Best Equity Funds

Like all other investment instruments, the primary purpose of investing in the equity funds is to generate high returns. These funds achieve this objective by investing 65% of the assets in equity shares of listed companies. It is in tune with SEBI’s investment dictate. The other 35% of assets are usually invested in debt instruments.

There are two types of earnings an investor can avail through equity funds, namely Dividends and Capital Gain. The tax on dividends, known as Dividend Distribution Tax or DDT, is cleared by the Asset Management Company (AMC), and investors need to pay any other taxes on those returns.

Capital gain is taxable but not in its entirety. Long Term Capital Gain (LTCG) on Equity-Linked Saving Scheme (ELSS) comes with certain tax benefits. Up to Rs. 1 Lakh in LTCG is tax-exempt. Anything above that comes under a tax slab of 10% as per section 80C of the Income Tax Act. Do note that there is a lock-in period of 3 years applicable on ELSS, which implies that you cannot redeem your returns before 3 years.

Short-Term Capital Gain is taxed at 15% in case the investor redeems his/her returns within a year.

Based on past returns we can narrow down the best performing equity funds that you can invest in via SIP. There are several advantages of investing in such funds. Some of them are mentioned below.

Equity funds are generally managed by professional fund management entities known as Asset Management Companies (AMC). These AMCs research, analyse and invest on behalf of their clients. They are privy to industry insights that an individual investor cannot possibly be.

• The risk factor is substantially mitigated if you invest in the best equity mutual funds. AMCs monitor several risk parameters such as concentration, volatility, liquidity, etc., and invest accordingly.
• The small ticket size ensures that an investor is not burdened beyond their means by this type of investment. In India, you can start an SIP in best equity mutual funds with as low as Rs 500
• These mutual funds are closely monitored by the SEBI, which ensures unmatched transparency in all transactions. All funds are mandated to publish their daily NAV and monthly portfolios on their websites.
• The sheer number of equity funds gives investors ample choices. As of 2018, there are over 9,500 equity mutual funds available currently. The best among these funds have recorded over 25% gains over a 3 year period.
• The tax benefits of ELSS funds are unavailable on other investment instruments. Investors can save taxation of up to Rs. 1 Lakh through these investments.
• Capital losses on an equity scheme are adjustable against the capital gains on another equity fund in the same year. This feature is also unavailable on any other investment scheme.