Various types of Equity Mutual Funds in India


Equity funds are the main choice for mutual fund investors as it generates high returns

The features of equity funds help investors to invest in the share market indirectly with the help of professional fund managers

Mutual funds are a great investment instrument that offers more choices to investors. You can find different types of mutual funds to choose based on your financial goals. This investment option is broadly classified into three main categories, such as debt funds, equity funds, and hybrid funds. Even if all of them have its own distinct features, the popularity of equity funds has increased over the past few years because of its immense gains. The main reason for the attractiveness of equity funds is its scope to offer high returns. These mutual fund schemes largely invests in equity stocks. Let us try to understand about Equity mutual funds and their different types.

Equity mutual funds in India

Equity funds are the main choice for mutual fund investors as it generates high returns by investing a major part of its assets in equity shares of companies in different proportions. The fund managers invest the remaining assets in debt and money market instruments. Equity mutual funds are an ideal choice for those who look for long-term investment goals. Whether you are a market-savvy investor or a novice one, this is a great investment option for you to fulfill your financial goals.

Features of equity funds

The features of equity funds help investors to invest in the share market indirectly with the help of professional fund managers.  Here are the features of equity mutual funds:

  • Cost efficiency

One of the most attractive features of equity funds is its cost-efficiency. An investor will get the exposure to several stocks if he or she invests a nominal amount in this fund to generate income.

  • Diversification

Investors can get more affordable portfolio diversification by investing in equity mutual funds.

  • Professional management

Investors need not spend time to track the potential and prospectus of the companies in their mutual fund portfolio in equity mutual funds as skilled fund managers appointed by the fund houses do research and monitor companies continuously.

  • Holding period

An investor can make capital gains when he or she redeems his or her equity fund units, which are taxable. The taxation rate is based on how long you invested in equity funds.

  • Tax exemption

Another notable feature of equity funds is its tax-saving feature. Equity funds have the shortest lock-in period of three years and exempt from tax under section 80C of the Income Tax Act.

Different types of equity mutual funds

As an investor, you need to choose your equity fund carefully to fulfill your financial goals. So, you need to be aware of the different types of equity funds available in India. Take a look at the various equity funds available in the country.

Based on Market capitalization, equity mutual funds are classified into:

Large cap equity funds:  These are reliable and stable investments in which the major part of its corpus invests in companies with massive market capitalization. These funds can offer sustainable returns to investors over a period of time.

Mid-cap equity funds:  Relatively more risky than large-cap funds, mid-cap equity funds are those funds that invest in the stock of mid-sized developing companies.

Small-cap funds:  Invest in the stocks of small-sized companies, these funds are prone to instability, and offer fluctuating returns.

Multi-cap equity funds:  These are equity funds that invest in stocks of companies across market capitalization irrespective of its size. Multi-cap funds invest in large-cap, mid-cap, and small-cap stocks and offer the advantage of diversification.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”,  so let me do Nivesh