If you prefer investing in the share market, there are good chances that at one point, you might have made a mutual fund investment. They enable you to diversify your portfolio and help you earn additional income. One such fund is an equity fund, also called high-risk high-reward funds. They provide capital appreciation over different investment tenures – short, medium, and long.
Amongst equity and debt funds, the former stands out for many reasons. So, let us learn the features and benefits of investing in such funds:
Regulated by SEBI
The Securities and Exchange Board of India serves as the chief regulator of all mutual funds, including equity funds. This regulatory body has directed all fund houses to disclose their month-end portfolios on their respective portals while mentioning the periodic expense ratio and Net Asset Value. This backing by SEBI makes the investment safe.
Furthermore, you get this information on the investment advisory platform that offers portfolio analysis and performance reports, letting you make informed decisions.
Diversifies investment portfolio
There are different types of equity mutual funds in which you can invest. The categories are done based on market capitalisation, themes, sectors, and the fund manager's investment style. This diverse characteristic of the fund enables you to select from different funds to invest in. In addition, diversifying the portfolio also lets you mitigate the risks associated with investing in a single fund.
Invest in lump sum or SIPs
The most prominent features are that investments can get done in a lump sum. It is easy to invest through a Systematic Investment Plan or SIP. They are ideal for young investors who cannot afford to invest large sums in one go. Moreover, these investments inculcate discipline when it comes to investments since you need to invest a fixed amount monthly. Invest a minimum amount of Rs. 500 monthly through SIP.
Handled by professional fund managers
The best part about investing in such funds is that you need not research or analyse before investment. They are managed by professional fund managers who hold years of experience under their sleeves. Such managers can predict market movements and are aware of how it functions. As such, the fund managers take buying and selling decisions so that the investment objectives and financial goals can be achieved.
Are tax-efficient
Equity funds are known to be some of the most tax-efficient funds. This is because when you invest in them, you need not worry about paying capital gain taxes to your fund house, irrespective of how often funds are bought and sold by the fund managers. Instead, pay the capital gain tax at an individual level.
Such schemes are widely considered risky investments. So, you should assess your risk appetite and preferred investment tenure before investing. However, they are highly beneficial and hence, invest in them today through mutual fund apps. Make sure to make informed decisions.
