Equity Fund is a type of Mutual Fund or a Private Mutual Fund (Hedge Fund), which buys Stocking Stocks on the Stock Exchange as Shares on Investor's Behalf and Part Ownership buys those Stocks related businesses.
Simply put, Investor's investment is invested in the Stock Market through Equities. As a result, when the price of the shares bought by him increases, the invested Amount by the investor increases in the same proportion.
The basic purpose of the Fund Manager of Equity Fund is to invest only the investor's investment into stocks of such companies, in which the probability of Growth is much higher so that investor's investment can be increased in the shortest possible time. Could
In order to understand this fact a little more deeply, we need to know how many types of Equity Funds are available to the investor in the present time, in which they will be able to earn maximum profits in the shortest possible time. Can Invest. We can divide the different types of Equity Funds currently available in many categories as follows:
What is Equity Fund Focused on Geography
These are Equity Funds or Equity Mutual Fund Schemes, which are based on geographical location. like:
- International Equity Funds: These are Equity Funds, which Investor's money invest in foreign stock markets. So if you want to invest your savings in the US Stock Market, you have to invest in an International Equity Fund Scheme, which is invested in the US market.
- Global Equity Funds: These are Equity Funds, which Investor's money invest not only in the country's stock market, but also in the foreign stock market. However, at least 80% of the amounts invested through such equity funds are invested in foreign markets. So if you want to invest your savings in India as well as in the foreign stock market, then you have to invest in a Global Equity Fund Scheme.
- Worldwide Equity Funds: These are Equity Funds, which can invest in the Stock Market in any country of Investor's Money World. The fund manager's objective of this kind of Mutual Fund Schemes is only to make more money for the investor in the shortest possible time. Therefore, in whatever country of the world, these fund managers see greater potential for growth, they invest in it.
- Domestic Equity Funds: These are Equity Funds, which Investor's money is invested only in Domestic Stock Market, which is India for us. So if you want to invest your savings only in the Indian Stock Market, then you have to invest in any Domestic Equity Fund Scheme and currently there are thousands of MF Schemes which only invest in the Indian market.
What is Equity Fund Focused on Market Capitalization
Different companies can also be divided into several parts depending on their current market capital, which shows the current market value of the company and the mutual fund schemes created on the basis of market capitalization should be divided into 5 parts as follows. Can be:
- Mega Cap Equity Funds: Those Mutual Fund Schemes Only Invest in Very Large Stocks Stocks, those Mutual Fund Schemes are known as Mega Cap or Giant Cap Equity Funds. For example, the SBI Bluechip Fund or the Birla Sun Fife Frontline Equity Fund are the only mutual fund schemes that invest in the shares of giant companies like HDFC Bank, Reliance Industries, Infosys and ITC. Growth of this type of Mutual Fund Schemes is not very high, but because the likelihood of drowning of such large companies is also minimal, so, in this type of Mutual Fund Schemes, those people are more interested to invest, which is much more RISK Do not want to, but still want Compounded Interest at least doubled from the bank Fixed Deposit / Recurring Deposit.
- Large Cap Equity Funds: The Mutual Fund Schemes, which are invested in large companies, with stocks as well as some of their amounts in those companies, which are not yet the Mega Cap, but they are likely to have their Mega Cap in the near future. Such Mutual Fund Schemes are known as Large Cap Equity Funds and are generally referred to as the Large Fund Mutual Fund Schemes, such as the SBI Bluechip Fund or the Birla Sun Fife Frontline Equity Fund.
- Mid Cap Equity Funds: Mutual Fund Schemes, which are invested mostly in Stocks of Mid-Cap Companies, compared to Large Cap Companies, this type of Mutual Fund Schemes is known as Mid Cap Equity Funds. These Mutual Funds essentially invest in stocks of those companies with priority, in which the probability of Growth is much higher. Although these companies are not very large, investing in these schemes compared to the Large Cap Schemes is comparatively more RISKY, but often returns more than the Mid Cap Equity Funds, as compared to the Large Cap Equity Funds. Next, Mid Cap Companies are made of Large Cap. Therefore, there is the possibility of Growth in the Mid-Cap Companies more quickly than the Large Cap Companies, because Large Cap Companies, That's why Large Cap is because they have grown significantly, while Mid-Cap companies have to become Large Cap There is still a lot to do in Growth.
- Small Cap Equity Funds: The Mutual Fund Schemes, which are known as Small Cap Equity Funds, are invested mostly in small companies' stock only in the stock market. Fund Managers of these Schemes invest most of their fund fundamentally in small companies. Therefore, investing in such equity funds schemes is significantly more risky compared to Mid Cap Schemes, but returns from these are much higher than the Large / Mega Cap MF Schemes.
- Micro Cap Equity Funds: The Mutual Fund Schemes, known as Micro Cap Equity Funds, which are invested mostly by Amount Investments in very small companies' stock only. Fund Managers of these schemes invest most of their funds into basically emerging small companies. Therefore, investing in such equity funds schemes is most risky, but returns from these are many times more than any other MF schemes.
Capacity to take risks for every investor is different, and the associated Goal from every investor's investment is also different. Therefore, everyone has the right to decide on the risk of taking their risk and availing the Goal only on the basis of Time Horizon.
However, if we want to make a selection of a Mutual Fund Scheme in the simplest manner, then if you need money only for the next 5 to 7 years to complete your Goal, you will have to invest in Mega / Large Cap Mutual Fund Invest in, because no recession, no big company of our country has ever been in the recession for 5 years. Plus, the prices of large companies shares quite slowly during the recession, while increasing rapidly during acceleration.
In the same way if you are going to need money for 7 to 10 years to achieve any of your financial goals, then you can invest in a Consistently Good Mid-Cap Fund to complete this kind of Goal. However, if you are going to need money after 10 years to achieve any of your financial goals, you may feel free to invest in a Consistently Good Small / Micro Cap Mutual Fund Scheme.
What is Equity Fund Focused on Investing Style
In addition to geography and market capitalization, Equity Funds can also be divided into more parts, which are based entirely on Investing Styles.
- Private Equity Funds: These are Equity Funds, which invest in private companies that do not trade on the Stock Exchange. For example Parge Products, India's oldest and most successful Biscuit Company is such a company, but is not listed on the Stock Exchange. Therefore, if investing in a company like Parle Products, then it can be invested only through these Private Equity Funds.
- Equity Income Funds: These are Equity Funds, which only invest in companies that provide continuous and maximum dividend.
- Dividend Growth Funds: These are Equity Funds, which invest only in stocks of companies, whose dividends given per share per annum are increasing in comparison to their stock price.
- Index Equity Funds: These are Equity Funds, which only invest in an Index Fund.
- Sector or Industry Specific Equity Funds: These are Equity Funds, which invest only in a particular sector (Pharma, FMCG, IT, etc ...).
In this way, different ways can be Equity Funds, but look at a general investor, it is easiest to select a suitable Mutual Fund Scheme based on Market Capitalization to Achieve Set Goal. So make your budget, increase Savings, set financial goals, and make sure to have appropriate time horizon for availing those financial goals.
When you decide on certain financial goals, and when you know how many amounts you need for financial goals, then you can easily decide what you want What kind of Amount should be invested in the Equity Fund for Financial Goal?
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