EQ­UITY FUND TYPES

Consumer Voice - - Mutual Funds -

More than 80 per cent in­vest­ments hap­pen in large-cap com­pa­nies, en­sur­ing bet­ter re­turns and pro­vid­ing a cush­ion­ing ef­fect even if the stock in­dices fall sharply.

In this, 60 per cent to 80 per cent of in­vest­ments get in­vested in large-cap com­pa­nies. Any dras­tic fall in stocks have a mar­ginal ef­fect on in­vest­ment.

Here, at least 60 per cent of in­vest­ment is in small- and mid-cap com­pa­nies. Any sharp fall in stock in­dices will have di­rect im­pact, but when the fund grows, it grows ex­po­nen­tially.

Th­ese funds nor­mally have a spe­cific lock-in pe­riod (three years, for ex­am­ple, un­less con­verted into an open-ended fund), after which they can be traded. Fur­ther pur­chases can be made any­time dur­ing the lock-in pe­riod. Th­ese funds give the tax ben­e­fit of a re­bate u/s 80C of the In­come Tax Act.

Th­ese funds are ex­clu­sively for in­vest­ment in the realty sec­tor where there is a long ges­ta­tion pe­riod due to project struc­ture, be­fore they start giv­ing you re­turns, de­pend­ing upon the fund house’s brand value and the com­ple­tion of projects on time as well as sell­ing the build­ing units to pub­lic/cor­po­rate en­ti­ties.

Th­ese funds at­tract in­vest­ments out­side the coun­try (abroad) of more than 65 per cent.

In this, you can grow your money by in­vest­ing in the eq­uity mar­ket as well as avail tax de­duc­tion un­der Sec­tion 80C of the In­come Tax Act and get tax-free div­i­dends. In some ELSS funds, there could be a lock-in pe­riod of three years.

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