Investing in mutual funds has become a popular option for many investors if a June 2021 report by Livemint, a financial daily, is anything to go by. If mutual funds have got your attention and you want to start investing in them to grow your wealth, it is always better to analyze your kind of investor before making investment decisions.
Choosing the right mutual fund can be confusing, with different funds that cater to different needs and risk appetites. Among the various schemes available, an equity mutual fund is one such scheme that invests in shares or stocks of publicly listed companies. These kinds of finds have numerous benefits, some of them worth mentioning are –
- Equity mutual funds are subject to risks, so not everyone is inclined to invest directly. But in the hands of a qualified fund manager, equity mutual funds could generate attractive returns in the long run for investors.
- An Equity Linked Savings Scheme (ELSS) is an equity mutual fund that provides tax-saving advantages under Section 80C of the Income Tax Act, up to Rs 1.5 lakhs.
- To generate maximum returns on a portfolio, fund managers monitor the market continuously and decide investment options for investors. Depending on the duration of your investment, your returns are taxed differently.
However, investors need to consider the complete picture before investing in an equity mutual fund.
Like with any investment instrument, equity funds have some disadvantages too –
- Fund management expenses are slightly on the higher side since the salary of fund managers, exit ratio, and other costs have to be factored in
- Equity funds are riskier than debt funds. Therefore, investors maintaining a lower-risk portfolio may not wish to invest in such funds.
- A lock-in period of three years is required to benefit from tax savings in an ELSS, which impacts its liquidity.
Top-performing equity mutual funds in India
When we look at the past and current performance of the best equity mutual funds in the market, these are some of the top equity mutual funds today:
- Mirae Asset Healthcare Fund Direct-Growth – The annualized returns for three years are slated to be around 33.80%. The NAV of this healthcare sector fund stands at 24.417, and the exit load percentage is 1% for 365 days.
- Quant Small Cap Fund-Growth Option Direct Plan – The annualized five-year return is around 21.27%. The NAV as of August 16, 2021, is 124.66, and the exit load percentage is the same as Mirae’s. It is a small-cap fund with a high level of risk, but it has shown tremendous performance in the past year.
- ICICI Prudential Technology Fund Direct Plan-Growth – Being a technology sector fund, it has been among India’s top equity India’sual funds, divisive return of 29.86% calculated based on the last five years’ average. Its NAV is 152.68, and the exit load ratio is 1% for 15 days. This fund has set the S&P BSE Information Technology index as the benchmark.
While you can invest in several mutual funds today, don’t lose sight of the main criteria. Keep in mind the level of risk, financial ratios, and expected return to narrow down your search regarding equity mutual funds.
To find equity funds that align with your expectations, risk appetite, and financial objectives, it is prudent to seek expert guidance to make your mutual fund investments work for you. Reach out to one today!