Simplifying Equity Funds

What is a Equity Fund? Invest in equity companies for capital

appreciation. The primary objective of the equity

asset class is to provide capital growth / appreciation.

Ideal for investors who want to invest for long term & create wealth.

Volatile and hence, are more risky than debt funds.

Category of equity mutual funds

Which type of fund is for you?

  Large-cap Funds Mid-cap Funds Multi-cap Funds

Invest In

Funds which invest a larger proportion of

their corpus in companies with large market capitalization are called large cap

funds.

Funds which invest a larger proportion of their corpus in companies with

small or mid market capitalization are

called mid cap funds.

Funds which invest in stocks across

market capitalization. That

is, their portfolio comprises of large cap, midcap and small cap stocks.

Holding period 5 years and aboveRisk factor High High High

Category Avg. Returns

13.66% CAGR  for 5 years

21.53% CAGR  for 5 years

 

16.89% CAGR  for 5 years

 Who Should

InvestInvestor who want to earn good return from Equity market in

long run and having high risk appetite

Source: Category average return as on Oct 10, 2016

Which type of fund is for you?

  ELSS Funds (Tax Savings)

Balanced Funds (Equity Oriented)

Invest In

Diversify investments across different varied market

capitalization stocks and in addition also help you

reduce your tax burden

invest in a mix of equity & debt through stocks of

high growth companies & relatively safe portfolio of

debt.Holding period Lock-in period of 3 years 3 years or more

Risk factor High HighCategory

Average Returns17.58% CAGR  for 5 years

 14.58% CAGR  for 5 years

 

Who Should Invest

Looking to invest for tax saving along with wealth

creation

Looking for a mixture of safety, income and modest

capital appreciation.

Source: Category average return as on Oct 10, 2016

ELSS v/s other tax saving instruments

  PPF Insurance ELSSTenure 15 years Approx. 15-20

years Minimum 3 years

Safety Highest High Low (risk due to equity market)

LiquidityFunds blocked for 15 years (Partial

withdrawals from 7th year onwards)

Withdrawal allowed but with

stringent penalties

Locked for 3 years. After that 100% money can be

withdrawn

Returns Fixed 8% p.a. 5-7% p.a.

Last 15 years’ category average

return: 22.01% p.a., Best: 27.05% p.a.

and Worst: 14.95% p.a.

Source: ELSS Return as on Oct 10, 2016

Taxation

Taxation Equity Funds

Short Term Capital Gain

Flat 15%(units held for 12 months or less)

Long Term Capital Gain

NIL(units held for more than 12

months)

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