You are here: Home ยป Money Tutor
How To
What are different types of equity mutual funds
Did you know there are different types of equity mutual funds and each offer a different type of benefit? But before we tell you more about that, let’s see what an equity mutual fund actually is. 
 
When mutual funds invest maximum part of their corpus in the stock market, they are broadly called an equity mutual fund schemes. Remember, the structure of the fund may vary for different schemes and also on fund manager’s view on different stocks. The structure depends on the objective of the scheme. 

In fact, depending on their investment objectives, you can classify equity mutual funds into a number of types.

Large Cap Equity Funds: For instance, funds which invest a large portion of their corpus in companies with large market capitalization are called large-cap funds. This type of fund is known to offer stability and sustainable returns, over a period of time.
 
Mid-Cap Equity Funds: Another type of equity mutual fund is called mid-cap funds. Here the fund invests in stocks of mid-size companies, which are still considered developing companies. Likewise equity funds which invest in stocks of small-size companies are called small cap equity funds.

 Multi Cap Equity Funds: these funds invest in companies across different sectors and hence reduce the amount of risk in the fund. Diversification helps prevent events that could affect a single sector for affecting the fund, and hence reduce risk.”

Thematic Equity Funds: These funds invest in securities of specific sectors such as IT and pharmaceuticals. It is specified in their offer documents. So, the performance of these schemes depends on the performance of the respective sector. These funds may give higher returns, but they also come with increased risks.

Equity Linked Savings Scheme: In fact, did you know another type of equity mutual fund scheme called equity-linked savings scheme (ELSS) actually give you tax savings? You have to lock in your funds for three years in ELSS, and they work as a good investment option for those who want to invest in equity MFs as well as get tax savings.

Investing in equity mutual funds comes at slightly higher risk as compared to debt mutual funds, but they also give your money a chance to earn higher returns. Now that you know more about different types of equity mutual funds, what are you waiting for, call your investment advisor today.








 
x