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Equity fund refers to a type of mutual fund that is mainly invested in stocks. Investors gain from stock market growth through equity funds. Choosing the best mutual fund scheme is a crucial step for any investor. For this purpose, experienced fund managers become very important as they can help increase returns and minimise risks. To help you build your portfolio, Kotak Mahindra Bank offers an array of investment solutions.

What are Equity Mutual Funds?

As its name suggests, Equity Mutual Funds are invested in the shares of various companies. The strategy is to invest in companies from diverse markets and different capitalisation levels to acquire higher returns. Nevertheless, it is essential to consider the risks connected with these funds as their output may vary depending on the market circumstances.

Benefits of Equity Mutual Funds

Usually, investors with sound knowledge of the equity market earn higher returns. However, the benefits of investing with the help of experts like Kotak Mahindra Bank are as follows:

  • Diversified Portfolio

    Spreading the investments across multiple stocks helps reduce risk. Diversification of the portfolio is the key to minimising the impact of low-performing stocks.

  • Long-Term Investment

    To avoid short-term market fluctuations, a minimum of a 5-year investment horizon is advised. It allows you to lead your investment portfolio towards stable and substantial returns.

Types of Equity Funds

By Market Capitalisation:

  1. Large Cap: Invests in well-established, stable companies.
  2. Mid Cap: Focuses on medium-sized firms with growth potential.
  3. Small Cap: Targets smaller, high-growth companies.
  4. Large & MidCap: Diversifies across large and medium-sized firms.
  5. Large Cap Index: Mirrors specific large-cap stock indices.
  6. Mid-Cap Index: Tracks particular mid-cap stock indices.
  7. Small Cap Index: Follows specific small-cap stock indices.

By Solutions:

  1. ELSS: Provides tax benefits while investing in equities.
  2. Retirement Solutions: Accumulates funds for post-retirement years.

By Diversification:

  1. Multi Cap: Balances risk and return across different-sized companies.
  2. Flexi Cap: Offers flexibility across market caps.
  3. Focused: Concentrates on selected stocks for potentially higher returns.
  4. Value Oriented: Targets potentially undervalued stocks.
  5. International: Invests globally.
  6. Contra: Takes contrarian positions for recovery.
  7. Equity FoF: Diversifies across equity funds.

By Sector & Themes:

  1. Dividend Yield: Focuses on high-dividend stocks.
  2. Sectoral: Concentrates on specific sectors.
  3. Thematic: Follows specific themes.
  4. International Index: Mirrors global stock indices.
  5. Other Equity Index: Tracks various equity indices.

Best Performing Equity Mutual Funds

Want great returns on your investments? Explore these top-performing Kotak equity funds, known for their impressive track records. Invest wisely for your financial future.

  1. Kotak Flexicap Fund: 3-year annualised return- 19.21%, 5-year return- 15.59%.
  2. Kotak Emerging Equity Fund: 3-year annualised return- 30.45%, 5-year return- 23.11%.
  3. Kotak Small Cap Fund: 3-year annualised return- 35.06%, 5-year return- 26.29%.

How do Equity Funds Work?

Stock or equity funds are collected from different investors and then invested in diverse stocks. The fund managers are essential in selecting suitable stocks and managing the portfolio. The various classes of equity funds include large-cap, mid-cap, and small-cap that target different sets of securities. The results depend on the expertise of the investor or fund manager and fluctuations in the market.

How do Equity Funds Earn?

The factors that impact the gains of equity funds are varied but can be attributed to stock dividends and capital appreciation. Ultimately, how much a fund flourishes is contingent on the whims of the market, the expertise of the fund manager's stock choices, and the structure of their portfolio. Distinct market patterns, fiscal events, and the well-being of corporations all contribute to dictating the ultimate returns.

Who Should Invest in Equity Funds?

Deciding how to invest your money can be tricky. But by understanding your goals and comfortability with risk, you can make the right investment decisions. Equity funds are a good investment option for some investors if they can see long-term growth and handle market fluctuations. If this sounds like something you are interested in, talk to an advisor from Kotak Mahindra Bank and understand your risk profile.

Taxation of Equity Funds

Investing in India comes with a separate set of rules. One of them being tax implications for investing in equity funds. For example, the Equity Linked Savings Scheme (ELSS) offers tax benefits to investors under Section 80C of the Income Tax Act. Also, capital gains considerations could arise based on how the investments are bought and sold over time.

Factors to Consider When Choosing Equity Mutual Funds

Investors need to evaluate various factors before choosing any Equity Mutual Fund. Here are some of the points to consider.

  • Performance of the fund - Checking a mutual fund's past performance gives you an idea of its expected returns.
  • Size of the fund - There are no standards for the best mutual fund size. However, if the funds are too high or too small, it can affect the overall performance.
  • Expense ratio - You incur expenses while investing in any Equity Mutual Funds. Ensure the expense ratio is not too high, and the return on investment is unaffected.
  • Investment goal - Every investor has their investment objectives, and finding the funds that are the right fit for the portfolio is the key.
  • Risk appetite - It's essential to consider your risk capacity and tolerance while investing.

Equity Funds Recommended By Kotak

More than 35 equity fund schemes, including equity funds, debt funds, hybrid funds, and more, are offered by Kotak Mahindra Bank. These funds are managed by Kotak Mahindra Asset Management Company Limited. The best Equity Mutual funds recommended by Kotak Mahindra Bank are as follows.

  • Kotak Small Cap Fund
  • Kotak Infrastructure and Economic Reform Fund
  • Kotak Emerging Equity Fund
  • Kotak Equity Opportunities Fund
  • Kotak India EQ Contra Fund
  • Kotak Tax Saver Fund
  • Kotak Multi Asset Allocator FoF - Dynamic
  • Kotak Equity Hybrid Fund

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Frequently Asked Questions

What is equity mutual funds?

Equity fund refers to a common type of mutual fund that mainly invests in the various stocks in the market.

Which is the best equity mutual fund?

Kotak Flexicap Fund Direct-Growth is one of the best Equity Mutual Funds with 15.59% annualised 5-year returns.

Why invest in equity mutual funds?

Reasons to invest in Equity Mutual Funds are the diversified portfolio and long-term investment options offered by Kotak Mahindra Bank.

How do beginners invest in equity?

The best way to invest in equity is by opting for index funds. It reduces the investment cost and allows you to start a Systematic Investment Plan (SIP).

Is it good to invest in equity funds?

As the return on investment is high, it is good to invest in equity funds after evaluating the risk involved.

When to invest in equity funds?

Equity funds are the best choice for investors with long-term investment goals. However, it’s best to consult the fund managers at Kotak Mahindra Bank for professional advice.

Benefits of investing in equity funds

Some benefits of investing in equity funds are that it’s cost-efficient, convenient, flexible, and offers a diverse portfolio.