Equity funds are a top category of mutual funds. To get the most out of your equity fund investment, you need to understand them.
Equity funds are favorable for a risk-seeker, with a long-term horizon. These best equity mutual funds invest in stocks of companies in different ratios according to their rate, which is further divided into large-cap, mid-cap, and small-cap. On risk continuum, large-caps are the least risky, giving steady returns during market downturns. Small-caps are risky ones that offer skyrocketing returns during a market rally.
SIP is the best way to start investing in mutual funds. It gives you compounding power and the benefit of rupee cost averaging. There are a lot of factors to be considered in getting into a proper mutual fund. You have to consider quantitative factors such as financial ratios and qualitative factors like fund history while making the selection.
The best equity mutual funds mainly invest in stocks of many companies. According to the Securities and Exchange Board of India (SEBI), if a fund invests 65% or more of its portfolio in equities, it is classified as an equity-oriented fund. This article on the best equity mutual funds includes the following:
Best Equity Mutual Funds
Equity mutual funds invest in at least 65% of the stocks in their portfolio. Equity funds can be managed actively or passively. The best equity mutual funds offer excellent returns over the medium to long term horizon. Since equity funds mainly invest in stocks, they are generally considered to be very risky compared to debt and hybrid funds.
Fund value often experiences frequent fluctuations. Only for this, the top equity mutual funds are preferred by aggressive investors. Since equity funds are risky bets, you have to analyze various parameters before investing in a particular fund.
Invest in Best Equity Mutual Funds if you are-
When investing in equity funds, you should consider your risk tolerance and investment horizon. These funds are ideal for investors with an investment duration of five or more years. Therefore, short-term investors should avoid investing in equity mutual funds.
If tax saving is on your mind, you can invest in ELSS, it is considered as the best option under Section 80C of the Income Tax Act, 1961. The ELSS has the shortest lock-in period of three years. Also, it provides a much higher return than other investments covered under section 80C.
A budding mutual fund investor can choose to invest in a large-cap equity fund as these funds invest in equity shares of well-established companies that have a long-term track record of delivering stable returns. In comparison, an experienced investor may prefer to invest in diversified equity funds to get the best mix of risk and return.
Note: There is no recommendation in the fund order. Investors will choose the funds according to their goals, experiences reward. Contact your financial planner if you find it challenging to understand and evaluate funds. You can make a smooth and paperless investment in a handheld fund.