Best BNP Paribas Equity Mutual Funds

Incorporated in 2004, BNP Paribas Mutual Fund is a dedicated asset management segment of BNP Paribas Bank, which has a strong presence in over 68 countries. It offers a wide range of investment solutions that have been specially designed to fulfil the requirement of retail investors. For the quarter ending March 31, 2021, this asset management company (AMC) has a QAAUM of approximately Rs. 7,830 crore. It offers more than 15 schemes to investors. Its extensive range of products includes hybrid funds, debt funds, along with the best BNP Paribas equity mutual funds.

Equity funds are mutual fund schemes that primarily invest in equity and equity-related instruments. According to the Securities and Exchange Board of India (SEBI) rules, these funds must allocate at least 65% of the investment corpus to equity shares of different companies. The funds invest the rest of the available capital in debt and money market securities. 

Equity funds are further categorised into different schemes based on the fund manager's investment strategy, focusing on certain sectors or market capitalisation. A few examples include value funds, large-cap funds, multi-cap funds, sectoral funds, etc. 

These schemes are associated with high risk as the underlying stocks' price get heavily impacted by market volatility. 

Note that the gains earned on top BNP Paribas equity mutual funds are taxed depending upon the holding period of the units. 

Taxability

Short-term Capital Gains: If an investor sells his/her units in an equity fund before the completion of one year from the date of purchase, the realised returns are known as short-term Capital Gains (STCG). A short-term Capital Gains Tax rate of 15% is applicable to these gains. 

Long-term Capital Gains: When investors realise their returns after holding units for more than 1 year, such gains are known as Long-term Capital Gains (LTCG). No tax is imposed on LTCG of up to Rs. 1 lakh. However, any amount exceeding Rs. 1 lakh is subject to Long-term Capital Gains Tax at 10%. 

TDS: Dividend income generated through equity mutual funds attract a 10% TDS if the amount exceeds Rs. 5000 in a fiscal year. 

The best BNP Paribas equity mutual funds 2023 belong to different categories and may not be appropriate for all investors. After all, there's no one ready-made solution when it comes to investing. Accordingly, investors need to consider some crucial aspects before they allocate their savings to any scheme. 

Factors to Consider Before Investing

Investment goal: The best BNP Paribas equity mutual funds can be different with respect to the portfolio constituents, risk level, objective, etc. At the same time, investors have different financial goals and investment horizons. Individuals must make sure to subscribe to schemes that would help them to achieve their investment goals. 

Fund's past performance: By looking at historical returns of equity funds, investors can find out how the scheme managed to perform in different market conditions. Moreover, one can also find out whether or not the fund has achieved its objective. Investors may compare the fund's past performance with the benchmark and other schemes before making a decision. Nevertheless, note that the past performance of a scheme does not determine its future performance. 

Expense ratio: This refers to a small percentage of a fund's total assets, which AMCs levy on investors to finance the various expenses incurred for managing the portfolio. Such expenses include - salary of the fund manager, advertising costs, allocation charges, and more. The expense ratio varies from one equity fund to another and impacts returns. Hence, it is an essential factor to consider for investors when deciding which is the best BNP Paribas equity mutual fund. 

Size of the fund: The size of an equity fund refers to the total assets under management (AUM). Although there is nothing such as an ideal fund, in case the investment corpus is too big or too little, a scheme's performance can get impacted. 

Risk appetite: As mentioned earlier, equity mutual funds are associated with high risk. However, the risk level may vary depending upon the type of scheme one decides to choose. That's why individuals need to make sure that the risk-reward ratio of the fund is as per their risk appetite. 

Fund manager's experience: This is one of the most vital aspects to consider when comparing the best BNP Paribas equity mutual funds. After all, the scheme's performance is directly impacted by the fund manager's actions, who make the crucial buy-and-sell decision as per the market scenario. A fund manager with a proven track record is likely to have the potential to overcome challenging market scenarios by using his/her specialised skills and advanced risk management techniques. 

Direct or regular plan: Direct plans are mutual fund schemes that investors can subscribe to without the involvement of any third party. Nevertheless, if individuals wish to opt for a regular plan, they have to make the transaction via brokers or distributors. Asset management companies do not have to pay any commission to intermediaries in case of a direct plan. That's why they are associated with a lower expense ratio and higher NAV in comparison to regular plans. 

Investment mode: To invest in the best BNP Paribas equity mutual funds, investors can opt for either of the two available modes - systematic investment plan or lump sum. By choosing the SIP route, investors can allocate a fixed sum of money to a scheme of their choice at regular intervals, for example, monthly or quarterly. On the contrary, the lump sum mode enables investors to invest the available money at one go. One must note that the minimum amount required to start an SIP is Rs. 500; whereas, investors need at least Rs. 1,000 to make a lump sum investment.