“Equity mutual funds explained in simple terms-learn what is equity fund, how they work, benefits, risk, best tips for Indian investors. An equity fund is a mutual fund scheme that primarily invests in stocks (also called equity fund) of companies.
Concept
An Equity mutual fund is a mutual fund scheme that primarily invests in the stocks (equity shares) of companies. Investors pool their money into a fund where professionals fund manager uses that money to invest in the stock market. The fund purchases shares of different companies aiming to grow the overall value of the investment. as the value of those share increases, so does the Net Asset Value (also called NAV) of the fund , leading to returns for investors. The main objective of an equity fund is to generate capital appreciation over the medium to long-term period.
Types of equity mutual funds
- Large-Cap Fund : invest in Large, stable companies
- Mid-Cap Fund : focus on mid type companies
- Small-Cap Fund : focus on smaller, growth oriented companies
- Index Fund : track a specific market index like S&P 500, Nifty 50
- Sectoral Fund : focus on specific sector like healthcare, infra, tech, energy, etc.
- Thematic Fund : invest based on a theme like, ESG (Environmental, Social, Governance).
Returns and Risk
Equity funds are Market-linked, meaning they go up and down based on stock market performance risk includes
- Market Risk : stock market prices can fall due to economic events, geopolitical issue ,etc.
- Volatility : short-term ups and down are common.
- Sector/Company Risk : poor performance by specific sectors and companies can effect returns.
Why people invest in equity mutual funds
Equity fund are one of the most popular investment option for looking to grow their wealth. anyone can take advantage of market fluctuation even don’t have any knowledge about market and it’s fluctuation, because there are experts of their field who manage your hard earn money, invest in the companies share and generate profit on it in mid and long time.
