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Equity Mutual Funds

Equity Mutual Funds:

Inflows into India’s equity mutual funds rose 17% sequentially to a record high of Rs 40,608 crore in June, data from the Association of Mutual Funds in India (AMFI) showed recently.

  • Equity Mutual Funds is a type of investment fund that pools money from investors to trade primarily a portfolio of stocks, also known as equity securities.
  • They are also known as Growth Funds.
  • Equity Funds are either Active or Passive.
  • In an Active Fund, a fund managerscans the market, conducts research on companies, examines performance and looks for the best stocks to invest.
  • In a Passive Fund, the fund manager builds a portfolio that mirrors a popular market index, say Sensex or Nifty Fifty.
  • The fund manager has a passive role in stock selection.
  • Buy, hold, or sell decisions aredriven by the benchmark index, and the fund manager merely needs to replicate the same with minimal tracking error.
  • Equity Funds can also be divided as per Market Capitalisation, i.e., how much the capital market values an entire company’s equity.
  • There can be Large Cap, Mid Cap, Small or Micro Cap Funds.
  • There can be a further classification as Diversified or Sectoral / Thematic.
  • In the former, the scheme invests in stocks across the entire market spectrum, while in the latter, it is restricted to only a particular sector or theme, say, Infotech or Infrastructure.