Equity Fund

Invest in a diverse range of companies with Equity Funds, where at least 65% of your investment goes into stocks as mandated by SEBI. Choose from fund types based on company size, investment style, and geography.

At least 65% invested in equities

At least 65% invested in equities

Active and passive management options

Active and passive management options

Diverse in sectors, sizes, and geographies

Diverse in sectors, sizes, and geographies

Accessible for different investor goals

Accessible for different investor goals

List of Equity Mutual Funds Based on Last 3-Year Returns

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What are Equity Funds?

Equity Funds pool money to invest mainly in company stocks. They put at least 65% of their money in shares. These funds can be managed by experts (active) or follow market indexes like the Sensex (passive). Equity funds come in many types, based on company size, how they invest, and where the companies are located. You can choose from funds that invest in Indian companies, global markets, or specific industries like technology or healthcare.

Benefits of Investing in Equity Funds

Adding Equity Funds to your investment mix can offer numerous benefits. Let’s see how!

  • Higher Earning Potential

    Equity Funds often outperform other investments like bonds or fixed deposits over time. Investing in companies' stocks gives you a share in their potential profits and growth.

  • Risk Reduction

    These funds diversify your investment across various companies and industries, minimising the impact if one investment dips. It's a safer approach to aim for solid returns.

  • Managed by Experts

    Fund managers with experience and expertise handle the investment decisions in Equity Funds. They work to grow your investment, leveraging their market knowledge.

  • Liquidity Advantage

    Equity Funds provide the flexibility to sell your investment relatively quickly if you need to, offering better liquidity compared to assets like real estate.

  • Variety of Options

    With Equity Funds, you can choose from a range of sectors, market capitalisations, or regions, aligning your investment with your financial goals and risk tolerance.

  • Income from Dividends

    Beyond the potential for investment growth, some Equity Funds also pay dividends, offering you a regular income stream from your investments.

Who should invest in Equity Funds?

Equity Funds are ideal for investors looking for higher returns than what debt funds offer, understanding that there's a bit more risk involved.

  • Beginners in Investing

    If you're new to investing, Equity Funds are a good start. They let you invest in the stock market without needing to pick individual stocks or have a lot of knowledge. The fund managers make the investment decisions for you.

  • Small Investors

    They're great for small individual investors, too, because these funds allow for diversification, spreading risk across various stocks with just a small initial investment.

  • Individuals Seeking Less Risk

    For investors looking to reduce risk through diversification, Equity Funds offer a practical solution. By pooling funds from many investors, these funds can invest in a wider range of stocks than most individuals could afford on their own. 

Limitations of Investing in Equity Funds

Even with their advantages, Equity Funds come with certain limitations to consider:

  • Market Risk

    Equity Funds are tied to the stock market, so if the market goes down, your fund's value likely will too. This can mean your investment might lose value during market dips.

  • Performance Variability

    Not all Equity Funds perform the same. Some may do well while others might not, depending on the fund's specific investments and the fund manager's decisions.

  • No Guaranteed Returns

    Unlike fixed deposits or certain bonds, Equity Funds don't offer guaranteed returns. Your investment's success is dependent on market conditions and the specific stocks the fund holds.

Points to consider before investing in Equity Funds

Before you invest in Equity Funds, here are six crucial aspects to evaluate

  • Investment Goal Alignment

    Ensure the fund's objective matches your financial goals. Whether you're saving for retirement, a major purchase, or wealth accumulation, choose a fund that aligns with your timeline and objectives.

  • Risk Tolerance

    Equity Funds come with varying levels of risk. Assess your comfort with potential market fluctuations and choose a fund that fits your risk appetite, whether it's conservative, moderate, or aggressive.

  • Fund Performance History

    While past performance isn't a guarantee of future results, it can provide insights into how the fund has managed through different market conditions. Look for consistent performance over the long term.

  • Expense Ratios and Fees

    Understand the costs associated with the fund, including management fees and administrative expenses. Lower fees can significantly impact your investment returns over time.

  • Fund Management

    Research the fund manager's experience and track record. Skilled management can be a key factor in the fund's success, especially in actively managed funds.

  • Diversification

    Check how the fund diversifies its holdings across sectors, geographies, and asset classes. Proper diversification can reduce risk and stabilise potential returns.

How to Start Investing in Equity Funds with INDmoney

Ready to invest in Equity Funds through INDmoney? Here’s a straightforward guide to get you started:

  • Step 1

    Install the INDmoney app and sign up. Complete your Know Your Customer (KYC) process to activate your free investment account.

  • Step 2

    Once your account is active, explore the mutual fund section in the app. There, you can find various equity funds. Select the one that aligns with your investment goals.

  • Step 3

    Evaluate the equity fund options by examining their past performance, risk factors, Asset Under Management (AUM), Expense Ratios, and the sectors and stocks they invest in.

  • Step 4

    Decide how you want to invest: in regular intervals through a Systematic Investment Plan (SIP) or a one-time lump sum. On the fund's page, choose the appropriate option.

  • Step 5

    Specify the amount you wish to invest, whether as a SIP or a lump sum.

  • Step 6

    Arrange your payment method. For SIPs, set up an auto-debit with your bank or UPI. For a lump sum, you can use UPI, net banking, or other bank transfer methods like NEFT or RTGS.

Frequently Asked Questions

Equity funds pool money from investors to primarily invest in stocks, aiming for capital appreciation.

These funds invest in a diversified portfolio of stocks, allowing investors to benefit from the overall performance of the stock market.

Equity funds come in various types, including large-cap, mid-cap, small-cap, sector-specific, and thematic funds, catering to different investment preferences.

Advantages include diversification, professional management, potential for capital appreciation, and direct exposure to stock market trends.

Equity funds are suitable for long-term investors comfortable with market fluctuations and seeking growth and capital appreciation.

Risks include market volatility, no guaranteed returns, and the possibility of underperformance due to poor fund management or adverse market conditions.

Consider factors like investment goals, risk tolerance, fund type, expense ratios, historical performance, and prevailing market conditions when selecting an equity fund for your portfolio.

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