Different Equity Mutual Funds to Invest in

Equity mutual funds are a type of mutual fund that invests principally in stock and hence are also known as stock funds. It is comparatively risky than other type of MFs and provide higher returns. These funds are categorised as per the company size and the style of investment in the portfolio. It is an idle choice for long term investment and financial goal such as child’s education or your retirement. Stock funds are broadly invest in business sector such as real estate, commodity sector, health care sector etc. These funds are most suitable for small individual investors. This is because the following features:

• Deduction of risk resulting from a fund’s portfolio diversification
• Small amount of capital required to buy an equity fund

Investment in equity mutual funds is very advantageous and offers following benefits to the unit holder:

• Professional Management -  The customer gets the expertise guidance on investment. The AMCs hire experienced professionals to direct your money in equity. These experts after analysing the market scenario invest your money in the performing funds.
  
  
• Portfolio Diversification - The investor gets the exposure to various stocks and can start investing with the amount as low as Rs. 500. The diversification in investment lessen the risk and reduce the loss. 
  
  
• Liquidity - The stock fund schemes are liquid that is they provide the investor flexibility to redeem the investment as and when required. You can redeem your the amount anytime Net Asset Value. The freedom to pool and withdraw the money according will gives control over the investments.
  
  
• Systematic form of Investment - The potential investor can park money in small units unlike other forms of investment where the single investment of large amount is acceptable. The investment can be made at regular investments through Systematic Investment Plans (SIP). This help the person in long term wealth creation and builds the saving habit. 
  
  
• Tax Benefit - On the investment period of more than 1 year, the investor gets the tax exemption. The tax rebate is also offered by the Government of India on Equity Linked Saving Scheme (ELSS) under Section 80C of Income Tax Act 1961.

Each person has unique choice and different interest. And hence the need to invest may also be different. Therefore, to cater the diverse needs and interest of people there are different types of equity funds available. The different types of Equity Mutual Funds are:

• Equity Linked Savings Scheme (ELSS) - It is an equity cum tax saving instrument that have diversified portfolios where the fund manager can invest in stocks of his selected small, mid and large caps from all sectors. It has the lock-in period of 3 years that is the investor cannot redeem the funds before 3 years.
• Sector Funds - These funds aim at investing in a single sector of the economy such as healthcare, technology, construction etc. It is highly risky to invest in sector funds as entire money is pooled in single sector. These funds are sensitive to various factors.
• Equity Diversified - Under it, the investment is made across various sectors.
• Global Funds - These funds invest in the company located in any part of the world. Alike, international/foreign funds the investment under it can be made even in the investor’s own country.
• Hybrid/Balanced Funds -  As the name suggests, these funds invest in both the equity shares and debt instruments. They provide a balanced mixture of security, income and capital appreciation.

Based on the purpose of investment and risk bearing potential, the customer can choose from variety of mutual fund schemes and procure funds for future needs. Investing in MF reaps better returns in comparison to traditional form of investment. Though risk factor is higher but the return is proportionate.   

Disclaimer - Mutual Funds are subject to market risks. Please read the scheme related documents carefully before investing.

.