Top Equity Funds

Equity Mutual Funds

Equity funds primarily invest in stocks. Ideal for long term wealth creation.
Risk: Medium to HighInvestment Horizon: Long Term
1Y return
Quant Small Cap Fund Growth Option Direct Plan
Quant Small Cap Fund Growth Option Direct Plan
93.88%
AUM ₹1375 Cr Expense 0.56%
L&T Emerging Businesses Fund Direct Growth
L&T Emerging Businesses Fund Direct Growth
81.79%
AUM ₹8190 Cr Expense 0.73%
Quant Infrastructure Fund Growth Option Direct Plan
Quant Infrastructure Fund Growth Option Direct Plan
80.03%
AUM ₹292 Cr Expense 0.58%
Canara Robeco Small Cap Fund Direct Growth
Canara Robeco Small Cap Fund Direct Growth
78.02%
AUM ₹1914 Cr Expense 0.45%
Nippon India Small Cap Fund - Direct Plan - Growth Plan
Nippon India Small Cap Fund - Direct Plan - Growth Plan
77.27%
AUM ₹18832 Cr Expense 1.03%
Principal Small Cap Fund Direct Growth
Principal Small Cap Fund Direct Growth
76%
AUM ₹513 Cr Expense 0.73%
Tata Small Cap Fund Direct Growth
Tata Small Cap Fund Direct Growth
75.41%
AUM ₹1897 Cr Expense 0.35%
BOI AXA Small Cap Fund Direct Growth
BOI AXA Small Cap Fund Direct Growth
73.67%
AUM ₹213 Cr Expense 1.21%
Kotak Small Cap Direct Growth
Kotak Small Cap Direct Growth
70.18%
AUM ₹6762 Cr Expense 0.48%
IDBI Small Cap Fund Direct Growth
IDBI Small Cap Fund Direct Growth
68.16%
AUM ₹137 Cr Expense 1.54%
HSBC Small Cap Equity Fund Direct Growth
HSBC Small Cap Equity Fund Direct Growth
67.83%
AUM ₹357 Cr Expense 1.09%
Edelweiss Small Cap Fund Direct Growth
Edelweiss Small Cap Fund Direct Growth
67.37%
AUM ₹1156 Cr Expense 0.52%
ICICI Prudential Technology Fund Direct Plan Growth
ICICI Prudential Technology Fund Direct Plan Growth
66.32%
AUM ₹7909 Cr Expense 0.76%
HDFC Small Cap Fund-Direct Growth Option
HDFC Small Cap Fund-Direct Growth Option
66.02%
AUM ₹13649 Cr Expense 0.83%
IDFC Infrastructure Fund - Direct Plan - Growth
IDFC Infrastructure Fund - Direct Plan - Growth
65.28%
AUM ₹661 Cr Expense 1.21%
ICICI Prudential Commodities Fund Direct Growth
ICICI Prudential Commodities Fund Direct Growth
65.2%
AUM ₹701 Cr Expense 1.18%
IDFC Sterling Value Fund Direct Plan Growth
IDFC Sterling Value Fund Direct Plan Growth
64.74%
AUM ₹4437 Cr Expense 0.88%
Invesco India Smallcap Fund Direct Growth
Invesco India Smallcap Fund Direct Growth
64.69%
AUM ₹1291 Cr Expense 0.52%
ICICI Prudential Smallcap Fund Direct Plan Growth
ICICI Prudential Smallcap Fund Direct Plan Growth
64.67%
AUM ₹3450 Cr Expense 0.63%
Union Small Cap Fund Direct Growth
Union Small Cap Fund Direct Growth
64.52%
AUM ₹592 Cr Expense 1.72%
 

What are Equity Funds?

Equity mutual funds are those mutual funds which try to generate higher returns by investing in the stocks of companies. These are the riskiest class of mutual funds, and hence, they have the potential to provide higher returns than other funds such as Debt Funds and Hybrid Funds . The performance of the market and chosen companies plays a significant role in deciding the investors’ returns.

Features of Equity Funds

Unlike other mutual funds, equity funds are considered one of the best ways to grow your wealth and create an enjoyable investing habit. There are many advantages to investing in best equity funds as follows:
• Professional fund management
By investing in Equity Mutual Funds, you transfer the responsibility of stock selection, rebalancing and research to the fund manager. You can access the expertise of knowledgeable fund managers at a very low cost.
• Diversification of investments:
Equity funds provide diversification benefits at a very low cost, as compared to direct investing in stocks. For example, for as low as Rs 500, you can take exposure to 20-30 companies. This would be nearly impossible to achieve through direct investing.
• The ticket size of investments
You can start with as low as INR 500 per month as SIP, or you can have a lump sum commitment according to your nature of investing and risk appetite. This freedom makes best equity mutual funds a lucrative investment instrument.
• All the funds are well-regulated
The equity funds are regulated by SEBI, which means they have a lot of transparency and sufficient disclosure. This helps investors to make informed decisions about their investments.

Types of Equity Funds

Equity funds can be: Active or passive. In an Active Fund, a fund manager does market research, examines the performance of companies, and looks for the best stocks to invest in. In a Passive Fund, the fund manager simply builds a portfolio that mirrors a popular market index, like Sensex or Nifty.
There are different types of direct equity funds, and all of them have notable characteristics. Based on those characteristics, here are some of the types of direct equity mutual funds:
Depending on the investing style, there are other types of equity mutual funds, like dividend yield funds, value funds, focused funds, and sectoral or thematic funds. All these funds are unique and different from each other in terms of the investment involved.

Who Should Invest in Equity Funds?

• Equity funds can be a very useful investment for investors who are looking to generate high returns over a long-term horizon. However, such an investor should have a high risk tolerance, as the returns from equity funds can be volatile.

• Equity fund returns can vary from very high returns in some years, to negative returns in certain other years. By staying invested for a long-term period, ( say 5-7 years), investors can increase their chances of generating a healthy average return.

• The option to buy a mutual fund for as low as Rs 500 and gain diversification and access to professional expertise also make these funds very lucrative for investors with high risk-appetite.

• These funds are also taxed favourably as compared to debt funds. If you are also planning to save taxes and grow your wealth as a retirement plan, then ELSS funds can also be useful as it helps in long-term planning and saving and growing money quickly.

What should You consider while investing in an Equity Fund?

Since equity funds are entirely different from most other types of funds, there are some important things you need to consider before investing. They are as follows:

How to Invest in Equity Funds Online?

STEP 1
Download the INDmoney App
STEP 2
Create your profile
STEP 3
Select any best equity fund from our catalogue
STEP 4
Choose between Starting a SIP or One time lumpsum
STEP 5
Complete the payment process

Taxability of Equity Funds

Dividends and Capital Gains procured from equity funds are taxable in India, and it is essential to understand the taxation of equity funds. Without this knowledge, planning taxes for your financial planning is not effective.
Capital Gains are defined as the difference in the cost and selling price of the equity mutual funds. The taxation on Equity Mutual Funds is similar to how Equities are taxed.
Holding period upto 12 months is considered short-term, while holding the fund for more than 1 year would be long-term.

• The short-term capital gains rate is 15% plus cess.

• In case of long-term gains upto Rs 1 lakh are exempt from tax. Gains above Rs 1 lakh are taxed at a rate of 10% ( plus cess)

• Any dividend from mutual funds will be taxable at the hands of the investor at the income tax slab rate.

How to Evaluate Equity Funds?

The difference between seasoned investors and beginners is their ability to understand equity funds and invest in the right one not to lose money.
• Track record
If the fund has consistently outperformed its peers and the benchmark over a 3 year and 5-year horizon, it is an indication that the fund is well-managed. While past performance is no guarantee of the future returns, it is an important indicator about the track record of the fund, and helps in evaluation with respect to its peers.
• Management
Management of the equity funds plays an important role in its performance. Hence, if you have confidence in the asset management company and they are doing an ideal job in necessitating growth, you can bank on this fund. Also, the reputation of the fund manager is an important factor to check.
• Expense ratio attached to the funds
This is usually seen as a parameter against all kinds of funds. It is defined as the money undertaken by fund managers for maintenance, marketing, distribution and selling expenses, etc. The right fund will have a desirable expense ratio within the range of 0.5 to 2.5%, which is an ideal industry benchmark.
• Asset allocation
One of the key things to look at is how diversified is your fund’s portfolio and where have they majorly invested in. Some funds focus on more large and mid caps while some focus on a particular sector like banking or infra. Your risk and returns potential depends on the type of asset allocation you prefer.

Outlook

To conclude, Equity mutual funds are high risk - high return instruments. Among all categories of mutual funds, equity funds generally deliver the highest returns. On average, equity funds have generated returns in the range of 10% to 12%. However, the returns fluctuate depending on the market movement and overall economic conditions. One must do his due diligence before investing in these mutual funds.

Frequently Asked Questions

What are equity funds?

How to invest in equity funds online?

How are equity funds taxed?

Do equity funds pay dividends?

How to choose the best equity funds to invest?

What are the risks involved in investing in equity funds?

How long should I remain invested in equity funds?

Where do equity funds invest my money?

How much money should I invest in equity funds?

What are the expected returns of equity funds?

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