Mutual funds are considered a common and convenient way of investing your money, as they are managed by professional fund managers who invest in a diversified portfolio of stocks, bonds and other securities. Equity funds, in particular, are a type of mutual fund that invests predominantly in equity securities or stocks of different companies and aims to provide higher returns over the long term. Equity funds are further classified into large-cap, mid-cap, and small-cap funds based on the market capitalization of the stocks they invest in.
Equity funds are known for their high returns over the long term, but they also come with higher risks than debt funds as equities are subject to market fluctuations. To minimize the risk, investors should consider investing in equity funds with a long-term horizon of at least five to ten years to cushion against market volatility.
Investing in an equity fund can be done in a lump sum or through a systematic investment plan (SIP), where the investor invests a fixed amount at regular intervals like monthly or quarterly. SIPs are a good option for small investors who want to start investing in mutual funds.
Before investing, it’s important to do research and comparison using the monthly SIP calculator or any other reliable mutual fund tools and check the performance, expense ratio, and the fund manager’s reputation before investing your money.
Some of the best-performing equity funds based on the past five-year returns are:
1. Mirae Asset Large Cap Fund: This large-cap equity fund has consistently outperformed its benchmark index and delivered an annualized return of 17.33% over the past five years. The fund has diversified holdings in blue-chip companies like HDFC Bank, Reliance Industries Ltd, etc.
2. Axis-Focused 25 Fund: This multi-cap equity fund has a concentrated portfolio of only 25 stocks and has delivered an annualized return of 15.28% over the past five years. The fund has holdings in companies like HDFC Bank, Kotak Mahindra Bank, Toll Brothers, etc.
3. Kotak Emerging Equity Fund: This small-cap equity fund has given an annualized return of 22.77% over the past five years. The fund invests in fundamentally strong small-cap companies like Kajaria Ceramics, Bharti Airtel, etc.
4. HDFC Small Cap Fund: This small-cap equity fund has given an annualized return of 20.84% over the past five years. The fund invests in companies with a market capitalization of less than Rs. 7500 crores and has holdings in companies like City Union Bank, Aarti Industries, etc.
5. ICICI Prudential Bluechip Fund: This large-cap equity fund has delivered an annualized return of 14.14% over the past five years. The fund has a diversified portfolio of blue-chip companies like ICICI Bank, Infosys, HDFC Bank, etc.
However, past performance does not guarantee future performance, and investors should consult a financial advisor before investing.
In conclusion, equity funds are a good option for investors looking to invest their money for the long term and should consider using the monthly SIP calculator to keep their investments disciplined and systematic. While investing in mutual funds, investors should weigh the pros and cons of investing in the Indian financial market and do their research and due diligence.
Disclaimer: The views and tips mentioned in this article are to be taken as general information and not professional advice. The investor must gauge all the pros and cons of trading in the Indian financial market before investing their money. Past performance may or may not be an indicative of future performance. The author or the publication is not responsible for any losses incurred by the investors.
