Best IDBI Equity Mutual Funds

Incorporated in 2010, IDBI Asset Management is 66.67 % owned by IDBI Bank and 33.33 % by IDBI Capital Market & Securities Ltd. As of 31st March 2021, this AMC had Rs.4120 crore as assets under management (AUM).

This AMC currently offers more than 20 mutual fund schemes spread across equity, debt, and hybrid categories. This includes the best IDBI equity mutual funds.

Equity mutual funds or growth funds are mutual fund schemes that predominantly make investments in the stocks or shares of companies from various market capitalisations.  These funds are accompanied by a high-risk factor; hence they bear the potential of providing high returns. 

These funds make investments of a minimum of 65% of an investor’s capital in shares and stocks, while the remaining 35% might be invested in money-market or debt instruments. 

Equity mutual funds can be categorised as either passive or active funds. In a passive fund, a fund manager constructs a portfolio that reflects a popular market index, including Sensex. In an active fund, a fund manager researches companies, conducts market analysis, examines performance and searches for the best stocks for making investments.

Moreover, these funds can also be classified according to market capitalisation, which implies the market value of a company. There can be additional categorisation as diversified or thematic/sectoral. Based on market cap, investors can choose among large-cap, small-cap, mid-cap, and multi-cap funds. A mid-cap fund will invest in stocks on mid-cap companies, a small-cap fund invests in small-cap company stocks, and so on. 

The best IDBI equity mutual fund schemes currently offer approximately 10 equity fund schemes.

Taxability

Besides being familiar with the best IDBI equity mutual funds, it is imperative to have an idea about the taxability involved in equity mutual funds.

Long-term Capital Gains Tax: Investors earn long-term capital gains by selling equity fund units after a holding period of one year or more. These capital gains are exempted from taxation when limited to Rs.1 lakh in a year. Any gains exceeding this upper limit is taxed at a rate of 10% without any indexation benefits.

Short-term Capital Gains Tax:   An investor enjoys short-term capital gains on redeeming the equity fund within a holding period of one year. A short term capital gains tax is levied on these gains at a rate of 15% irrespective of the income tax slab of the concerned investor.

TDS: If the investor’s dividend exceeds Rs.5000 for a given financial year, then as per section 194K, TDS at a rate of 10% is deducted before the capital reaches an investor’s account. 

Factors to Consider Before Investing

In addition to knowing the taxability applicable to the best IDBI equity mutual funds, investors must be aware of several other factors. These are mentioned below:

Risk appetite: There is significant risk associated with an equity mutual fund investment. To be able to choose the top IDBI equity mutual fund, an investor must consider his or her risk appetite. The risk tolerance is different for different individuals opting for the same mutual fund. It is a highly subjective matter, and several things are accountable for it. This includes the financial situation and overall investment goal of an individual. 

Investment objective:  The investment objective defines the purpose of an investor behind making an investment in a specific asset. An investor must evaluate this objective as it would greatly help him or her in choosing a suitable scheme from the best IDBI equity mutual funds in 2023.

Experience of a fund manager: The competence of a fund manager is highly accountable for the performance of an investor’s fund. This is the reason why a majority of the experienced investors considerably put emphasis on the fund manager. The fund managers are judged based on several parameters, including experience level, ability to identify scripts in comparison to their peers, etc.

Expense ratio: The expense ratio defines the fees which an investor is charged from the mutual fund houses for managing the funds. The fees of the fund manager and the fees for record-keeping are included here. A mutual fund scheme with a low expense ratio bears the potential of generating higher returns in the long run.

Past performance of the fund: The past returns on a particular mutual fund can be used for judging its quality. Though the past performance does not give an indication of probable returns, it can help investors manage their ROI expectations. A particular mutual fund’s past performance would help an investor understand the bearish and bullish trends in the market conditions over a time period.

Holding analysis: The holding analysis forms a crucial parameter as it makes one aware of the expected level of returns and the accountable scale of losses. It also shows where resources are invested. 

First-time investors might find it difficult to choose the most suitable fund from the best IDBI equity mutual funds. However, using this article as a reference along with having a basic understanding of mutual funds would prove to be of great help to them.