Equity Funds – The Features And Benefits Of Investing In This Mutual Fund

If you like to invest in the share market, there is a good chance that at one point or another; you would have invested in mutual funds. Mutual funds allow you to diversify your investment portfolio and also help you earn additional income. An equity fund is one such mutual fund that is best known as a ‘high-risk high-reward fund’. This fund provides capital appreciation over various investment tenures – short, medium and long. Here are the main features and benefits of investing in equity based mutual funds.

1. Equity based funds are regulated by SEBI

The Securities and Exchange Board of India or SEBI serves as the chief regulator of all types of mutual fund investments, including equity linked mutual funds. This regulatory body has mandated all fund houses to disclose their month-end portfolios on their respective websites, while also mentioning the periodic expense ratios and net Asset Value or NAV daily. This backing by SEBI makes your investment safe. Furthermore, you can get this information on investment advisory platforms, which provide portfolio analysis and performance reports, enabling you, the investor to make informed decisions.

2. You can diversify your investment portfolio

There are several different types of equity mutual funds in which you can invest. The categorisation of these funds is done on the basis of market capitalisation, themes, sectors, and the investment style of the fund manager. This diverse characteristic of the fund allows you, to choose from different funds to invest in. Diversifying your investment portfolio also allows you to mitigate the risks associated with investing in a single fund.

3. You can invest in lump sum or through SIP

One of the most prominent features of equity mutual funds is that investments can be done in lump sums. It is just as easy to invest through a Systematic Investment Plan or SIP. SIPs are ideal for young investors who cannot afford to invest large sums of money, in one shot. Moreover, these investments inculcate discipline when it comes to investments, since you have to invest a fix amount each month. In fact, you can invest as little as ₹500 per month through SIP.

4. The fund is managed by professional fund managers

The great thing about investing in equity oriented funds is that you do not have to do any research or analysis before investing. These funds are managed by professional fund managers with years of experience under their belts. Such managers can predict market movements and are well aware of how it functions. As such, buying and selling decisions are taken by fund managers, so that your investment objectives and financial goals may be achieved.

5. Equity based funds are tax efficient

Equity funds are also known to be some of the most tax-efficient funds. When you invest in this mutual fund, you do not have to worry about paying capital gains taxes to your fund house, irrespective of how often fund units are purchased or sold by fund managers. You can simply pay the capital gains tax on an individual level.
Final word: Equity savings schemes are widely considered as risky investments so you must assess your risk appetites and your preferred investment tenures before investing. However, investing in equity based funds can prove to be highly beneficial. Just ensure make informed investment decisions. Remember to check the reputation of the fund manager as this individual holds the key to your investment. A good manager can indeed help you earn high returns on your investments.

4 Advantages of Investing in Equity Funds

The investment market is full of opportunities. Investors can choose from a wide range of securities that can help them reach their financial goals over specific investment horizons. For most investors, mutual funds remain their preferred investment instruments. Among the various kinds of mutual funds available in the investment market, equity mutual funds are a popular choice. These funds typically aim to generate higher returns for investors. The fund manager invests in shares of companies with different market capitalisation. Here are 4 advantages of investing in equity based funds.

1. Equity based funds are professionally managed

When it comes to share market investments, it is best to invest in securities managed by experts in the field. The great thing about equity linked mutual funds is that they are managed by professional fund managers who know the ins-and-outs of the investment market. Such managers study the market on a daily basis and make investments by predicting market fluctuations. They also refer to real-time data as well as past-performance reports of funds before making any investment decisions. As such, you can rest assured that your money is in safe hands when a fund is managed by a reputed, professional fund manager.

2. Investing in equities can lead to capital appreciation

One of the most basic reasons why investors prefer to invest in equity linked mutual funds is that it has the potential to appreciate the capital invested. An equity based fund is one of those rare funds that provide returns that can help beat inflation. As it always happens in the stock market, if the price of the stock rises, it automatically results in capital appreciation. If you make well-informed investment decisions over a good period of time, you can truly create a good corpus over time, by strategically investing in equity based funds.

3. You can benefit from portfolio diversification

A diversified investment portfolio is crucial if you wish to mitigate the risks associated with share market investments. This is a great benefit you can get form investing in equity savings schemes. By investing in equity based funds, you can spread your investments over in different sectors, which can help reduce the risks associated with losses on investments in future. In the event of market volatility and under-performance; those stocks that are out-performing can make of for losses incurred by the under-performers. This helps minimise market risks and losses on your overall investment portfolio.

4. You can liquidate your investments whenever you like

The great advantage of investing in mutual funds is that they can be liquidated easily. Since equity oriented funds fall in the general category of mutual funds, this liquidity benefit is associated with them as well. You can easily get back your corpus in your savings bank account when you invest in equity based funds. It is possible to redeem the fund (partially or completely) at any given time; especially when you find yourself facing a financial emergency. Moreover, you can invest in these funds through SIPs, which you can stop anytime. Pre-term investments are credited to your account in a week whereas matured funds are deposited within 3 days.

Final word: Equity funds produce higher and better returns than both, fixed deposits and debt funds. However, the returns earned by investors, largely depends on the performance of the company. Since these funds have the ability to provide higher returns, most investors, prefer investing in them. However, equity based funds are ideal for investors with medium-to-high investment appetites. If you consider yourself a conservative investor, you should stick to investing in debt based mutual funds.