The Various Types of Equity Funds

Equity Funds and equity schemes are mutual funds that invest in stocks and can be managed either actively or passively; however one chooses to. These funds are also known as 'stock funds' and are categorised in accordance to the style of investment holdings in the portfolio and the company size.

These stock funds can be domestic or international and their size is determined by the company's market capitalisation. The investment style that is reflected in the fund's holding is made use of in order to categorise equity mutual funds.

There are various types of equity funds and each of them differs from one another. Therefore, depending upon the investment objectives, you can classify the types of equity funds and equity schemes in the following ways:

Large-cap Equity Funds

These equity funds invest the maximum portion in companies that possess a large market capitalization; hence, known as large-cap funds. This equity fund is renowned to offer stability and sustainable returns over a certain period of time.

Mid-cap Equity Funds

These types of equity fund invest in stocks of companies that are medium-sized, also known as developing companies. Similarly equity funds that believe in investing in stocks of smaller companies are known as small-cap equity funds.

Thematic Equity Funds

These equity funds are meant to be invested in securities of sectors such as pharmaceutical or IT. The performance of each of these schemes depends upon how well each of these industries is doing in the market. These funds promise you higher returns but at higher risks.

Multi-cap funds

These forms of equity funds and schemes invest into different sectors in order to reduce the risks associated with investments. Also known as diversification of investment, this process helps if some sectors are affected negatively in the market. This process is quite necessary in order to reduce the risk factor associated with investments.

Equity Linked Savings Scheme

This form of an equity scheme provides you with tax savings where you have the option of locking your funds for a period of three years.

Therefore, if you wish to invest in equity funds and schemes, then you should know that they come with a higher risk but you have a chance to earn better returns.

Top 10 Equity Mutual Fund in India for Ambitious Investor

Mutual funds are often considered relatively safe investment option in comparison to equities. This statement is true as direct investment in stocks involves huge amount of risk. Furthermore, you need substantial amount of working, proven knowledge to convert market fluctuations into monetary equivalents.
To mitigate the equity risk and to tap favorable returns from market fluctuations, Fund managers have launched several schemes. Amongst the various schemes they formulate, equity funds are known to be the top-gainers.

Here are the top 10 equity mutual funds in India that promise double-digit, positive returns to the investors for the year 2014.

1> Birla Sun Life Long Term Advantage Fund
This growth fund is offering a whopping double-digit return of 63.3% for 1 year of investment. Managed by Mahesh Pati, the fund has consistently performed well over the past few years. The standard benchmark for this scheme is S&P BSE 200.

2> Axis Long Term Equity Fund
With an annual return rate of 78.1%, this scheme from the Axis fund house continues to be one of the consistent top-performers. Benchmarked against S&P BSE 200, this diversified scheme invests predominantly in Banking, automotive, and technology sector.

3> BNP Paribas Equity Fund
With an unmatched growth rate of 51.4% for a year, this CNX Nifty benchmarked growth fund continues to lure investors, even today. The portfolio is diversified and returns are equated.

4> Quantum Long-term Equity Fund
Marked against the S&P BSE SENSEX, this growth fund is the best call for long term growth. With portfolio packed with technology and oil/chemical giants, this fund is expected to promise good returns in future.

5> DSP BlackRock Equity Fund
This diversified portfolio fund is a dividend based scheme ideal for regular investors. Managed by Apoorva Shah, this scheme promises substantial returns of 46.3% for a single year.

6> Kotak NIFTY ETF
This CNX NIFT benchmarked fund is offering an average annual return rate of 43.7% consistently. Managed by young and able fund manager Deepak Gupta, this scheme has managed to offer positive returns even during troubled times.

7> Franklin India Smaller Companies Fund
Offering annual returns of 99.7%, this scheme is the cynosure of Mid-Cap top performers. Benchmarked against CNX Midcap, this fund continues to attract moderate risk-taking investors all over the country.

8> Reliance Small Cap
The multifaceted Reliance fund house has managed to show some magic with equities by launching this fund. Grabbing a surprising return rate of 124.2% for a year, S&P BSE SMALL CAP benchmarked fund has attracted several risk-taking investors.

9> Franklin India High Growth Fund
With a stable return rate of 76.1% for a year, this CNX 500 benchmarked has grabbed the attention of several investors lately. With a strong, diversified portfolio, the risk associated with this scheme is relatively moderate.

10> ICICI Prudential and other Services Fund
A strong market player from the ICICI fund house, this service-themed fund offers a double digit return of 61.2% for a year. Themed around the service industry, this fund shows consistency in returns, even during troubled times.