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 Four Small and Mid Cap Funds to Choose This December

Savings play an indispensable role in your life and as a result many of you may look forward for different avenues of investments. Among the commonly purchased investment products are bank term deposits. However these products offer conservative returns. So, several investors are always looking forward for lucrative opportunities of investments.

Small and mid-term funds offer the privilege of lucrative investments while hedging investment risk. With the changing economic conditions in India, such schemes are becoming popular among masses. After comparing several schemes we have managed to shortlist the top four small and mid-cap funds.

DSP BlackRock MicroCap Fund

With a consistent double-digit return rate for the last five years, DSP BlackRock has managed to captivate the attention of investors since a long time. Though the Assets under Management for this scheme are less than 2,000 crores, still it offer better redemption as well as growth to investors. Courtesy to the capabilities of Vinit Sambre and Jay Kothari, this scheme has managed to perform so well.

HDFC MidCap Opportunities Fund

This fund has completed a positive track record of seven long years and holds top growth and value stocks in its portfolio.  The fund manager focusses on the stocks that have the ability to multiply their earnings by 15 to 20 percent. With assets under management of almost 2802.96 crore, this fund has become popular among masses not only for better gains, but also for versatile redemption facility.

ICICI Prudential Discovery

This began its functions in the year 2004 and has had a remarkable run in the market. This company has a good cash flow and low leverage while the fund manager tries to strategize and capture the bullish economic cycle of the underlying companies. With more than Rs. 2830 crores of assets under management, this fund has been offering consistent positive results for the last five years.

Franklin India Prima Fund

It has a corpus of Rs 867. 36 crore and has been generating a positive cash flow across all business cycles.  Managed by popular fund manager R Janakiraman since 2008, this fund has been offering positive returns with almost consistent growth rate of 15%. With 61 stocks under the roof, this fund is one of the most popular funds among investors.

Four Important Tips to Invest in Debt Funds

Financial Market in India offers different types of instruments to match the risk appetite of different investors. Products in the equity segment are labelled as high-risk entities that reap substantial returns while those in the debt segment are labelled low-risk investment vehicles that guarantee assured returns.

Debt instruments are popular for their assured return rates, which are somewhat lower than their equity counterparts. Since the returns are low, the risk associated with such investments is minimum. As a result they are considered as safe means of investments.

However, debt funds do not offer easy liquidity. So, mutual fund companies provide debt funds to overcome this shortcoming. Unlike debt vehicles, these funds are standardized and the investor does not require extensive financial knowledge to make the purchase decision.

Here are the four simple and easy tips to invest in debt funds:

1>    Plan the tenure

Debt funds invest predominantly in bonds and debentures. All these instruments offer substantial gain over a period of time. As a result, you should invest in debt funds for a long time in order to reap substantial capital appreciation. Furthermore, investment tenure should be more than a year in order to gain double digit returns.

2>    Compare the NAV values

NAV or Net Asset Value plays a crucial role while choosing the right debt fund. NAV value will not depend on the fluctuating market conditions in case of these instruments. However, the value gets affected with the cash flow of the fund. Funds with higher cash flow are often labelled stable as the NAV value does not fluctuate rapidly.

3>    Assess the Credit Quality

Credit rating is a vital parameter considered while purchasing a debt fund. Credit risk analyzing bodies like CRISIL determine the credit rating for all the debt schemes. Schemes that carry lower ratings often compensate their buyers with favorable returns. However, the one with higher ratings are considered the safest.

4>    Determine the Scheme's Portfolio

Debt funds do not necessarily invest in a single instrument. Fund managers choose different instruments in order to get balanced returns as well as to diversify credit risk. Understand the portfolio and determine the credit risk associated with every underlying instrument. This way you can get better insights on how the scheme will perform in the long run.

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.