Best HSBC Equity Mutual Funds

L&T Investment Management Limited is one of the top 10 AMCs in India, catering to various investment needs. Founded in 1997, it has an average Assets Under Management (AUM) of Rs. 72727.95 crore as of June 2021. L&T Finance Holdings Limited, a listed company registered with RBI as an NBFC, is this AMC’s sponsor. 

This company offers more than 30 mutual fund schemes, including the best L&T equity mutual funds.

Equity mutual funds invest in stocks of companies across all market capitalisations. There are several types of equity funds that depend on investment strategy, market capitalisation, tax treatment, etc. Some of these types include small-cap, mid-cap, large-cap, actively managed, passively managed, ELSS, and sectoral funds.

Mutual Funds of this type offer the highest returns than any other kind because of equity exposure as high as 95%. However, equity mutual funds are impacted by market fluctuations directly. Therefore, one should measure his/her risk-taking capacity before investing in these funds. Apart from this, equity mutual funds enable you to attain portfolio diversification as you can invest a small amount to gain exposure to various stocks. 

Some more benefits of investing in this mutual fund sub-type are its flexibility and liquidity. However, it is vital to note that the advantages and disadvantages will vary depending on the type of equity mutual fund you are opting for. 

Taxability

But, before you invest in the best L&T mutual funds 2023 from among the 10+ schemes it offers, check the pertinent taxability. 

Short-term Capital Gains Tax: A STCGT is applicable on your gains if you redeem units of the best L&T equity mutual funds within a year of investment. You will be taxed at a flat rate of 15%, irrespective of the net profits. 

Long-term Capital Gains Tax: In case you realise the capital gains after a holding period of 12 months or more, you are liable to pay an LTCGT. These gains are tax-exempt if the amount is up to Rs.1 lakh. Any amount above that mark is taxable at 10% without indexation benefits. 

TDS: Tax Deducted at Source applies to dividends above Rs.5000. 

Understanding the taxability of the top L&T equity mutual funds is crucial in investment and liquidation decisions. However, that’s not sufficient to informedly pick the most suitable equity mutual funds. 

Factors to Consider Before Investing

To that end, here are some pointers to keep in mind before going for an equity MF. 

Investment objective: Every investor has a financial goal that should be in sync with the fund’s objectives. You may want to evaluate these objectives before shortlisting the best L&T mutual fund. 

Risk analysis: As mentioned already, equity funds are a highly risky investment option. Therefore, one should estimate his/her risk appetite before investing in such schemes. It is advisable to consider every aspect of the best L&T equity mutual funds as they are significantly susceptible to market risks.

Fund performance: The past performance of a fund is important to consider prior to investing. It may not be an indicator of the returns a scheme will generate presently. But it can give insights into how it delivered under different market conditions over a prolonged period. 

Holding analysis: Review the holding analysis of a scheme to learn where your resources are invested. It provides a rough idea of the expected returns and risks involved. 

Fund manager’s experience: A fund manager with prior experience can identify the areas of investment that will result in higher returns. Therefore, it is necessary to review a fund manager’s experience before investing. 

Expense ratio: This reflects a fee charged by the AMC for management, administration, promotion, and distribution of a mutual fund scheme. The respective AMC deducts this amount from the final return.

Exit load: Some AMCs charge a fee if you exit the fund during the lock-in period. However, some companies may not levy a charge if investors liquidate their holdings within a certain period, as per the scheme details. Therefore, consider this point before investing in the best L&T equity mutual funds.

Regular or direct plan: A regular plan requires investors to buy units of a scheme via a third-party agent, like a broker. This drives up the cost of management for AMCs, translating to higher expense ratios. Conversely, a direct plan lets people invest in the top L&T equity mutual fund without the involvement of any third party. Thus, they involve a lower expense ratio. You may want to consider this point prudently to decide the suitable route. 

Investment method: Another essential factor to consider is whether you’ll invest via SIP or lump-sum. SIP lets you invest a fixed sum periodically. Units are allotted according to the NAV on the date of a deposit, which proffers the benefit of rupee cost averaging. On the other hand, investors can make a one-time deposit to buy units of an equity MF scheme per that day’s NAV via the lump-sum route.  

Choosing the right L&T equity scheme to invest in can be a tedious job. However, the above points can make the selection procedure seamless and less time-consuming.