What are Equity Funds with Examples?

Equity Funds-Meaning-Examples-Features-characteristics-Advantages-Benefits-Disadvantages-Limitations-iBizMoney

Investing is a long-term process that requires meticulous planning and preparation to reduce the risk of financial loss. This necessitates a foundational understanding of the various scheme options available to you. The topic of Equity Mutual Funds will be discussed here. We will discuss what are equity funds with examples in this topic.

Mutual funds and ETFs (exchange-traded funds) are two common types of equities funds investors can purchase (ETFs). Depending on the mutual fund’s structure and the investor’s financial goals and condition, both types of investments can be advantageous.

What is Equity Fund?

The term “equity fund” refers to any open-end fund, such as a mutual fund or exchange-traded fund (ETF), closed-end fund, or unit investment trust (UIT), that invests in the common stock of companies (thus the name “equity”). One cannot simply compare it to a bond fund or fixed-income fund, which invests almost exclusively in bonds.

When you put your money into an equity fund, you’re actually purchasing stock in a variety of businesses. The fund manager’s goal is to maximize returns by spreading capital over a wide range of companies. The returns on term deposits and debt-based funds are often higher than those on equity-based funds. These investments carry some degree of danger because their success is tied to market conditions.

Equity mutual fund invest in equities of companies with varying market capitalization in the hopes of generating significant returns. Since equity mutual fund are the most volatile, they also have the greatest potential for returns, far exceeding those of debt and hybrid funds. An investor’s return on investment will depend significantly on the company’s success.

Overview of Equity Funds

If a stock mutual fund has a longer track record of out-performance than its peers, it may be considered the best in its category. In comparison to its competitors, the best equity fund has a lower expense ratio. The top mutual funds may maintain their value regardless of market conditions. You should check the equity fund’s alpha to determine which mutual fund is the finest. It reveals the equity fund’s excess return relative to the performance of the reference index. The equities fund that has a better alpha than its peers is the one to go with.

The beta of the stock fund is something to consider. Indicates the fund’s volatility relative to a reference index. An equity fund’s beta below one indicates lower volatility when compared to funds with higher betas. Examining the standard deviation will give you an idea of the equity fund’s level of volatility. One way to measure the volatility of an equity fund is to compare its standard deviation to that of similar funds. Based on its historical performance and its level of risk, an equity fund can be evaluated and selected. When picking an equity mutual fund, it’s important to look at the fund’s Sharpe’s ratio to determine whether or not the expected return justifies the level of risk you’re willing to take.

Choose the top debt funds by considering the quality of the bonds they hold. Bond issuers would earn a credit rating based on how well they could pay back the main amount and the interest. You have to invest your money into debt funds that have AAA-rated bonds in their portfolios. It’s a safer investment than bonds with a lower rating that might provide a greater interest rate. But they could miss payments on both the principal and the interest. The expense ratio might assist you evaluate which debt fund has done the best.

What Does Equity Funds Function?

Equity mutual funds place at least 60% of their money into shares of stock in a variety of companies. The asset allocation will be dependent on the purpose of the investment. Depending on how the market is going, the asset allocation can be made up of only large-cap, mid-cap, or small-cap stocks. The style of investing might be oriented on value or growth.

After investing a major percentage of the money into the stock market, the balance could go into debt and money market instruments. This is done to handle rapid demands to cash out and to lessen the risk level to some degree. The fund manager decides whether to buy or sell in order to take advantage of fluctuations in the market and obtain the greatest money back.

Examples of Equity Funds

Equity funds can be grouped into distinct groupings based on their investment aims and where they invest most of their money. If you know them, you can make the most of your investments. Large-Cap Equity Mutual Fund, Mid-Cap Equity Mutual Fund, Multi-Cap Equity Mutual Fund, Small-Cap Equity Mutual Fund, and Large and Mid-Cap Equity Mutual Fund are all different forms of equity mutual funds.

Large-Cap Equity Mutual Funds examples like: ICICI Prudential Bluechip Stocks Fund, Kotak Blue-chip, HDFC Top 100 Fund, etc. Small-Cap Equity Mutual Funds examples like: Axis Small Cap Fund, Tata Small Cap Fund and more. Mid-Cap Equity Mutual Funds like: Motilal Oswal Midcap Fund, HDFC Mid-Cap Opportunities Fund and many more.


You may wish to choose the best mutual fund based on your investing goals and how much risk you are ready to take. Before investing in a mutual fund, you could investigate the track record of the mutual fund house and the fund manager. But you can only put money into the mutual fund if you like the manner the fund manager makes investments. Before you invest money into a mutual fund, you need to look at the expense ratio. You might find that the best equity funds have a smaller charge.

Scroll to Top