Nowadays Mutual Funds have become one of the most popular investment options. Choosing the right mutual fund depends on the risk-taking ability of the investor. The one who wants long term investment can invest in Equity mutual funds. Below are the types of equity mutual funds.
Large Cap Funds:
- These funds belong to big companies. These companies hold a firm position in the Top 100 list in the stock market. These companies are also known as Blue Chip companies.
- The large-cap funds have a high market capital value. Therefore, investors expect a stable return from these funds.
- Investing in such funds are a lower risk. Large-cap mutual fund investors cannot expect a very high return from these funds. In conclusion, the safe play investors usually choose these funds.
Mid Cap Funds:
- Moderate risk investors ideally choose mid-cap funds.
- It can deliver better returns than large-cap funds.
- The liquidity is less than that of a large-cap fund.
Small Cap Funds:
- Small-Cap funds belong to the small-sized or budding companies.
- These funds may generate a good return. Therefore, these are the riskiest bids in mutual funds.
- These funds are highly volatile and have very low liquidity.
- The investors having a high-risk profile invest in small-cap funds.
- These small-cap funds show exponential growth. In other words, they return higher in the long term.
Equity Linked Savings Scheme (ELSS):
- It is one of the most popular investment schemes. It has dual benefits of high returns as well as tax exemptions.
- These funds have a 3 years lock-in period. Hence, it is definitely a tax- saving investment option.
- ELSS can return a good amount at the time of maturity. So, investing in ELSS can help you beat inflation as well.
The equity mutual funds can be categorized based on sectors and themes as well. Investment in different types of funds is the key to high returns through mutual fund investment. Therefore, a budding investor or a savvy investor can invest in different equity funds to generate wealth over a long period.