Equity Mutual Funds

Professional Management

Here, professional fund managers manage online equity funds and select stocks based on their market view and in-depth market research. They regularly analyze market conditions to adjust your investment to safeguard yields.

Portfolio Diversification

By investing in equity mutual funds, your money belongs to several businesses and industries, not just one. It ensures your entire investment does not reside in a single stock and that risk is spread evenly.

Convenience and Flexibility

Equity funds make investing hassle-free as they provide;

• Simple options for investing online
• You may use a Systematic Investment Plan (SIP) to start investing gradually.

Liquidity

Equity mutual funds are easy to buy and sell at any time, providing liquidity to meet your financial needs.

Step 1: Pooling of Funds

The first step is to raise funds from investors, pool them, and then follow the developed fund's investment strategy. In most cases, it is predecided before the launch of NFO (new fund offer) for investors' knowledge.

Step 2: Stock Selection by Fund Manager

Depending on the fund scheme, the fund manager selects the stocks and invests based on;

• Fund goals
• Company Fundamentals
• Economic and market trends

However, this selection can also vary depending on the mutual fund's objectives. For example, if it's a large-cap fund, the selection would include the top 100 companies based on market cap.

Step 3: Diversification into Equities (and other instruments)

The fund manager will invest in stocks based on market cap or investment strategy. In return, you will receive units of that fund.

But with a major equity focus, the fund can also allocate a small percentage to debt securities and liquid instruments.

Step 4: Fund Performance

Over time, the value of your investment rises in step with the fund's stock prices. In the end, for evaluation purposes, the fund's overall performance is measured by Net Asset Value (NAV) or the cost per unit.

Step 5: Fund Management and Risk Analysis

Based on market conditions, the fund manager continuously assesses and modifies the portfolio. Any major diversions are then aligned with the fund's investment goals and risk-return ratio.

Step 6: Redemption or Withdrawal of Funds

Investors can choose to redeem their units and withdraw their investment anytime. However, it does attract exit load and taxes (LTCG and STCG) on redemption.

How to Choose the Right Equity Mutual Funds?

Your choice of equity mutual fund might have a significant impact on your investing experience. Here's how you can choose a fund that matches your financial goals:

• Understand Your Investing Objectives - Before choosing a fund, learn what your financial goals are:
  • Long-term generation of wealth
  • Setting aside money for schooling
  • Making retirement plans, etc.
• Recognise Your Risk Tolerance - Every fund will have varying risk and return characteristics. Assess your comfort level with market volatility before selecting a fund.
• Examine the Fund's Performance History - Evaluating the fund's historical performance can serve as a guide (not a forecast of future growth).
• Track record and Fund Manager's Experience - Consider the fund's strategy and experience of the fund manager, and how they plan to manage the fund during volatility.
• Expense Ratios and Fees - Regardless of the fund, the expense ratio applies to all. And a higher ratio eventually ends up lowering your net proceeds. Hence, selecting a fund with transparent fee structures can help you make a better choice.
• Recognise the Fund Composition - With equity at its focus, each mutual fund will follow a different strategy. The composition may include stocks of varying industries and businesses. Hence, select funds that reflect your economic and market views or interests.