Equity Funds

Equity Funds Mutual Funds !

Opportunity to create a diversified portfolio that is tailored to your needs and goals.


Equity Funds

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Equity funds are mutual fund schemes that invest their money in stocks of different companies based on the investment goal of the scheme. These funds are a great way to invest if you want your money to grow in value over time, as they have the potential to help you get rich over time. Equity funds are a good choice for long-term investors who want to gain exposure to the stock market.

Features of Equity Mutual Funds

Cost of Investment

The expense ratio of equities funds is often impacted by the frequent buying and selling of stock shares. For equities funds, the Securities and Exchange Board of India (SEBI) has set a limit of 2.5% on the expense ratio.

Holding Period

Redeeming a fund unit results in a capital gain. Capital gains are taxed. Holding duration impacts an investment's tax rate. Short-term holdings are less than a year old. Short-term gains are taxed 15%.

Cost Effectiveness

You gain exposure to a variety of stocks by investing in equity funds, and you do so for a relatively little sum. A concentration risk exists for your portfolio, though. 

Features of Equity Mutual Funds

How do Equity Mutual Funds work?

At least 60% of the assets in equity mutual funds are allocated in equity shares of various companies in equal quantities. The asset allocation will meet the goal of the investment. Depending on the state of the market, the asset allocation may consist only of stocks of large-, mid-, or small-cap companies. The investing approach could be growth- or value-oriented. The balance may be invested in debt and money market instruments after allocating an important to the equity section.
This will handle any unexpected redemption requests and, to a certain limit, reduce risk. To benefit from shifting market movements and maximize returns, the fund management decides whether to purchase or sell.

Types of Equity Mutual Funds

Large Cap Funds invest 80% of their assets in large cap enterprises (Top 100 companies in terms of market capitalization). They invest in successful firms. These funds offer fair returns and are less volatile than mid- and small-cap funds.

Minimum 65% of Mid Cap Funds’ assets are in mid cap stock (101-250 companies in terms of market capitalization). They’re riskier than large-cap funds, but they may offer better returns.

Small Cap Funds must invest at least 65% of assets in small cap equities (251 and above companies in terms of market capitalization). These products can produce decent returns but are more volatile than large- and mid-cap funds.

Multi-Cap funds invest in large, mid, and small companies dependent on market conditions. This allows investors to build a market-cap-diversified portfolio. According to SEBI Multi Cap funds shall invest at least 25% in large, 25% in mid, and 25% in small enterprises.

Large and mid cap Funds invest at least 35% of their assets in large (Top 100 firms by market cap) and mid cap (below $1 billion) companies (101-250 companies in terms of market capitalization). 30% of the assets may be invested in non-big and midsize shares, debt and money market instruments, and other SEBI-approved securities.

Benefits of Equity Mutual Funds


Equity funds let people put their money into a portfolio that has holdings in many different parts of the economy. This lowers the risk compared to investing directly in stocks because the bad performance of some stocks can be offset by the good performance of other stocks.

Expert Management

Expert Management

Inflation-adjusted returns on equity funds could be better than returns on traditional investments because the returns are tied to the market. Equity funds give investors a chance to grow their money in a reasonable way over the long term.



Investors can start a SIP (Systematic Investment Plan), SWP (Systematic Withdrawal Plan), or STP (Systematic Transfer Plan) to make it easier to invest, sell, or move their units to another scheme.

Tax benefits

Tax benefits

Under Section 80C of the Income Tax Act, investments in ELSS (Equity-Linked Savings Scheme) provide tax benefits of up to INR 1,50,000 (For Individuals and HUF). It has a three-year lock-in term, which is one of the shortest among tax-saving tools.

Difference between Equity Funds and Debt Funds
Parameters Equity Mutual funds debt funds
Nature Invest in stocks of companies. Invest in fixed income securities such as bonds and securitized products etc.
Theme Investment depends on the market capitalisation and sectors. Investment may differ based on maturity and credit rating of the debt security.
Returns Higher returns for assuming higher risk. Lower returns equivalent with the risk undertaken.
Risk Higher as compared to debt funds. Lower as compared to equity mutual funds.

An equity mutual fund is an open-ended plan that seeks long-term capital appreciation by investing primarily in equities and equity-related assets. These funds are excellent for investors who have a long time horizon. Because equities mutual funds primarily invest in company stocks, individuals with a high risk appetite may consider investing in these market-linked schemes.

When you have a high risk tolerance and a 5-year or longer investment horizon, you should consider investing in equity funds. With a long investment horizon, the equity fund may be able to deal with market swings and deliver. If you are seeking for a mutual fund scheme that invests primarily in equity, you could consider investing in equity funds.

Investing in equity funds is an excellent alternative since they have the ability to provide risk-adjusted returns over time. Investing in equity funds may enable investors to build wealth; however, they may need to have a long-term investment horizon of five years or more in order for the equity scheme to perform to its full potential. Additionally, investors with a high risk appetite might consider investing in equities funds. By investing in equity funds, investors can target their long-term financial goals such as retirement planning, protecting their child's financial future, purchasing their dream home, and so on.

How you can Apply for Equity Mutual Funds through Swaraj Finpro

It is quite easy to invest in Equity Mutual Funds through Swaraj FinPro
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