Best Equity Savings Mutual Funds in India (2026)
Equity savings mutual funds combine equity, arbitrage strategies, and debt investments within a single portfolio. Under SEBI regulations, these funds must maintain at least 65% exposure to equity and equity-related instruments, which allows them to qualify for equity taxation.
The strategy aims to provide a balance between growth potential and stability by combining directional equity exposure with hedged arbitrage positions and fixed-income securities.
Top 10 Best Equity Savings Mutual Funds in India Based on Returns, Ranks & AUM
AUM Growth of Equity Savings Mutual Funds - May 2026
In the past one month, the Union Equity Savings Fund Direct Growth has emerged as the leader in net AUM growth, witnessing an impressive addition of ₹75.47 crore. This positions it as one of the top-performing Equity Savings mutual funds in terms of investor interest and fund growth.
Fund | 1M Net Flow | 1M Net Flow % | Action |
|---|---|---|---|
 Union Equity Savings Fund Current AUM: 138.33 Cr | +₹75.47 Cr | 52.88% | Invest |
 HSBC Equity Savings Fund Current AUM: 796.12 Cr | +₹40.56 Cr | 5.39% | Invest |
 Kotak Equity Savings Fund Current AUM: 9.47K Cr | +₹23.6 Cr | 0.25% | Invest |
 Mirae Asset Equity Savings Fund Current AUM: 1.83K Cr | +₹17.51 Cr | 0.93% | Invest |
 SBI Equity Savings Fund Current AUM: 5.61K Cr | +₹9.54 Cr | 0.16% | Invest |
Top Stock added by Equity Savings Mutual Funds - May 2026
Over the last month, HDFC Bank Ltd has been added to the portfolios of 10 out of 24 Equity Savings mutual funds. This signals growing confidence in the stock’s long-term growth prospects among Equity Savings fund managers.
Top Stock sold by Equity Savings Mutual Funds - May 2026
In contrast, Infosys Ltd has been sold by 5 of 24 Equity Savings mutual funds in the last one month. This shift underscores a cautious approach by fund managers toward the stock, reflecting changing market dynamics.
Sector allocation of Equity Savings mutual funds - May 2026
Over the last 6 months, Equity Savings category has seen increased allocation towards Communication, Consumer Defensive, Utilities sectors and allocation in Securitize, Consumer Cyclical, Basic Materials sectors has decreased
Sector | AUM |
|---|---|
 Financial Services Increased by 7.84%, in last 6M | 17.42K Cr |
 Consumer Cyclical Decreased by 14.99%, in last 6M | 5.56K Cr |
 Energy Decreased by 0.07%, in last 6M | 4.31K Cr |
 Basic Materials Decreased by 12.20%, in last 6M | 4.15K Cr |
 Communication Increased by 24.88%, in last 6M | 3.67K Cr |
 Industrial Decreased by 8.37%, in last 6M | 3.53K Cr |
 Consumer Defensive Increased by 18.24%, in last 6M | 3.48K Cr |
 Tech Decreased by 11.15%, in last 6M | 3.44K Cr |
 Health Increased by 5.46%, in last 6M | 3.23K Cr |
 Utilities Increased by 14.41%, in last 6M | 2.5K Cr |
 Real Estate Decreased by 11.43%, in last 6M | 892.44 Cr |
 Securitize Decreased by 100.00%, in last 6M | 0 Cr |
What Are Equity Savings Mutual Funds and How Do They Work?
Equity savings mutual funds invest across three key components within a single portfolio.
These components typically include:
- unhedged equity investments
- equity arbitrage strategies
- debt securities
The combination allows the fund to participate in equity markets while using arbitrage and debt investments to help reduce overall volatility.
Because a significant portion of equity exposure is hedged through arbitrage strategies, the effective market risk is usually lower than the headline equity allocation suggests.
This structure aims to provide a relatively balanced investment approach compared with pure equity funds.
SEBI's Classification Rule for Equity Savings Mutual Funds
SEBI classifies equity savings funds under the hybrid mutual fund category with specific allocation requirements.
Key rules include:
- At least 65% of the portfolio must be invested in equity and equity-related instruments, including arbitrage positions
- A minimum of 10% must be invested in equity arbitrage positions
- At least 10% must be invested in debt instruments
- Each asset management company (AMC) can offer only one equity savings scheme
Because the gross equity exposure (including arbitrage) exceeds 65%, these funds are treated as equity-oriented mutual funds for taxation purposes.
How Do Equity Savings Mutual Funds Generate Returns?
Equity savings mutual funds generate returns through a combination of equity market participation, arbitrage opportunities, and fixed-income income.
1. Net equity component
A portion of the portfolio is invested in equities without hedging. This part benefits from rising stock prices and contributes to long-term capital appreciation.
2. Arbitrage component
The fund may simultaneously buy shares in the cash market and sell equivalent futures contracts. This strategy captures small price differences between the two markets and is largely market-neutral.
3. Debt component
Debt securities such as corporate bonds and government securities provide interest income and help stabilise the portfolio.
The combination of these three components aims to reduce volatility compared with pure equity funds while still maintaining some exposure to market growth.
Who Should Invest in Equity Savings Mutual Funds?
Equity savings mutual funds may be suitable for investors seeking moderate exposure to equities while maintaining relatively lower volatility.
They may be appropriate for:
- Investors looking for equity-oriented taxation with lower effective equity risk
- Investors transitioning from debt funds to hybrid strategies
- Conservative investors seeking balanced exposure to equity and debt markets
- Investors with a short-to-medium investment horizon
These funds can also be used as part of a diversified portfolio to complement other equity or hybrid investments.
However, they may not be suitable for:
- Investors seeking high long-term equity returns
- Investors expecting guaranteed income or capital protection
- Investors with very long investment horizons who prefer full equity exposure
Investors should evaluate their financial goals, risk tolerance, and investment horizon before investing.
Advantages of Equity Savings Mutual Funds
Equity savings funds offer several characteristics that may benefit certain investors.
- Lower volatility than equity funds
The combination of arbitrage strategies and debt securities may help reduce the impact of equity market fluctuations.
- Equity-oriented tax treatment
Because the gross equity exposure exceeds 65%, these funds qualify for equity taxation.
- Diversified investment structure
Exposure to equity, arbitrage, and debt within a single portfolio can help balance risk and return.
Risks of Equity Savings Mutual Funds
Despite their balanced structure, equity savings funds still involve certain risks.
- Equity market risk
The unhedged equity portion remains exposed to stock market fluctuations.
- Interest rate risk
Debt securities may be affected by changes in interest rates.
- Arbitrage opportunity risk
Returns from arbitrage strategies depend on price differences between cash and futures markets, which may vary over time.
- Moderate return potential
Because part of the equity exposure is hedged, long-term return potential may be lower than pure equity funds.
Investors should consider these risks before investing.
Frequently Asked Questions
Yes, Equity Savings Funds can be suitable for the long term, especially for conservative investors. However, they are most effective for short-to-medium-term goals of 3-5 years, where they balance growth and capital protection.
Equity Savings Funds are typically classified as having a moderate to moderately high risk level. The risk is lower than pure equity funds but higher than that of pure debt or liquid funds due to their exposure to the stock market.
Their stability comes from their three-part portfolio structure. The debt and arbitrage components provide a cushion against stock market volatility, reducing downside risk and making the investment journey smoother compared to pure equity funds.
Yes, all mutual funds carry risks. For Equity Savings Funds, the main risks are market risk (affecting the equity portion) and interest rate risk (affecting the debt portion). However, their diversified structure helps mitigate these risks.
The primary goal of Equity Savings Funds is to provide more consistent returns with lower volatility. While returns are not guaranteed, the blend of equity, debt, and arbitrage is designed to smooth out performance across different market conditions.
The performance of Equity Savings Funds varies, but top-performing funds have delivered competitive returns, often outperforming traditional debt instruments. You can check the 1-year, 3-year, and 5-year returns of different funds on the INDmoney app.
The allocation depends on your risk profile and financial goals. For a conservative to moderate investor, these funds can form a core part of the portfolio, perhaps ranging from 20% to 40%. It's best to align this with your overall asset allocation strategy.
You can easily invest in a wide range of top-rated Equity Savings Funds through the INDmoney app. The platform allows you to compare funds, track performance, and invest with zero commission in direct plans.
Mutual Fund Calculators
Calculate your Mutual Funds Lumpsum & SIP Returns for free with INDmoney Calculators
Calculate returns on your SIP investments
Calculate returns on your one-time investments
Regular vs. Direct Mutual Fund Calculator
Calculate commissions saved by investing in direct mutual funds