The mutual funds are grabbing the attention of many people and are beneficial in many ways. The equity funds being a part of mutual funds are meant to produce great returns. This is done by letting the people invest their money in the stocks of companies in various bazaar capitalization. The result for a shareholder completely depends on how a company is performing, whether it is making profits or losses.
Equity mutual funds are known to invest their 60 percent, maybe more of possessions into equity shares linked to firms in fluctuating proportions. The investment can be a large-cap, middle cap, and even small-cap assets. The style of investing in the market decides that the people will be able to experience growth and value in their assets.
After assigning a lot of shares in the market, the rest goes into liability and money fair tools. This way there will be lesser chances of any risks and sudden improvement requests. All this is done by the managers of the funds which will decide purchase and sale so that the maximum profits or returns are generated out of it.
Which people should participate?
The involvement in mutual funds is a risky job. The people who are ready to take risks and can tolerate the changes in the horizon of the market can invest in equity stocks. The long term benefits are included in equity funds, so the investors who aim for long terms like 5 years can go for it. The best possible people to participate in equity funds are listed below:
- Up-and-coming investors – the up and coming investors who to have the best of the field exposure can try their hands in equity funds. This way their funds will be invested in the best firms of the capital fair. The returns will be steady and long term.
- Market friendly investors –the people who are well aware of the market can invest in the equity funds. The calculated risks and stable profits are the best choices, the risks involved is lesser than the people who capitalize on small caps or mid-caps.
Best features to invest in equity funds
- 80C tax release – ELSS funds under equity funds is the one best way one can get the release of tax payments. This is works by section 80C underthe income tax act. This involves the shortest period of investment which is three years and the results are steady and profitable.
- Cost of speculation –this one feature also decides the returns. Currently, the expense ratio is of 2.5 percent and SEBI is preparing to decrease it. This way the returns of the investors in the equity funds will be extraordinary.
- Holding phase – the process of the equity funds works on redeeming it and attaining the capital gains. The capital profits are dutiable but this depends totally on how extended one has capitalized on the funds. Therefore, this process is named as holding phase.
- Cost-effectiveness– investment in the equity funds can give you knowledge of many other funds where you can invest at a very minor sum.