Best Invesco Equity Mutual Funds

In 2016, Invesco Ltd., an NYSE-listed global investment management firm, acquired Religare Securities, starting the Invesco Mutual Fund. They have investment managers, portfolio managers, analysts, and researchers serving clients on the ground in more than 25 countries. Serving individual investors and institutions with mutual funds and sub-advised portfolios, they have over Rs.36000 crore in assets under management.

Invesco Mutual Fund provides nearly 30 schemes in equity, fixed income, exchange-traded fund, fund-of-funds, and hybrid categories.

An equity mutual fund involves investing mostly in equity shares of different companies. Also known as stock funds or growth funds, these typically invest at least 65% of their corpus in equities or equity-related instruments. The best Invesco equity mutual funds generate high returns while taking significant risks by investing in certain stocks, depending on the scheme. 

Equity funds can be divided into active or passive funds. A fund manager actively scans the market, conducts thorough research, and searches for the best stocks to invest in. These schemes, where the fund manager actively handpicks and monitors stocks, are active funds. For passive funds, they build a portfolio mirroring a popular market index like Nifty 50 or Sensex. 

Invesco Equity Mutual Funds Categories

Moreover, the best Invesco equity mutual funds can be divided into the following categories.

Thematic and sectoral equity funds: This is when an equity fund invests in a specific investment theme or sectors like banking, information technology, or pharma. The performance of such shares heavily depends on the market state of such particular industries. 

Contra equity funds: These schemes follow a contrarian strategy of buying under-performing stocks at low prices, expecting a full recovery in the long run. 

Focused equity funds: This scheme involves investing in a maximum number of 30 stocks with high market capitalisations when starting such a scheme.

Small-cap: These funds invest in small-sized companies with a market capitalisation of less than Rs.100 crore. These tend to be the most volatile but provide sizeable returns during recovery from a recession. 

Mid-cap: These involve investing in medium-sized, developing companies. These are riskier than large-cap stocks but offer more growth potential. 

Large-cap: This type of fund involves investing in companies with large market capitalisation. These are known to be stable and hold up better during recessions. 

Multi-cap or diversified equity funds: These invest in stocks of companies regardless of size or sector, reducing the risks considerably. 

Factors to Consider Before Investing

The following are some of the factors that investors need to consider to choose the best Invesco equity mutual funds from the 10+ schemes offered.

Asset allocation: Equity funds invest 65% or more of their assets in equity shares of businesses in portions and types based on the kind of scheme. The fund manager chooses the companies to invest in based on his/her assessment of the market if it’s an active fund. The remaining amount is invested in either money market or debt instruments.

Risk: Equity funds involve a significant amount of risk for the potential of huge rewards. Small-cap, mid-cap, and thematic funds are the riskiest investment options. Large-cap and diversified funds are less risky but can be impacted by market volatility in varying degrees. However, as expert fund managers and market experts manage the best Invesco equity mutual funds, they require much less research to invest than stocks.

Returns: Equity funds deliver the highest returns among other mutual funds. But, the scale of yields depends on the scheme type. Equity funds seldom outperform stocks in terms of returns but offer more balanced profits to investors. Experienced fund managers who understand the stock market very well manage the top Invesco mutual funds.

Investment strategies: A fund manager can pick various investment styles like growth and value-based approaches. Value-based strategies involve investing in undervalued stocks that might make a significant rise in the near future. Growth investment style involves investing in companies that are already performing well and are expected to do even better. One can read out about these underlying objectives on a scheme-related page. In most cases, the investment strategy is featured in the name of a scheme itself. 

Expense ratio: Frequently buying and selling equity funds increases the expense ratio but allows the fund manager to leverage market fluctuations. Nonetheless, look at the best Invesco equity mutual fund and their expense ratios for an informed decision.

Taxability

It’d also help if investors learn the taxes applicable to capital gains on equity funds before taking the final call. 

Long-term Capital Gains Tax: If the units are sold after a year of investment, investors have to pay 10% tax on gains exceeding Rs.1 lakh.

Short-term Capital Gains Tax: If the investor holds a scheme for a period of up to a year, they are liable to pay 15% tax on STCG.

TDS: TDS does not apply to capital gains on equity mutual funds. However, dividends above Rs.5000 from the best Invesco equity mutual funds attract 10% TDS. 

These are some of the concepts that new investors need to understand before choosing the best Invesco equity funds for 2023.