Equity Mutual Fund

Best Equity MF Categories For 2021

By Scripbox

March, 2021

What Is A Mutual Fund?

Mutual funds pool money from several investors to buy securities.

The fund is handled by a fund manager - an expert who follows financial market trends and knows where to invest.

Equity MFs

An equity mutual fund is one that invests principally in stocks.

These are long term investments with certain risks attached but tend to grow ahead of inflation.

Active Fund

In an active fund, the fund manager assesses the market, conducts thorough research, and looks for the best stocks to invest in.

Passive Fund

With a passive fund, the fund manager builds a portfolio that is similar to an existing stock market index, like the Nifty 50 or Sensex 30. 

Returns

These investments are indirect - either invested in stocks, or in an instrument the fund manager chooses. The fund manager does thorough research to ensure the best outcomes.

Fund Types

Investors can choose from a variety of funds based on their needs: long term (5+ years), short-term (1-5 years), theme-based, (large cap, small cap) or sector-based, (pharma/telecom/FMCG).

Large Cap Funds

Many large cap funds offer returns of over 10% over 5 years.

These include HDFC Top 100 Fund, ICICI Prudential Bluechip Fund, Mirae Asset Large Cap Fund and Axis Bluechip Fund. 

Mid Cap Funds

Many long-term mid cap funds offer returns of 11-14%.

These include Nippon India Growth Fund, L&T Midcap Fund, Franklin India Prima Fund, Kotak Emerging Equity Scheme and DSP Midcap Fund.

Index Funds

Index funds aim to offer growth proportionate to the index they replicate.

Options include UTI Nifty Index Fund, HDFX Nifty 50 Fund, HDFC Index Sensex Fund, Nippon India Index Sensex Plan.

Tax-Saving Funds

Also called ELSS or equity-linked savings scheme, these funds offer tax deductions of upto Rs. 1.5 Lac.

Options include Mirae Asset Tax Saver and Motilal Oswal Long Term Equity Fund.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.