{"id":21102,"date":"2021-07-26T09:51:23","date_gmt":"2021-07-26T09:51:23","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=21102"},"modified":"2023-06-23T12:25:16","modified_gmt":"2023-06-23T12:25:16","slug":"what-is-equity-mutual-fund","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/moneyfy\/equity-funds\/what-is-equity-mutual-fund\/","title":{"rendered":"What is Equity Mutual Fund?"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p>So you\u2019ve finally decided to start your mutual fund investment journey. As you explore your options, you will find that the MF market has something to offer to every investor \u2013 risk-loving, risk-averse, short-term, long-term, and more. But, if you\u2019re wondering if equity funds are the ideal pick for your investment portfolio, this guide will help you decide.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are equity mutual funds?<\/strong><\/h2>\n\n\n\n<p>These funds invest a predominant share of their assets, as much as 60%, in stocks of companies. As a result, the company&#8217;s performance in which the funds are invested plays a key role in determining returns. They are often broadly described as &#8216;risky&#8217;, but that&#8217;s just half the truth. With equity funds, it is the investment horizon that you need to pay attention to. If you stay invested for the long term, you can build a healthy corpus.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Features<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">\u2022 <strong>Risk factor<\/strong><\/h3>\n\n\n\n<p>The risk factor ranges from high to moderate, but it all boils down to risk diversification and portfolio rebalancing. Ensure that you spread the risk over a mix of equity, debt, and alternative market instruments. Also, sell and buy units from time to time to always maintain desirable asset allocation levels, and you have nothing to fear.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">\u2022 <strong>Ticket size<\/strong><\/h3>\n\n\n\n<p>Building a balanced portfolio can prove to be pricey. If you cannot afford to pay a lump sum, simply opt for the monthly <a href=\"https:\/\/www.tatacapitalmoneyfy.com\/systematic-investment-plan\" data-type=\"URL\" data-id=\"https:\/\/www.tatacapitalmoneyfy.com\/systematic-investment-plan\" target=\"_blank\" rel=\"noreferrer noopener\">Systematic Investments Plans or SIP<\/a>. You can start your investment journey with just Rs. 500 per month.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">\u2022 <strong>Investment horizon<\/strong><\/h3>\n\n\n\n<p>The equity market is highly volatile in the short run. However, the probability of being affected by market turbulence significantly reduces in the long run. These funds are ideal for investment goals like retirement planning, building an education corpus, etc.<\/p>\n\n\n\n<p style=\"color:#FF0000\"><strong>Additional Read: <\/strong><a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-management\/mutual-fund-trends-to-keep-an-eye-on-in-2021\/\">Mutual Fund Trends to keep an eye on in 2021<\/a><strong><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Types of equity funds<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Based on market capitalisation<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Large cap funds \u2013 <\/strong>invest in stocks of top 100 companies. Since the companies hold significant market share and enjoy a good reputation, these funds are the least risky.<\/li><li><strong>Mid cap funds \u2013 <\/strong>invest in companies ranking between 101 and 250. Though riskier than large cap funds, mid cap funds offer higher earning potential.<\/li><li><strong>Small cap funds \u2013 <\/strong>invest in start-ups or small companies that rank from 251 or above. The earning potential is extremely high, and so is the risk factor.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Based on investment style<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Thematic or sectoral funds \u2013 <\/strong>invest at least 80% of their assets in a particular theme or sector, as per the SEBI mandate. These equity <a href=\"https:\/\/www.tatacapital.com\/moneyfy\/home\">mutual funds<\/a> are usually added to the portfolio to augment returns.<\/li><li><strong>Dividend yield funds \u2013 <\/strong>invest predominantly in high yielding dividend stocks. Meaning, stocks of companies with stable cash flows and business models. Hence, they are a low-risk option.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Based on tax efficiency<\/strong><\/h3>\n\n\n\n<p><a rel=\"noreferrer noopener\" href=\"https:\/\/www.tatacapitalmoneyfy.com\/mutual-funds\/sebi-categories-equity\/elss\" data-type=\"URL\" data-id=\"https:\/\/www.tatacapitalmoneyfy.com\/mutual-funds\/sebi-categories-equity\/elss\" target=\"_blank\">ELSS<\/a>, short for Equity Linked Savings Scheme, are the only tax-saving funds, and they are equity-oriented. Income Tax Act&#8217;s Section 80C allows tax exemptions of up to Rs. 1.5 lakhs of your yearly taxable income. You can save up to Rs. 46,800 with these funds.<\/p>\n\n\n\n<p style=\"color:#FF0000\"><strong>Additional Read: <\/strong><a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-management\/direct-equity-vs-equity-mutual-funds-which-should-be-preferred\/\">Direct Equity vs. Equity Mutual Funds: Which should be preferred?<\/a><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Over to you<\/strong><\/h3>\n\n\n\n<p>Want to know about the best equity mutual funds available today? Compare funds on Tata Capital\u2019s <a href=\"https:\/\/play.google.com\/store\/apps\/details?id=com.tatacapital.moneyfy&amp;hl=en\">Moneyfy app<\/a>. See our top picks, match the fund features with your investment goals, and build a balanced portfolio. Start investing in the equity market from the comfort of your home!<\/p>\n\n\n\n<div class=\"wp-block-group alignwide\"><div class=\"wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow\">\n<div class=\"wp-block-columns alignwide is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\"><\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\">\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/play.google.com\/store\/apps\/details?id=com.tatacapital.moneyfy&amp;hl=en\">Download Moneyfy App<\/a><\/div>\n<\/div>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\"><\/div>\n<\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>So you\u2019ve finally decided to start your mutual fund investment journey. As you explore your options. <\/p>\n<p><a href=\"https:\/\/www.tatacapital.com\/blog\/investments\/what-is-equity-mutual-fund\/\">Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":21103,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[69],"tags":[],"class_list":["post-21102","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-equity-funds"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What are Equity Mutual Funds? - Tata Capital Blog<\/title>\n<meta name=\"description\" content=\"If you are planning to choose equity funds as the ideal pick for your investment portfolio, this guide will help you decide. 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