Best PPFAS Equity Mutual Funds

PPFAS or Parag Parikh Financial Advisory Services AMC was set up in October 2012. It is a relatively young AMC with 0.07% of the market share. PPFAS handles less than five schemes in total, comprising debt, equity, and hybrid kinds. As of 2020, PPFAS’ AUM stands at Rs.2,871.87 crore.  

In this AMC’s equity segment, the best PPFAS equity mutual funds have an AUM of around Rs.10276.27 crore. Equity mutual funds invest in stocks of different companies. These funds need to invest a minimum of 65% of their corpus in equity instruments to be classified per SEBI. Hence, they are the riskiest of all mutual funds. However, these have the potential to provide higher returns. 

Equity mutual funds’ value is determined significantly by the performance of these companies whose stocks they own. Therefore, any individual can choose the best PPFAS equity mutual funds to invest in large-cap, small, and mid-cap companies. To participate, persons can opt for the SIP or lumpsum options. 

PPFAS handles approximately 2 equity mutual fund schemes. They cover tax-saving options and pure equity-related investments. 

Taxability

Individuals investing in these should know about the taxation applicable. All income earned from selling mutual funds comes under capital gains eligible for tax. 

Short-term Capital Gains Tax: When equity mutual funds are sold before one year of holding, these gains are applicable for short-term capital gains tax. Tax is levied at a rate of 15%. Therefore, no matter the tax slab an investor falls under, they have to pay this amount. However, if the income of an individual is below Rs.2.5 lakh, they can adjust the gains, and any remainder will be taxed at 15%.

Long-term Capital Gains Tax: Any gains on equity mutual funds sold after one year of holding qualify for long-term capital gains tax. If any earnings are up to Rs.1 lakh, they are not taxed. However, any income more than Rs. 1 lakh will attract an LTCG of 10% without any indexation benefit. 

TDS: Earlier dividends were non-taxable as a fund house paid a distribution tax. However, as of 2020, dividends have become taxable in an investor’s hands at a rate of 10% above Rs.5000. 

ELSS taxation: Up to Rs. 1.5 lakhs are made tax-free in ELSS investments. 

Factors to Consider Before Investing

Apart from the taxation of gains from mutual funds, it is also necessary to understand the premise of investing. 

Many parameters are to be considered before investing in any of the best PPFAS equity mutual funds 2021. These factors can help an investor gauge how to go about making any investment. 

Investment objective: The investment objective of some best PPFAS equity mutual funds Is crucial in that it should align with an investors’ aim. Therefore, an AMC usually stresses and highlights its goal for investments. Moreover, it’s ideal if all past management of the schemes adequately reflects its stated objectives. 

Holding analysis: Often, the best way to gauge projected returns of all equity-linked fund is by studying their holdings. Holdings are companies in which the mutual fund holds a stake. Thus, individuals can get a fair idea about the fund’s likely returns by analysing the performance of the composite companies. 

Expense ratio: The management of a mutual fund involves dedicated staff. Brokerage fees and other costs are charged from all investors. A fund with a high expense ratio implies a larger percentage of the profits will go towards the fund’s management, leaving the remainder for distribution. 

Risk appetite: Equity-based mutual funds are risky investments in comparison to other mutual funds. Therefore, before any investment, a personal risk evaluation should be done so that a person invests in the best PPFAS equity mutual fund impartially.

Exit load: When you exit a mutual fund scheme, AMC will charge an exit load. Additionally, it is also viewed as a penalty in the case you withdraw from this fund prematurely. The exit load aims to discourage investors from exiting funds ahead of time. It is unlike an expense ratio in that it is not used to maintain a fund. 

Fund manager’s experience: The experience of a fund manager is crucial to the progress of a mutual fund scheme. It is the fund manager’s expertise and experience that counts since he/she decides and makes the investments. Therefore, a fund manager with a longer experience will have insights into the handling of a fund better. 

Fund’s performance: It’s a substantial risk to invest in a newer fund, as only a few years of performance data are available. Individuals will have to analyse the risks a scheme has been exposed to over time. Gauging the fund’s history will give the individual sufficient insight into its fundamentals, which is crucial for generating expected or above-expected returns. 

Deciding on the best PPFAS equity mutual funds is challenging. In addition, equity-based investments often involve higher risk. Therefore, before beginning any serious investment, individuals should consider the above-mentioned factors.