Discover the opportunity of Equity Mutual Fund

Posted On July 30, 2019

Equity mutual funds are defined as those funds that invest somewhere around 65% of their portfolio inequity/stocks. Such funds could be passively or actively managed. Best equity mutual funds end up providing high returns over a medium-long term horizon. Since these equity oriented mutual funds are majorly invested in stocks, hence, there is a certain risk factor invloved; the fund value might face some frequent fluctuations. Due to this reason, investing in equity mutual funds is generally preferred by aggressive investors who have risk appetite.The investors must make sure to analyze the parameters before selecting equity mutual funds.

Benefits of investing in Equity mutual funds

• Investing in the best equity mutual funds lets you have exposure to various stocks just by investing a nominal amount. Butthere is always a risk factor involved for your portfolio, hence, take the decision accordingly.
• You earncapital gains as you redeem units of equity mutual funds. These earned capital gains are subject to tax, but the tax rate depends on the duration of invested period (called as a holding period).
• You also get a sigh of relief whilst investing in a types of Equity Funds called ELSS which is a tax-saving investment instrument under section 80C of the Income Tax. Having a minimum lock-in-period of 3 years and a promising potential of high returns, ELSS has a good track record compared to other options under 80C.

Types of Equity funds

Based on Themes and Sector: These funds particularly focus their investments on a particular theme or sector. Thematic funds follow particular themes, like international stocks, or emerging consumer companies. As these funds focus on a particular theme or sector, they may turn out to be riskier.

Based on Market Capitalization:

Large-cap equity mutual funds: Usually, large-cap companies have huge investment potential, thus, making them reliable investments. They provide stability in large-cap funds.

Mid-cap equity mutual funds: They invest in medium-sized companies.

Mid-and-small-cap equity mutual funds: Theseare funds that invest in both small-cap and mid-cap companies.

Small-cap- equity mutual funds: Usually small cap companies are prone to volatility; therefore, these funds deliver fluctuating returns.

Multi-cap equity mutual funds: Funds that invest across the market capitalization, i.e. in small-cap, middle-cap, and large-cap are called multi-cap funds.

Based on Investment Style: Equity mutual funds which follow a particular indexare known as ‘index funds’. These funds are low-cost funds because there is no involvement of a fund manager. 

Top 5 Equity Mutual Funds

1. Kotak Emerging Equity Scheme (G) -It comes with a 3 year return of around 16.44 %.
2. L&T Midcap Fund (G)-Direct Plan – It comes with a 3 year return of around 19.1 %.
3. SBI Small Cap Fund (G) – Direct Plan – It comes with a 3 year return of around 19.12 %.
4. Mirae Asset Emerging Bluechip (G) – It comes with a 3 year return of around 22.27 %.
5. CanaraRobeco Emerging Equities Fund – It comes with a 3 year return of around 19.63 %.