Equity funds are a special type of mutual funds that purchases holdings, called ‘equity’, in companies by buying the stocks of the company.
To put it in a simpler way, Equity funds, also known as stock funds, predominantly is used for investment in stocks.
The trust of people for investing their money in mutual and equity funds have sharply risen. This is evident as per the statistics presented in July 2017. While household investment in mutual funds recorded an ascend to 40% on a year-to-year basis, household investment in equity funds have soared by 50% in the June 2016 to July 2017 period. The increase in household investment in mutual and equity funds can be contributed to the declining real-estate prices and stable gold prices, where most of the investment was preferred previously.
Equity funds are apt for those who do not want to invest large amounts, thus, they are an ideal investment for most people.
Moreover, equity funds are handled and managed by professional experts who have detailed knowledge of the markets; they know about the best companies and stocks to invest money in. Thus, no research work of the stocks and companies from the investor end is required.
There are numerous types of equity funds where money can be invested:
- Diversified equity funds:
These are equity funds that can be invested in a wide range of sectors and not limited to a particular stock. - Large-cap, mid-cap, small-cap and multi-cap equity funds:
Large-cap funds are invested in stocks of large-cap and renowned companies, where the reliability factor is most prominent. Small-cap and mid-cap funds are invested in small emerging companies and mid-sized companies respectively. Such equity funds provide varying returns. Multi-cap funds are the equity funds that invest in large-cap, small-cap or mid-cap stocks - Index funds:
Equity funds that are invested in a particular index like Sensex or Nifty are index funds. - Sector funds: Sector funds are equity funds that are invested in a particular sector such as IT, pharma, etc.
- Thematic funds: Equity funds that are invested in stocks pertaining a theme, like international stocks or emerging IT companies.
The advantages of the equity funds have attracted people to invest their money in equities. The benefits of equity funds are enlisted as below:
- Access to a range of portfolios
- Dividends and Liquidity
- Capital Appreciation
- Professional expertise to manage investments
Reputed Asset Management companies give their expertise on markets to ensure that your investment gets deserved returns. The best way to invest in equity funds is via systematic investment plan, where a monthly investment is made and they consider the current market scenario with a view to getting higher returns.
So, start investing in equity funds today.