Thousands of investors are reaping benefits by investing in a diversified portfolio and are building real wealth. All thanks to equity mutual funds, a mutual fund that makes frequent investments in stocks or shares of companies from various industries. The primary goal of these funds is to conjure aggressive long-term returns while mitigating concentration risk.
Are you interested in investing in equity mutual funds?
Here is a simple yet extensive guide to finding the best equity mutual funds.
What are the benefits of investing in a Mutual fund?
The following are some benefits that top equities mutual funds may provide investors:
● Small-ticket investments:
Individuals are not required to make large financial commitments while investing in various stocks through equity funds. In most situations, they may begin a SIP with Rs. 500.
● Diversification of one’s portfolio:
Investments by equity mutual funds are made proportionally in firm shares from various industries. This approach shields investors from the negative consequences of market volatility in certain areas..
● Suitability:
Investors for whom it is difficult to invest in equities individually can consider equity mutual funds.
● Risk reduction:
An Asset Management Company (AMC) comprises professionals that regularly analyze economic, geopolitical, and stock-level events. They assist individuals in making appropriate investments to limit the risk component.
● Extensive regulation:
Equity mutual funds are under strict regulation of the Securities and Exchange Board of India (SEBI). To preserve transparency, all funds must report their month-end portfolios, NAVs, and periodic cost ratios.
Who can benefit from these funds?
Compared to other forms of mutual funds, equity-based funds have more variable returns. As a result, these funds are more suited for the long term, securing the investor from short-term market swings.
Such investments can benefit investors with a high-risk tolerance who are searching for long-term wealth appreciation. However, one must consider various aspects before selecting the finest equity mutual fund.
These funds will benefit:
● Investors who want to participate in equities but lack the necessary skills or time:
Equity mutual funds provide an option for such investors. They only need to select a decent fund and invest in it regularly. The fund manager will handle the rest.
They will examine numerous technical and fundamental indications like a company’s profitability, its capacity to weather difficult times, the industry in which it works, etc.
● Investors who wish to begin investing in stocks with a little sum:
Equity funds allow you to start with as little as ₹100.
● Investors who can commit to a 5-year investment plan:
Investors with ambitions that are more than 5 years distant might consider equity funds. Retirement, children’s education, and other long-term ambitions are examples.
Equity funds might be a smart alternative even if an investor has no specific aim in mind and just wants to earn greater returns on his money for a minimum of 5 years.
● Investors want to reduce their tax burden while increasing their wealth:
Equity funds can also benefit investors who seek to profit from tax savings and long-term capital building.
What about Taxation?
Tax on short-term capital gains:
If investors sell the acquired equity fund units within a year of acquisition, the capital gains are taxed at 15%, regardless of the size.
Tax on long-term capital gains:
This tax applies to investors’ equity share redeems made one year after the date of acquisition. Gains over Rs.1 lakh are taxed at 10% without indexation in India.
Tax Deducted at Source (TDS):
TDS of 10% is levied on dividends from equities mutual funds that exceed Rs.5000.
Concerning the Equity-Linked Savings Scheme (ELSS):
Investments in equity-linked savings programs are tax-free up to Rs.1.5 lakh under Section 80(C) of the Income Tax Act. However, this method requires a three-year lock-in term.
Best Indian Equity Mutual Funds:
Here is our list of the best equity mutual funds in India by Category.
Some Quality Equity Funds:
- Nippon India Value Fund
- Axis Focused 25 Fund
- DSP Quant Fund
- Axis Blue-chip Fund (For conservative investors)
Value/Contra Mutual Fund:
- ICICI Pru Value Discovery Fund
- UTI Value Opportunities Fund
- Franklin India Focused Equity Fund
- HDFC Flexi Cap Fund
Growth Funds at a Reasonable Cost:
- Parag Parikh Flexi Cap Fund
- Mirae Asset Emerging Bluechip Fund
- Kotak Equity Opportunities Fund
- Canara Robeco Emerging Equities
- Mirae Asset Large Cap Fund (For conservative investors)
Best Performing Equity Mutual Funds
- Quant Tax Plan
- Quant Active Fund
- Quant Mid Cap Fund
- Parag Parikh Flexi Cap Fund
- Axis Midcap Fund
- PGIM India Midcap Opportunities Fund
- Mirae Asset Tax Saver Fund
- Mirae Asset Emerging Bluechip Fund
- SBI Focused Equity Fund
- PGIM India Flexi Cap Fund
Best Debt Mutual Funds in India:
Liquid Funds:
- Axis Liquid Fund
- ICICI Pru Liquid Fund
- Nippon India Liquid Fund
Equity Savings Funds:
- ICICI Pru Equity Savings Fund
- Mirae Asset Equity Savings Fund
