Top 5 Best Equity Funds 2019 to invest in India

In this article we discuss equity mutual funds and how to to identify the best equity funds.

Summary: Top 5 Best Equity Funds 2019 to invest in India

Large Cap Funds

S.No: Fund Name 1yr

Return %

Net Asset Value

(Rs./Unit)

Asset Under Management

(Rs.Cr)

1 Axis BlueChip Fund-D (G) 10.7 28.78 379
2 Axis BlueChip Fund (G) 9.2 26.79 2791.43
3 CR BlueChip Equity Fund-D (G) 4.7 24.4 9.69
4 CR Bluechip Equity Fund (G) 3.5 23.02 129.87
5 JM Core 11 Fund -Direct(G) 3.3 8.55 6.75

Mid Cap Funds

S.No: Fund Name 1yr

Return %

Net Asset Value(Rs./Unit) Asset Under Management(Rs.Cr)
1 Axis Mid Cap Fund-Direct (G) 6.3 36.71 522.19
2 Axis Mid Cap Fund (G) 5.1 34.14 4636.74
3 Invesco India Midcap-D (G) -1.9 49.69 Expense Ratio

%:

2.13

4 Invesco India Midcap (G) -3.5 45.14 Expense Ratio

%:

0.74

Multi-Cap Funds

S.No: Fund Name 1yr

Return %

Net Asset Value(Rs./Unit) Asset Under Management(Rs.Cr)
1 Axis MCF-DP (G) 11.2 10.98 119.7
2 Axis MCF- RP(G) 9.4 10.75 2,489.09
3 UTI Equity Fund-Direct (G) 5.6 136.22 755.32
4 UTI Equity Fund 5.0 132.91 7402.23

 

ELSS Funds

S.No: Fund Name 1yr

Return %

Net Asset Value(Rs./Unit) Asset Under Management(Rs.Cr)
1 CR Equity Tax Saver Fund- D (G) 3.4 62.37 53.62
2 CR Equity Tax Saver Fund (G) 2.6 60.12 780.16

What are Equity Funds? How to identify best equity funds?

Mutual funds are formally categorized by the asset class of investments they own. Some mutual funds only own stocks. Some mutual funds only own bonds. The former are called as equity funds and the latter are bond funds or fixed income funds. As the name ‘Equity’ itself suggests, these types of mutual funds invest in equity stocks of the companies. Since they invest in stocks, Equity funds are also known as stock funds.

As an asset class, equity is considered to be risky. Therefore these funds also have similar risk profiles . Their returns of the best equity funds are generally higher and are linked to market performance. These kinds of funds are good for those who have a willingness to invest for a longer period of time, that is 5 years or more. Since the portfolio consists of equity instruments, the risk and return characteristics of such a portfolio will be similar to equity markets.

The primary way of categorizing mutual fund products is on the basis of the asset class in which the scheme will invest. Some of them are:
1. Equity funds – invests mainly in equity
2. Debt funds – invests mainly in debt
3. Hybrid funds – invests in both debt and equity
4. Gold funds – invest in gold and sometimes may also invest in gold producing companies.

Why to invest in the best Equity Funds?

Equity Funds can be actively or passively managed, depending on their objective. Moreover, buying an Equity Fund is one of the best ways to have a small stake in a business without starting or investing in a company directly.
Indian Equity Funds are regulated by SEBI (Securities Exchange Board of India). The amount you invest in Equity Funds is regulated by SEBI and they frame policies & norms to make sure that the investor’s money is safe. Equity funds are great for those investors who have a long term investment plan. They are more prone to risks but also have the potential to give higher returns.

What are the types of best Equity Funds?

    1. Equity Funds based on Geographical factors:
      • International Equity Funds are those that invest in stocks outside of the home country.
      • Global Equity Funds are those that invest in stocks around the world including those in the home country but provide service to foreign stocks by at least 80% of their overall portfolio. These funds are extremely diversified.
      • Worldwide Equity Funds are those that invest in stocks around the world with no par between domestic or international assets.
      • Domestic Equity Funds are those that invest in stocks solely in the home country of the investor and issuer.
    2. Equity Funds based on Market Capitalization:
      • Large Cap Equity Funds: These funds are defined as the funds which invest in companies with a large market capitalization.  These types of funds are prone to offer more stability and sustainable returns, over a period of time.
      • Mid Cap Equity Funds: are those that invest in companies with a medium market capitalization i.e. these funds invests in stocks of mid-size companies, which are still considered developing companies.
      • Small Cap Equity Funds : are those that invest in companies with a small market capitalization (small-size companies).
      • Diversified or Multi- Cap Equity Funds: Diversified fund will have investments across large, small and mid cap stocks. The investment varies depending upon the market condition and fund manager can choose which is best for the fund to perform well in their category, therefore there is reduction in the amount of risk in the fund.
    1. Equity Funds based on Style of Investment:
      • Private Equity Funds : are those that invest in privately held companies that don’t trade on the stock market.
      • ELSS or Equity Linked Savings Scheme : ELSS has the advantage of investing in equity within a period of 3 years and it has generated a minimum benchmark return of more than 12% in this time period. This has been one of the best tax saver options as one can get the benefit of getting tax exemption under section 80C. The returns are completely tax free within a period of 3 years. Overall, this scheme would be an add-on.
      • Sector or Industry Specific Equity Funds: These funds focus their investments in a single sector, financial services, healthcare and technology (multiple sectors). In short words, investments are done in sector specific stocks.

Are the Equity Funds or their returns tax free?

Currently, equity mutual fund investors need not pay any tax on long term capital gains (LTCG) on investments made before a year. If investments in equity mutual funds are sold within a year, gains will be treated as short term capital gains (STCG) and taxed at 15 per cent.

However, any gain in excess of money earned after 31st January, 2018 will be taxed at 10% if share is sold after 31st July, 2018. Currently, Tax to pay LTCG tax of 10 per cent on equity mutual funds is accepted by the Finance Ministry as per latest budget.

  1. Capital gains tax: Capital gains tax is a tax that is charged on the profits that he/she has made by selling his/her capital asset. In other words, it is a tax imposed on profits earned.
  2. For making it easy for taxation, the capital assets are classified to ‘Short-Term Capital Asset; and ‘Long-Term Capital Asset’.
  3. Short-Term Capital Asset: If the shares and securities are held by the taxpayer for a period not more than 36 months preceding the date of its transfer will be treated as a short-term capital asset.
  4. Long- Term Capital Assets: If the taxpayer holds the shares and securities for a period exceeding 36 months before the transfer will be treated as a long-term capital asset.
  5. Short-Term Capital Gains Tax (STCG): If a capital asset (stocks, bonds, land, residential property etc.) is sold within 36 months from the date of acquisition, profits from the sale are termed as short term capital gain.
  6. Short Term Capital Gain = Sale Consideration – (Cost of Acquisition + Cost of Improvement + Cost of Transfer).
  7. Long-Term Capital Gains Tax (LTCG): If the capital asset (stocks, bonds, land, residential property etc.) is sold after 36 months from the date of acquisition, profits from the sale are termed as long term capital gain.
  8. Long Term Capital Gain = Sale Consideration – (Indexed Cost of Acquisition + Indexed Cost of Improvement + Cost of Transfer + Exemptions).

 

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