Equity Mutual Funds are mutual fund schemes with a majority of their holdings including stocks of publicly listed companies.
The choice of stocks depend on the underlying objective of the fund and the strategies of the fund manager.
Equity mutual funds are a a good option for investors looking for capital appreciation and growth.
Investing in equity mutual funds has better chances of generating the expected yield if individuals stay invested for the long-term.
Portfolio Diversification
Investors can diversify their portfolio through the fund instead of personally buying diverse stock options on the market.
Reliable expertise
Investors can shift the onus of performance analysis, research, and security selection to an experienced team of experts.
Types of Equity Mutual Funds
Large Cap Funds
Large cap funds have portfolios with about 80% holdings in large companies. Large here indicates the Top 100 companies in terms of market capitalization.
Because the companies included in such portfolios are well-established, there is relatively less volatility w.r.t the performance of these stocks.
Mid Cap Funds
Mid cap funds are invested up to 65% in equity shares of the companies which rank between 101 – 250 in terms of market capitalization. Because such companies usually have good growth projection, they have higher chances of generating expected returns than large cap funds although there is higher volatility and more risk.
Large and Mid Cap Funds
These funds invest 35% each in large companies and mid cap companies, with the remaining 30% allotted to equities of other companies or diverse financial instruments as regulated by SEBI.
Small Cap Funds
Small cap funds have about 65% of their holdings in small cap companies i.e. companies which rank 251 and above in terms of market capitalization. In terms of potential to generate returns, small cap funds fare better than large and mid cap funds, but with considerable risk and volatility.
Multi Cap Funds
Multi cap funds are invested in all the above segregated companies with investment strategies governed by market conditions. Multi cap funds are a great way for investors to improve their portfolio diversity across different market capitalizations.
Advantages of Equity Mutual Funds
- Capable to offer a chance of inflation-adjusted returns over the long-term.
- Managed by experienced fund managers who actively track market conditions.
- There is no minimum ticket to get into equity mutual funds, with monthly SIPs starting as low as 500 INR.
- Offer tax rebates through the Equity Linked Savings Scheme (ELSS) up to INR 1,50,000 u/s 80C with a mere 3-year lock-in period
Disclaimer
Pickle-Jar Investments Private Limited (CIN. U67100PN2021PTC201233) is a NISM Certified / AMFI Registered Mutual Fund Distributor registered with the Association of Mutual Funds in India (AMFI), holding ARN No. 184140 valid upto 12 Aug 2027. We are not Registered Investment Advisors (RIA) as defined by the SEBI (Investment Advisers) Regulations, 2013 and do not provide investment advice on any SEBI regulated products. We do not charge any fees to our clients. We receive remuneration by way of commission / Brokerage from the Mutual Funds/ Asset Management Companies.
Mutual Funds investments are subject to market risks. Please read all Scheme related documents carefully before investing. Past performance of schemes may or may not be sustained in future. We advise investors to read data and risk factors of various mutual fund schemes available in the Scheme Information Document (SID), Statement of Additional Information (SAI), Key Information Memorandum (KIM) etc.