Should you invest in thematic funds through Systematic Investment Plan or lumpsum?

Investing in mutual funds has become easier and more flexible over the years. Today, you can invest in many types of mutual funds depending on your goals and interests. One such category is thematic mutual funds, a popular choice among investors who want to focus on a specific idea or sector* like technology, clean energy, or healthcare.

But a common question people ask is:

In this article, we’ll explore SIP investment plan vs lumpsum, compare their pros and cons, and help you decide what’s better for you. 

What are thematic mutual funds?

Thematic mutual funds invest in a particular theme or idea. Unlike regular diversified equity funds that invest across sectors, thematic funds focus on a specific segment.

Examples of popular themes* include:

• Green energy or ESG (Environmental, Social, Governance)
• Artificial Intelligence and technology
• Healthcare and pharma
• Banking and financial services
• Rural development or infrastructure

These funds are for investors who strongly believe in the long-term potential of a specific idea and are ready to accept a higher level of risk.

SIP vs lumpsum: What’s the difference?

Before we get into which is better for thematic funds, let’s quickly understand the basic difference:

• SIP (Systematic Investment Plan): You invest a fixed amount every month generally. It brings discipline and helps you average out the cost of investment over time.
• Lumpsum: You invest the entire amount at once. This is suitable when you have a large amount of money ready to invest.

Both approaches have their own benefits and risks.

Investing in thematic funds via SIP

Let’s first look at why investing in thematic funds through a SIP can be a suitable idea.

1. Reduces timing risk

Thematic funds can be very sensitive to market news, economic policies, or sector trends. If you invest a large amount at an unfavourable time, you may see negative returns for a long period.With SIPs, your money goes in over time, so you invest at different market levels. This helps in averaging your cost and reducing the impact of market ups and downs.

2. Builds investment discipline

SIPs help you invest regularly, even when the market looks uncertain. This habit is very useful, especially with volatile investments like thematic funds.

3. Suits small budgets

If you don’t have a large amount to invest, SIPs allow you to start with as little as Rs. 500 per month generally. You can increase it over time as your income grows.

4. Let’s you test the theme slowly

If you are unsure about a theme, SIPs let you test the waters. You can invest small amounts, track the fund’s performance, and then decide whether to continue, increase, or stop your investment.

Investing in thematic funds via lumpsum

Now, let’s see when it might make sense to go for a lumpsum investment.

1. When you’re confident about the theme

If you believe a certain theme* (like electric vehicles or digital banking) is set to grow in the near future—and you want to take full advantage, you might choose to invest a large amount upfront.

This can give you reasonable returns if the theme performs well soon after your investment.

2. When markets are down

Lumpsum investments work well when the market (or the specific theme) is down but expected to rise. You can buy at a low price and benefit from the rebound.

3. When you have extra funds

If you’ve received a bonus, inheritance, or sold an asset, you may consider using that money for a lumpsum investment. In such cases, using a lumpsum mutual fund calculator can help you estimate how much wealth you could build over time. Just enter the investment amount, time period, and expected return to see potential growth.

Comparing SIP and lumpsum in thematic funds

So, what should you choose?

There is no one-size-fits-all answer, but here are some guidelines:

Choose SIP if:

• You are new to investing
• You want to lower risk
• You don’t have a large sum to invest at once
• You believe in the theme but are not sure about short-term performance

Choose lumpsum if:

• You understand the market well
• You believe the theme is about to grow soon
• You’re investing during a market dip
• You have a large amount ready to invest

Can you do both?

Yes! You can use a mix of both strategies. For example:

• Invest 30–40% as a lumpsum if you feel confident about the theme now
• Start a SIP for the remaining amount to take advantage of future opportunities

This way, you balance risk and reward while staying invested over time.

Final Thoughts

Thematic funds can give reasonable returns, but they also come with higher risk because they focus on specific ideas or sectors. Whether you choose SIP or lumpsum depends on your knowledge, comfort with risk, and financial situation.

SIPs offer a relatively, more balanced approach, especially if you’re not sure when to enter. Lumpsum investments may give higher returns, but only if the timing is right.

If you’re considering a lumpsum, it’s wise to use a lumpsum mutual fund calculator to estimate your future returns and plan accordingly. Whatever you choose, always align your investment with your goals and time horizon.

*Please note that the reference to any industry/sector is just for illustrative purpose only and shall not be construed as a research report or a recommendation to buy or sell any security in that industry or sector.

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