Equity Mutual Funds

An equity fund is a type of mutual fund that invests in shares of companies listed on stock exchanges. Equity funds pool money from a large number of investors to invest in stocks and generate returns from their price appreciation.

Equity funds are managed by professional fund managers. They invest in a diversified portfolio of stocks, which spreads risk among various sectors and stock themes.

Equity funds are the simplest way for investors to participate in capital markets and benefit from India’s economic and business growth. They are ideal for new investors with limited knowledge and experience in stock markets and can invest even with a small amount.

Due to the volatile nature of equity markets, equity funds carry higher risk along with high growth potential.

There are different types of equity funds such as large cap, small cap, mid cap, index funds, sectoral funds, etc. that invest in particular types of stocks as per the scheme objective.

Investors can select a fund as per their financial goals and risk appetite. Funds declare an NAV for every business day, which fluctuates according to market conditions. Investors can buy and sell units of the fund at the prevailing NAV.

Step 1: Visit the Rupeezy app and navigate to the ‘Invest’ segment.

Step 2: Click on ‘Explore’ and select ‘Equity’ category.

Step 3: Select the type of equity fund or simply search for the fund name.

Step 4: Analyze the risk-return metric for all funds in a category.

Step 5: Go to ‘List View’ and check each fund’s details and comparison.

Step 6: Select your choice of fund and investment mode as ‘One Time’ or ‘SIP’.

Step 7: Enter the investment amount and make payment via UPI or Net Banking.

• Professional Management: Equity funds are managed by professionals with experience, expertise, and time to research stocks and actively manage the portfolio.
• Risk Diversification: Equity funds invest in diversified portfolios across many stocks and sectors, thus mitigating the risk.
• Convenience: Equity funds are low cost due to economies of scale, convenient, and allow investors to invest in stocks even with a small corpus.
• Well Regulated: Equity funds are secure and operate under stringent SEBI norms.
• Liquidity: Investors can exit equity funds anytime and access their money easily.
• Market Risk: Equity funds are prone to volatility in markets and the price of stocks. They are suitable for investors with a high-risk appetite and a long investment horizon.

• Mutual funds are tax efficient when held for the long term. Capital gains from equity mutual funds held over 12 months are taxed at 12.5% (above a threshold of Rs. 1,25,000 in a financial year). Interest and capital gains from debt instruments are taxed at income tax slab rates.
• Short term capital gains (units held<12 months) in equity funds are taxed at 20%.
• Investment in ELSS funds up to Rs. 1,50,000 qualifies for a tax benefit under Section 80C.