An equity fund is a form of a mutual fund, where a minimum of 65% of the corpus of the fund is allocated for equity and equity-oriented investment. Equity mutual funds are known for their relatively high returns. There are also various types of equity funds based on their characteristics and risk-return potential.
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Small-cap funds are equity funds that invest in private stocks with a minimum of Rs. 500 crores market capitalization. Small-cap companies on stock indexes such as the Sensex are usually listed below the 250th position.
Mid-cap funds are equity funds that invest money in the company shares with Rs. 500 crores Rs. 10,000 crore market capitalization. Mid-cap companies are ranked from 101 to 250 on the stock index.
Large-cap funds are equity funds that invest your money in corporate stocks with a large market capitalization. Large-cap companies ranked from 1 to 100 on a stock index.
Multi-cap funds are types of equity funds invested in shares of companies in market capitalization. Asset allocation is adjusted by the fund manager to provide better returns based on market conditions.
Equity-Linked Savings Scheme (ELSS)
ELSS is a type of mutual fund covered by Section 80C of the Income Tax Act of 1961. An investor can claim a tax deduction of up to Rs 1, 50,000 per year with an investment in ELSS funds.
An index fund is a type of fund investing in indexes (Nifty 50, SENSEX, sectoral Index, etc.). The output appears to match the index that replicates it.