The primary reason why people opt for equity mutual funds is the flexibility one benefits from the wide range of options available. It’s important that you choose a scheme that suits your investment horizon and risk appetite, so that you are fully aware and prepared for what you are getting into. Investors who are ready to remain invested for more than 5 years can invest 60% or more in equities and the remaining in debt or money market securities. Let’s look at the various kinds of equity mutual funds classified by SEBI.
Multi Cap Funds
These funds are typically for the non-aggressive investors who have a moderate risk appetite. The funds consist of large cap, midcap and small cap stocks (stocks of different market cap sizes.). The risk factor is low when compared to a pure mid-cap or a small-cap fund. It includes a minimum of 65% of the total investment in equity and equity related instruments. The top performing multi-cap funds include:
- Aditya Birla Sun Life Equity Fund Growth
- Kotak Standard Multicap Growth
- SBI Magnum Multi Cap Fund Growth
- IDFC Multi Cap Fund Growth
- Mirae Asset India Equity Fund Growth
- Motilal Oswal Multicap 35 Fund – – Growth
- Franklin India Equity Fund Growth
- DSP Equity Fund Growth
Large Cap Funds
These funds involve moderate risk. From their total assets, they have 80% exposure to equity. If one wants to benefit or create wealth with large cap funds then, you have to remain invested for a longer period. These funds are known to provide steady and sustainable returns as they invest in companies having higher market capitalization. The top performing large-cap funds include:
- SBI Bluechip Fund Growth
- ICICI Prudential Bluechip Fund Growth
- Aditya Birla Sun Life Frontline Equity Fund Growth
- Reliance Large Cap Fund – Growth
- Axis Bluechip Fund Growth
- UTI Mastershare Unit Growth
Large & Mid Cap Funds
The striking factor in these funds is the high risk-return tradeoff. The reason being, they include large and mid capitalization companies in the portfolio (minimum 35% of total assets include equity both in large and mid cap companies). The top performing large & mid cap funds include:
- Canara Robeco Emerging Equities Growth
- Principal Emerging Bluechip Fund Growth
- Mirae Asset Emerging Bluechip Growth
- DSP Equity Opportunities Fund Growth
- IDFC Core Equity Fund – Growth
- Kotak Equity Opportunities Fund Growth
- Aditya BSL Equity Advantage Fund Growth
Mid Cap Funds
These funds are meant for investors with high risk tolerance, as the underlying stocks in mid cap funds are highly volatile. They include 65% of their total assets to invest in equities They fall in between large-cap and small-cap funds. However, to help you earn high returns, Fund Managers perform careful selection of stock and diversification with good market knowledge. The top performing mid cap funds include:
- L&T Midcap Fund Growth
- Franklin India Prima Fund Growth
- Sundaram Mid Cap Growth
- Reliance Growth Fund – Growth
- HDFC Mid-Cap Opportunities Fund Growth
- DSP Midcap Fund Growth
Small Cap Funds
Aggressive investors find these funds attractive (65% of total assets invest in equities). Awareness of your investment horizon and risk capacity while investing in these funds is vital as they can be highly vulnerable during economic downturns. These funds are favored when the market performs well (bullish) but act reverse when the market is declining (bearish). The top performing small cap funds include:
- Reliance Small Cap Fund – Growth
- L&T Emerging Business Fund Growth
- Franklin India Smaller Companies Fund Growth
- Aditya Birla Sun Life Small Cap Midcap Fund Growth
Dividend Yield Funds
In simple words, Dividend yield means – the ratio of the past dividend paid per unit divided by market price. In this type of fund, a fund manager invest 65% to 80% of his investment corpus in equity. The fund managers make sure that they invest in a company that have stable cash flows and provide regular dividend even during a market downturn. Three top performing Dividend Yielding Funds include:
- Templeton India Equity Income Fund Growth
- Principal Dividend Yield Fund Growth
- UTI Dividend Yield Fund Growth
Value Fund
Value funds invest in undervalued stocks. The strategy behind this type of fund is that the stocks may have a lower value for temporary factors, however, once the valuation of these funds are at par with that of its competitors, they have more potential to earn higher returns. The top performing Value Funds include:
- L&T India Value Growth
- IDFC Sterling Value Fund Growth
- Aditya Birla Sun Life Pure Value Fund Growth
- Tata Equity P/E Fund Growth
- HDFC Capital Builder Value Fund Growth
Contra Fund
These funds are known for their unique style of investing as it is speculative in nature. They buy assets from weak performing sectors, that are available at a lower cost. The idea is that, once the short term concerns bothering these funds are lifted or mitigated. Then these funds have higher value in their long term and they generate higher returns. Remember to stay invested for a longer period to benefit from these funds. The top performing Contra Fund:
Focused Fund
As the name says, Focused funds invest only in limited number of stock. SEBI has allowed Focused funds to invest in a maximum of 30 stocks. One can invest in focused funds to seek growth as they provide high returns by investing in right stocks of quality companies. Focused funds invest 65% of its corpus in equity and equity related instruments. The top performing Focused funds include:
- Reliance Focused Equity Fund – Growth
- Aditya Birla Sun Life Focused Equity Fund Growth
- SBI Focused Equity Fund Growth
- Axis Focused 25 Fund Growth
Sectoral/ Thematic Fund
This can be divided into two:
- First are the Sectoral funds that invest in businesses that operate primarily in a particular sector or industry.
- Second are the Thematic funds that invest in assets in reference to a particular theme.
The advantage with these funds is that a sector with good growth potential will naturally have high product demand; by investing in this sector the share price of your funds increases with the increase in demand, thereby increasing your returns. The top performing Sectoral/ Thematic Funds include:
- Reliance Pharma Fund – Growth
- ICICI Prudential Technology Fund Growth
- Aditya Birla Sun Life Banking & Financial Services Growth
- Franklin India Technology Fund Growth
- SBI Banking & Financial Services Growth
- SBI Healthcare Opportunities Fund Growth
- ICICI Prudential Banking and Financial Services Fund Retail Growth
- UTI Healthcare Fund Growth
- ICICI Prudential FMCG Fund Growth
- SBI Technology Opportunities Fund Growth
ELSS
ELSS (Equity Linked Savings Scheme) are known for their tax benefits. These funds provide a tax deduction of up to Rs. 1.5 lakhs, under Section 80(C). These funds invest in various sectors and market caps. ELSS come with a fixed tenure of 3 years which is applicable for the monthly Systematic Investment Plans (SIP) as well. Minimum investment in equity and equity related instruments are 80% of the total investment corpus. The top performing ELSS Funds include:
- IDFC Tax Advantage (ELSS) Fund – Growth
- L&T Tax Advantage Fund Growth
- Aditya Birla Sun Life Tax Relief 96 Growth
- DSP Tax Saver Fund Growth
- ICICI Prudential Long Term Equity Fund (Tax Saving) Growth
- Axis Long Term Equity Growth
- Tata India Tax Savings Fund Growth
- Sundaram Diversified Equity Fund Growth
- HDFC Long Term Advantage Fund Growth
