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Equity Mutual Fund

Equity Mutual Fund – Basics Explained

Posted on July 3, 2020May 26, 2021 by Finance Infopedia

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.

Table of Contents

  • Small-Cap Funds
  • Mid-Cap Funds
  • Large-Cap Funds
  • Multi-Cap Funds
  • Equity-Linked Savings Scheme (ELSS)
  • Index Funds

Small-Cap Funds

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

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

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

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.

Index 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.

Also read: Invest in equity to beat inflation?

Also read: What is mutual fund? Definition, benefits, types & more

Also read: Debt funds – basics explained

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Author
Finance Infopedia

Hai,

My name is Ashlin Joby Thekkan. Living in Kerala in India (also known as God’s own country). Over the last 10 years, I have read and researched a lot on topics like personal finance management, equity investing etc. Now I can proudly say that all my efforts have helped me to gain knowledge and expertise in the field of equity investment and personal finance management.

I realized that the level of financial literacy among people, even among those who are well educated is very low. The moment I realized my passion for teaching personal finance management and investing, I started looking for platforms through which I can reach out to the public and teach them on related topics. I found that blogging is the right platform for me to reach out to a large audience and that helped me to become the founder of Finance Infopedia.

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