equity mutual funds
equity mutual funds An equity mutual fund is a type of mutual fund that invests primarily in shares or equities. Its objective is to provide long-term capital growth which is achieved by investing in a diversified share portfolio spread across various sectors and industries.
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| Equity mutual funds |
The main features of equity mutual funds are
- Investment objective - Long Term Capital Growth
- Investment portfolio - Shares & Equities (National & International)
- Risk level - Medium and High
- Return potential - High returns in the long term
- Diversification - spread the risk
- Professional management - Better to be seen by a good manager
- Liquidity - Units can be easily bought and sold through stock markets or fund houses
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The types of equity mutual funds are
Large-cap funds
A large-cap fund is a type of equity mutual fund that invests in large companies that have a high market capitalisation. The market capitalisation of these companies is usually more than ₹10,000 crore.
The main features of large-cap funds are
- Investment purpose - Launch Term Capital Growth
- Investment portfolio - Shares of big companies
- Risk level - moderate
- Return potential - Stable and regular returns
- Diversification - Often investing in all sectors
- Professional management - Experienced Manager
The benefits of large-cap funds are: Stability - Investing in big companies reduces risk Regular returns - Shares of big companies have the potential for regular returns Diversification - Investing in different sectors reduces risk.
Large-cap funds are suitable for investors who seek long-term capital growth, are willing to take moderate risks, and want stable and regular returns.
Mid-cap funds
Mid-cap funds are a type of equity mutual fund that invests in medium-sized companies with a market capitalization between ₹500 crore and ₹10,000 crore.
The main features of mid-cap funds are
- Investment purpose - Launch Term Capital Growth
- Investment portfolio - Shares of medium-sized companies
- Risk level - medium to high risk
- Return potential - Potential for high returns
- Diversification - Investing in different places
- Professional management - Experienced Manager
Benefits of mid-cap funds are: Potential for high returns Medium-sized companies have the potential for high returns Diversification reduces risk by investing in different sectors Managed by professionally experienced fund managers.
Small-cap funds
Small-cap funds are a type of equity mutual fund that invests in small companies with a market capitalization of less than ₹500 crore.
Key Features and Benefits of Small-Cap Funds
- Long term capital growth
- Shares of top sized companies
- High risk level
- Very high return potential
- Invests across sectors
- Managed by an experienced fund manager
- Willing to take high risk
- Want very high return potential
- Small companies have high return potential
Multi-cap funds
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Multi-cap funds are a type of equity mutual fund that invests in companies of different market capitalizations, such as large-cap, mid-cap and small-cap companies.
The advantage of multi-cap funds is that diversification helps in investing in different sectors, thereby reducing the risk. When investing in different sectors, one can expect high returns.
When accompanied by experienced managers, every investor can expect high returns and security and this is good news for those who are willing to take moderate to high risk.
Sectoral funds
Sectoral funds are a type of equity mutual fund that invests in specific sectors or industries, such as healthcare, IT, banking, etc.
Those who want to invest for long term will invest in shares of companies of specific sector industries. The risk level will be high but at the same time there will be full possibility of high returns.
There is less diversification and hence higher risk. Even with experienced managers, it is good for those who expect high returns and can leave their money to compound for a long time and are ready to take a high level of risk.
Thematic funds
Thematic funds are a type of equity mutual fund that invests based on a specific topic or theme, such as clean energy, digitalisation, healthcare, etc.
These are also ready for the long term, they invest in companies related to the theme, if the diversification is less then the risk is more, through this you can expect high returns.
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