The riskiest of all mutual funds, Equity funds are back with more investors

Apr 15, 2021 | Vanshika Kaushik

The riskiest of all mutual funds, Equity funds are back with more investors title banner

The world is returning to the new normal after the major lockdown imposed in 2020.The stock market has seen a topsy turvy journey in the previous year from stock price as high as 79,280(during the bullish phase)and drooping to 49.6(during the bearish phase).


 

After a long year of hesitancy to invest in Equity mutual funds now the investors are back again with the higher the risk higher the return theory.

 

The cash inflows in equity mutual funds amounted to 9,115 within March 2021 .A lot of investors are reinstating their faith in the equity mutual funds.This majorly includes the younger generation.

 

A lot of individuals from the Gen Z  are making substantial investments in the equity mutual funds though a lot riskier than its counterparts these funds guarantee higher returns too.

 

This is entirely subject to the market risks but the past data shows that equity funds offer higher returns during the months of assembly or national level elections.

 

Although this should not be the basis of investment but looks like a lot of investors are considering the assembly elections of Bengal as the  right time to invest.

 

(Must check: What is FinTech?)

 

Equity Mutual Funds

 

Equity mutual funds means  investing  majorly in stocks.It is mandatory to invest at least 65 % of corpus in Indian stocks and equity related investments for a mutual fund to be classified as an Equity mutual fund.

 

Averagely they give 10-12%interest rate which is higher than the interest rate  on money market funds or debt mutual funds.

 

SIP(Systematic Investment Plan)

 

SIP is an investment plan that requires depositing a certain amount in the bank on a regular basis.In a way it is similar to recurring deposit only difference being that SIP’s require a fixed amount to be deposited every month.

 

The best thing about SIP is even in a failing market the losses will be relatively less.It also eliminates the need to stay updated with the market trends.As there are less chances of fluctuations  they are relatively less risky.

 

In an interview with Money Control, Rupesh Bhansali head of mutual funds at GEPL capital predicted that usually after a good year stock markets tend to consolidate the investors should keenly study the market before investing.

 

He also stated that the equity market must not be considered an easy tool for money-making.Financial advisors also suggest that continuing the SIP’s can be the right decision at this point .

 

Though fluctuations in the market trends is nothing new, a systematic investment plan (SIP)still provides a cushion against the fluctuating market trends.

Tags #Business Analytics