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.