- Multi-cap Fund
- Large-cap Fund
- Large & Mid-cap Fund
- Mid-cap Fund
- Small-cap Fund
- Dividend Yield Fund
- Value Fund / Contra Fund
- Focused Fund
- Sectoral / Thematic Funds
- Equity Linked Savings Scheme (ELSS)
- Flexi-cap Fund
What is an Equity Mutual Fund?
An equity fund predominantly invests in equity shares of a company. These companies may belong to any market capitalisation bracket.Categories | Rank based on Market Capitalisation (Rs) |
Large-cap | 1-100th stocks |
Mid-cap | 101st – 250th stocks |
Small-cap | 251st stocks onward |
Different Types of Equity Mutual Funds
Before you invest in an equity mutual fund, you should be aware of the different types of equity mutual funds on offer. Market regulator, Securities and Exchange Board of India (SEBI) has put in place strict investment regulations for different types of equity mutual funds. The 11 types of equity mutual funds and their investment strategy is as follows –Sr. No. | Category of Schemes | Investment Mandate |
1 | Large-cap Fund | Large-cap mutual funds invest a minimum of 80% of total assets in equity stocks of large cap companies. |
2 | Large & Mid-cap Fund | Large & Mid-cap mutual funds invest 35% of their total assets in large-cap stocks and another 35% in mid cap stocks. |
3 | Mid-cap Fund | Mid-cap mutual funds invest minimum 65% of total assets in of mid cap stocks. |
4 | Small-cap Fund | Small-cap mutual funds invest minimum 65% of total assets in small cap stocks. |
5 | Dividend Yield Fund | Dividend yield funds invest minimum 65% of total assets in dividend yielding stocks. |
6 | Focused Fund | Focused funds must invest in a maximum of 30 stocks focusing on a specific sector – multi-cap, large-cap, mid-cap, small-cap. |
7 | Multi-cap Fund | Multi-cap funds should invest minimum 25% in each large, mid and small-cap stocks. |
8 | Flexi-cap Fund | Multi-cap funds are free to invest in stocks across large, mid and small-cap market capitalisation. |
9 | ELSS | An ELSS fund invests 80% of total assets in equity stocks in accordance with Equity Linked Saving Scheme, 2005 notified by Ministry of Finance. It is an open-ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit. |
10 | Contra Fund & Value Fund | Contra funds follow contrarian investment strategy while value funds invest a minimum of 65% of total assets in equity stocks following value investing. |
11 | Sectoral/ Thematic | Sectoral/ Thematic funds invest 80% of total assets in stocks of a particular sector/ theme. |
Historical Returns Generated by Equity Mutual Funds
The below table shows the performance of different types of equity mutual funds as on 4th October 2021.Equity Mutual Fund Category | 1-Year | 3-Years | 5-Years | 10-Years |
Large Cap | 54.35 | 18.79 | 13.77 | 14.9 |
Mid Cap | 70.05 | 24.53 | 15.78 | 19.11 |
Small Cap | 88.1 | 27.15 | 17.54 | 20.5 |
Large and Mid Cap | 63.69 | 21.29 | 14.98 | 17.03 |
Multi Cap | 70.94 | 23.13 | 15.9 | 17.62 |
Flexi Cap | 58.52 | 20.55 | 14.69 | 15.85 |
Focused | 58.48 | 20.03 | 14.74 | 16.01 |
Contra | 66.85 | 21.56 | 16.13 | 16.81 |
Value | 65 | 17.92 | 13.37 | 17.07 |
Dividend Yield | 63.4 | 19.48 | 14.5 | 14.68 |
ELSS | 58.67 | 19.75 | 14.49 | 16.47 |
How to choose a Mutual fund scheme to invest in?
With so many options to choose from, picking a mutual fund to invest in is not easy. Where do you even start? While a scheme may suit someone, it might not necessarily work for you. So, how do you know which mutual fund is the right one for you?The first step while deciding which is the right fund for you, is to identify your purpose and objective for investment. You should try to decide –- How much return you want to make to achieve a certain goal or
- Set a time frame or
- Decide how much risk you are willing to take.
- FD: Rs.1.84 lakhs
- Gold: Rs. 1.94 lakhs
- Sensex: Rs. 17.96 lakhs.
Sectoral Funds Vs Equity Mutual Funds
Equity Fund Category | 1-Year | 3-Years | 5-Years | 10-Years |
Sectoral-Technology | 82.38 | 34.29 | 29.47 | 23.24 |
Small Cap | 88.10 | 27.15 | 17.54 | 20.5 |
Mid Cap | 70.05 | 24.53 | 15.78 | 19.11 |
Sectoral-Pharma and Healthcare | 33.99 | 27.72 | 13.31 | 18.24 |
Multi Cap | 70.94 | 23.13 | 15.90 | 17.62 |
Value | 65.00 | 17.92 | 13.37 | 17.07 |
Large and Mid Cap | 63.69 | 21.29 | 14.98 | 17.03 |
ELSS | 58.67 | 19.75 | 14.49 | 16.47 |
Focused | 58.48 | 20.03 | 14.74 | 16.01 |
Flexi Cap | 58.52 | 20.55 | 14.69 | 15.85 |
Sectoral-Banking and Financial Services | 63.42 | 16.45 | 12.37 | 15.84 |
Large Cap | 54.35 | 18.79 | 13.77 | 14.90 |
Sectoral-Infrastructure | 85.61 | 20.53 | 13.21 | 12.78 |
Thematic Funds Vs Equity Mutual Funds
Equity Fund Category | 1-Year | 3-Years | 5-Years | 10-Years |
Small Cap | 88.1 | 27.15 | 17.54 | 20.5 |
Mid Cap | 70.05 | 24.53 | 15.78 | 19.11 |
Multi Cap | 70.94 | 23.13 | 15.90 | 17.62 |
Thematic-MNC | 45.70 | 15.91 | 11.70 | 17.30 |
Thematic-Consumption | 56.00 | 21.94 | 15.87 | 17.18 |
Value | 65.00 | 17.92 | 13.37 | 17.07 |
Large and Mid Cap | 63.69 | 21.29 | 14.98 | 17.03 |
Contra | 66.85 | 21.56 | 16.13 | 16.81 |
ELSS | 58.67 | 19.75 | 14.49 | 16.47 |
Focused | 58.48 | 20.03 | 14.74 | 16.01 |
Flexi Cap | 58.52 | 20.55 | 14.69 | 15.85 |
Thematic-Others | 62.77 | 19.71 | 12.85 | 15.35 |
Large Cap | 54.35 | 18.79 | 13.77 | 14.90 |
Dividend Yield | 63.4 | 19.48 | 14.50 | 14.68 |
Thematic-Energy | 82.91 | 23.12 | 17.55 | 14.30 |
Thematic-International | 28.63 | 13.35 | 14.19 | 12.87 |
Thematic-PSU | 67.21 | 15.54 | 8.18 | 7.71 |
Riskometer | Investor Type | Risk Profiling |
Low | Conservative | Fixed maturity plans, gilt funds and income funds are suitable for conservative investors. In equity category, large-cap funds can be considered. |
Moderately Low | Moderately Conservative | Short to medium term bonds, large-cap funds, arbitrage funds can be considered. |
Moderate | Moderate | Debt-oriented hybrid funds, multi-cap funds, value funds, ELSS can be considered. |
Moderately High | Moderately Aggressive | Large & mid-cap funds, flexi-cap funds, balanced advantage funds can be considered. |
High | Aggressive | Mid-cap, small-cap, contra funds, sectoral, thematic funds can be considered. |
How to Evaluate Best Equity Mutual Funds?
With more than 351 equity mutual funds available and the dynamic nature of ratings, how will you know which is the best equity mutual fund? The ratings displayed on financial websites change randomly. One day a fund is 5-star rated and just a few months later, it becomes a 2-star rated fund.[Read More: Still Using Star Ratings to Select Mutual Funds? – Wake Up Before It’s Too Late!]As investors, it is difficult for you to track these ever-changing ratings. So, how will you decide which is the best equity mutual fund? Let’s find out.1. Study the Underlying Portfolio: This is the first parameter while selecting best equity mutual funds. A mutual fund is nothing but a collection of stocks. Hence, its performance is 100% dependent on the performance of the underlying stocks. If the stocks are of good quality, then short-term underperformance is not a big deal. But unfortunately, most of the research houses pay very little attention to this big detail. They are mostly focused on past performance.But at RankMF, we study and rate each stock based on a variety of factors - profitability, balance sheet health, the industry they operate in, size of the business, efficiency and a lot more! This helps us and our investors look beneath the surface.For example: Franklin Bluechip Fund has generated a return of 69.76% in the last one year as of 4th October 2021. But look at the fund’s underlying portfolio. Majority of its underlying stocks are poor-quality stocks. Such schemes might generate decent returns when the markets are rallying but they are not suitable for long-term investing.Best Equity Mutual Funds | RankMF Star Ratings | Category | 1-Year | 3-Years | 5-Year |
Axis Bluechip Fund | 5-Star | Large-Cap Fund | 51.12% | 22.57% | 17.75% |
Kotak Equity Opportunities Fund | 4-Star | Large & Mid-cap Fund | 55.30% | 22.38% | 15.36% |
DSP Midcap Fund | 4-St | Mid-cap Fund | 51.00% | 24.22% |
|
SBI Small-cap Fund | 4-Star | Small-cap Fund | 74.15% | 27.98% | 21.87% |
BNP Paribas Multi-cap Fund | 3-Star | Multi-cap Fund | 66.50% | 21.49% | 14.88% |
Motilal Oswal Flexi-cap Fund | 5-Star | Flexi-cap Fund | 41.05% | 15.04% | 11.57% |
SBI Focused Equity Fund | 5-Star | Focused Fund | 66.78% | 24.86% | 17.80% |
Axis Long Term Equity Fund | 5-Star | ELSS | 61.76% | 23.98% | 17.65% |
Quantum Long Term Equity Value Fund | 4-Star | Value Fund | 56.57% | 13.56% | 10.76% |
Kotak India EQ Contra Fund | 3-Star | Contra Fund | 58.86% | 20.07% | 16.70% |
UTI Dividend Yield Fund | 5-Star | Dividend Yield Fund | 64.12% | 20.02% | 15.86% |
- All the above funds are open-ended, actively managed equity mutual funds.
- Only schemes with a corpus of at least Rs 250 crore are considered.
- Only those funds which had a buy recommendation on RankMF (based on our ranking parameters) are included.
- For a fund to qualify, the fund had to be in duration for at least 5 years.
Conclusion:
With this, we conclude our discussion on the Best Equity Mutual Funds. RankMF is India’s best mutual fund research and investment platform. RankMF’s research methodology considers over 20 million data points to review and evaluate mutual funds. Our platform aims to simplify your process of mutual fund research, analysis and investment. Follow the below steps to invest in the best equity mutual funds.How to Invest in Best Equity Mutual Funds You can invest in best equity mutual funds in 2021 in less than 15 minutes with RankMF. To invest in the best equity mutual funds, follow the below steps:- Open a FREE RankMF account in less than 15 minutes!
- Complete your Know your Customer (KYC) formalities. This will take you less than 10 minutes.
- Shortlist the fund you want to invest in.
- Register SIP or make lumpsum investments in the best equity mutual funds and you’re done!
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