Types of Equity Funds
In case of these types of funds, as the name implies, fund manager invests in equity shares of companies. The return of these types of funds is greater. But before investing, investor should understand that risk is always associated with return. If investor wants greater return, he should ready to face greater risk. Investors should know about various types of equity funds and/or they can take help of their financial advisor. The various types of equity funds are given below:
1. Growth Funds
These types of funds invest in companies whose earnings are expected to grow more than average rate. The main objective of these funds is capital appreciation over 3 to 5 years.
2. Diversified Equity Funds
As the name implies, these types of funds invest in equities of various sectors and companies. Due to diversification of funds, these types of funds have less risk than sector funds and growth funds.
3. Sector Funds
These type of funds invest in only one type of industry or sector of the market. Such as Infrastructure, Information & Technology, FMCG, Pharmaceuticals etc.
4. Equity Linked Savings Schemes
These are a type of diversified equity funds, in which investors have been given Income Tax rebate, according to Income tax rule to encourage investors to invest in equity market.
5. Thematic funds
These funds invest according to an investment theme. For example, an infrastructure thematic fund might invest in shares of companies that are into infrastructure construction, infrastructure toll-collection, cement, steel, telecom, power etc. The investment is thus more broad-based than a sector fund; but narrower than a diversified equity fund.
6. Equity Income/Dividend Yield Schemes
These type of funds invest in securities whose shares fluctuate less, and therefore, dividend represents a larger proportion of the returns on those shares. The NAV of such equity schemes are expected to fluctuate lesser than other categories of equity schemes.
Equity funds are most risky and appreciating funds. To compare various factors relating equity funds
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