Just how an investor is flooded with options on types of mutual funds offered to them, there are various types of equity funds available to investors.
Some of these mutual funds are:
Mid and small-cap Funds
These funds provide unusually high returns but are accompanied by a degree of risk. These funds comprise of shares of small and emerging companies that ideally provide decent returns in future terms. Generally, these companies have low market capitalization.
An index fund is a type of equity fund where returns are matched with the market index component. Index funds are passive in nature. They generally have a low-expense ratio as a result of which they tend to outperform various other indexes.
Unlike sector funds wherein you can invest your money only in particular sectors, these funds provide a wider scope of diversification. Here the fund manager selects companies from diverse sectors on the basis of a common theme. For instance, the theme can be infrastructure funds that comprise of sectors like oil corporations, steel, gas, etc.
It is a type of equity fund that carries an insignificant lock-in period and provide you with tax benefits of up to Rs1.5 lakhs under section 80C of Income Tax Act, 1961. These funds are equity linked that not only provide you with the benefits of tax but also aid in boosting your invested amount by generating a significant amount of inflation-beaten returns at the time of maturity.
Always remember to align your mutual fund investments with your personal and financial goals and invest in mutual funds accordingly. You can also invest in mutual funds online by taking the services of a mutual fund expert. Happy investing!