types of equity funds in india

Different Types of Equity Funds

By admin_mutual | Jan 10, 2023

According to the investment goal of the underlying scheme, equity funds are mutual fund schemes that invest their assets in the stocks of various companies. Due to their potential to generate wealth over the long term, these funds make excellent investments for capital growth. Equity funds are a good option for investors who want exposure to the stock market and long-term investments.

Types of Equity Funds

There are 13 different categories of equity mutual funds as per SEBI regulations. Investors can invest in a range of equity mutual funds. The investor’s investment goals, risk tolerance, and time horizon should all be taken into consideration when choosing a scheme. These are the main groups of equity funds.

Small cap funds

The minimum amount of assets that small cap mutual funds must put into small cap stocks is 65 percent. Small cap fund stocks have market capitalizations that are ranked lower than 251.

Large-cap funds

Large cap mutual funds must allocate at least 80% of the assets to the top 100 market-capitalization-ranked or large-cap stocks.

Mid-cap funds

A minimum of 65 percent of the assets of mid cap funds must be allocated to mid cap stocks. According to their market capitalizations, these stocks are ranked between 101 and 250.

Large and mid cap funds

The assets of these funds must consist of at least 35 percent large cap stocks and 35 percent mid cap stocks.

Dividend yield funds

These types of mutual funds in India are required to place at least 65 percent of their assets in stocks that pay dividends.

Multi cap funds

Large cap, mid cap, and small cap stocks must account for 25% of each of these funds’ investments. They ought to allocate 75% of their corpus to stock investments.

Flexi cap funds

Large cap, mid cap, and small cap stocks are all included in flexi cap funds’ stock investments. A minimum of 65 percent of the total assets of these types of mutual funds must be made up of equity and instruments with relation to equity.

Sectoral/thematic funds

At least 80% of the assets in these funds must be allocated to a particular industry or subject.

Focused funds

A portfolio of up to 30 stocks may be purchased by focused funds.

Contra funds

According to a contrarian investment strategy, contra funds must place at least 65 percent of their assets in stocks.

Value funds

These plans are required to use a value investment approach and invest at least 65 percent of their assets in stocks.

ELSS or tax saving funds

Tax deductions of up to Rs. 1.5 lakh are allowed for equity linked savings schemes and tax-saving mutual funds under Section 80C. At least 80% of the total assets of ELSS funds must be allocated to stock investments. A three-year lock-in period is required for these funds.

Index funds

An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the NIFTY and SENSEX. An index mutual fund is said to provide broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.


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