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Total Views: 179Word Count: 496See All articles From Author When it comes to equity funds, one cannot solely rely on the fund manager. Investors have to consider the following factors as well:
鈥?Personal goals 鈥?Risk appetite 鈥?Market trends 鈥?The growth of the companies whose stocks the investor wishes to invest in 鈥?Risk levels 鈥?Returns generated
Once the investor understands their aspirations and the above mutual fund metrics, the focus shifts to the Net Asset Value (NAV) and the profits it offers. NAV is the per unit price of the mutual fund scheme. They follow a familiar concept to that of the share price. Where share price fluctuates based on the market trend, NAV changes every day. Many investors are confused of the concept and tend to ask, 鈥榳hat is equity fund?鈥?p>
They predominantly focus on sharesstocks. Equity mutual funds invest 65 per cent of their assets in equities. They can spend the balance funds in debt or market securities. Considering the NAV rates change on a day-to-day basis Mike McGlinchey Jersey , the investors have to submit their application to fund houses before 3 PM. This is termed as cut-off time in mutual funds. If they do it on time, investors will receive the same day NAV. Else, they may be offered previous or next day鈥檚 NAV.
How are equity funds classified?
The SEBI, who handles mutual funds, have divided equity fund as: 1) Multi-cap funds: They invest 65 per cent of their assets in large, mid and small-cap funds. Multi-cap funds provide higher returns than small, mid and large-cap funds since they are spread across. Here the fund manager has the liberty to rebalance between large, mid and small-cap funds as it is a low-cost option.
2) Large-cap funds: This open-ended scheme invest at least 80 per cent of its assets in the shares of high-end companies Matt Breida Jersey , i.e. top 100 listed organisations. These funds help the investors maintain stability and are less volatile than mid and small-cap funds. However, the returns are lower here.
3) Mid-cap funds: These open-ended schemes invest almost 65 per cent of its assets in stocks of the companies ranking between 101 to 250 in the market capitalisation list. They offer higher returns and are ideal for investors who hold high-risk appetite.
4) Small-cap funds: They invest 65 per cent of their assets in low-ranked companies, those who fall below the 250th range in the market capitalisation list. Small-cap equity fund also provides higher returns. In fact, 95 per cent of all listed companies in India fall under this type of fund.