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Investors get dividends if they opt for the Dividend Plan of the Equity Fund.Capital Gains are the difference between the price at which the mutual fund units are purchased and the price at which they are redeemed or sold. Dividends and capital gains earned from Equity Funds are liable for taxation.And at the same time earn good returns from these investments. By investing in these funds, investors can reduce their taxable income by ₹1.5 lakh.
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ELSS or Equity Linked Saving Schemes is a type of Equity Fund that offers tax-saving benefits under Section 80C of the Income Tax Act.
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Investors who want to Start Equity Investing with a Small Amount: Many investors want to invest in the equity markets but cannot do so because they want to invest small amounts.They will analyze various technical and fundamental indicators such as the profitability of any company, its ability to survive challenging phases, the sector in which it operates, and so on. Rest will be taken care of by the fund manager. All one needs to do is pick a good fund and invest in it regularly. For such investors, Equity Mutual Funds offer an opportunity. However, they simply cannot do it because they don't have the time to do the necessary research and constantly track markets. Investors keen to invest in Equities but don't have the expertise or the time : There are many people who want to invest in stock markets.All other schemes are deemed as Other schemes Because these fund managers are continually tracking the financial markets and economy, they have the advantage to take such tactical calls and get the best out of equity markets and handle the volatility better.Ī fund that has a minimum of 65% in equity or equity-oriented securities is deemed as an equity-oriented fund for the benefit of computing tax. Similarly, if they see some companies showing a lot of promise, they invest in them at an early stage. If they feel some of the companies whose shares they had bought wouldn't perform as expected, they take them out of their portfolio. Also, after buying these stocks, the fund manager continuously tracks how the companies are performing, how the sectors in which they operate are performing, how the economy is performing, and various other crucial factors that can steer the prices of these stocks.And based on this research, they arrive at investment decisions such as which stocks to buy, at which price to buy and sell, how many of them to buy, etc. They research and analyze various technical and fundamental indicators such as the profitability of any company, its ability to survive challenging phases in the economy, the sector in which it operates, etc. These are professionals with expertise in markets and finance. This is where the role of the Fund Manager and his team comes into play. The next step is for the Fund to decide which stocks to pick from this universe. So, once the fund category is defined, the investment universe of an Equity Fund is defined.Similarly, Mid Cap Funds have to invest at least 65% of their total assets in India's mid-sized companies. Read more about What is large cap funds?. For example, Large Cap Funds have to invest at least 80% of their corpus in the top 100 companies in India by capitalization (these companies are called large-cap companies). Equity Funds by regulation are categorized based on either their investment style or their investing universe, and they have to stick to rules defined for that particular category by SEBI. The stock an Equity Fund will invest in depends on two things.So, by investing in an equity fund, an investor is a part-owner of the company the fund has invested in. Equity funds predominantly invest in equity shares (stocks) of various companies.