Equity Funds are a type of Mutual Funds which Invests in the Shares / Stocks of a company or Derivatives (like Futures and Options). Equity Mutual Funds are further classified based on the Market Capitalisation of Companies, Sector or a Theme the Fund Invests, etc….
Equity Funds are broadly classified based on Market Capitalisation, Based on Sector and Based on Investing Style. So the Fund is Named in such a way which denotes what kind of stocks they Invest.
Based on Market Capitalisation :
These Funds Invest based on the Market Capitalisation of a Stock. SEBI has Categorised the Stocks based on the market capitalisation which modifies the list every 6 months.
Based on Investing Style
These Funds Invest based on style of Investment which is given in a Fund Objective of a scheme. There are two types of Investing Active and Passive Style of Investing. In Active style the fund managers manages the fund very actively by deviating from the benchmark of the fund. Incase of a Passively managed fund the Fund Manager just follows the benchmark Index of the Fund
Based on Sector or Theme:
These Funds Invest based on the Sector like Banking, Pharma, Technology, FMCG, Power, etc….. Generally Sectoral funds are considered risky because they Invest only in a Particular Sector. So if there is any bad time for the sector due to government policies and other factors related to the sector. Sector Funds Invest across different market capitalisation.
Equity Funds are mostly of High Risk Investments. Investors Looking to Invest on a Longer Term Horizons (more than 5 years) can Invest in Equity Funds. So the Higher the risk the reward of the Return on the Investment is also higher. Investors looking to Invest in Equity Mutual Funds as its managed professionally by fund managers.
Equity Funds are taxed under two categories Long Term Capital Gains and Short Term Capital Gains. Equity Funds Invested less than 12 Months and the gains arising are taxed under Short Term Capital Gains. Equity Funds Invested for more than 12 months and the gains arising are taxed under Long Term Capital Gains.
Equity Funds are selected based on the Current Market Trends, Past Performance of a Equity Mutual Fund, Investment Horizon the Investor wants to Invest, Purpose of the Investments like Retirements, Child Education, etc…
You Invest, Check NAV, Latest Information on Equity Funds, Compare Returns of Different Equity Funds through our website www.fundsinn.com/mutual-funds/equity-mutual-funds
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