick to large-cap or hybrid funds, which are generally more stable. Moderate risk-takers can explore flexi-cap or balanced advantage funds, which diversify across market caps and asset classes. Aggressive investors may opt for mid-cap or small-cap funds, which offer high growth but often come with risks.

• Evaluate Historical Performance: Look at a fund’s performance across market cycles, ideally over 5 to 10 years. This helps you to judge its consistency, resilience in downturns, and ability to deliver stable returns. Don’t rely on short-term performance when investing a large lump sum value.

• Consider Expense Ratio: Check how much the fund charges to manage your money. A high expense ratio can reduce your returns over time, especially with a large investment. Choose funds that keep expenses to a minimum while maintaining consistent performance. Comparing funds within the same category can help you make an informed decision.

• Review the Fund Manager's Track Record: The experience and consistency of a fund manager can impact performance. A seasoned manager with a proven strategy tends to handle volatility better and make disciplined investment decisions.

• Mutual Fund Diversification: If you're unsure about market conditions and mutual fund performance, you can diversify lump sum investments into different mutual funds to reduce risk. These diversifications can provide decent returns but protect capital, which is essential.

• Sector-Specific Funds for Lump Sum: Lump sum Investing in sector or thematic funds carries high risk because these funds focus on one industry. Their performance depends on the economic cycle of that sector. These funds are better suited for experienced investors who understand better risks.

How to invest in Lumpsum Investment

After assessing the best mutual fund for lumpsum investment based on your time horizon and risk tolerance, you can start investments through the Rupeezy App for tracking mutual fund investments and fund insights to explore other mutual funds after necessary KYC compliance.

Conclusion

Lumpsum investment in mutual funds can be a wealth-building strategy when done with proper planning and awareness. While it offers the benefit of immediate market exposure and compounding, it also demands a sound understanding of market cycles, risk appetite, and fund selection. Ensure your financial foundation like insurance, emergency savings, and KYC compliance is in place before making a lump sum investment. Please consult your financial advisor before investing.

FAQs

Q. Which mutual fund is best for lumpsum?

While Mutual Fund for Lumpsum Investments change based on factors like Market Returns, AMC, Sector and Stock Allocations and others. Based on recent 3 year annualised returns Franklin India Opportunities Fund, SBI PSU Fund, and Invesco India PSU Equity Fund have performed better. Always assess or seek financial advice before investing.

Q. Is it good to invest lumpsum in mutual funds now?

Yes, if markets are undervalued or recovering. Avoid market peaks and you can use Systematic Transfer Plan (STP) if unsure.

Q. How to invest lumpsum in mutual funds?

Choose suitable funds based on your risk apetite, and invest via trusted platforms like Rupeezy App.

Q. What is lumpsum investment in a mutual fund?

It’s a one-time investment of a large amount in a mutual fund, instead of spreading it over time like SIP.

Q. SIP or lumpsum, which is better in a mutual fund?

SIP suits regular investments and averaging cost. Lumpsum works best for large amounts and long-term goals.