By In today’s economic landscape, equity mutual funds are becoming more and more popular among investors in India. According to the Association of Mutual Funds in India (AMFI), the total assets under management (AUM) of Indian mutual funds stood at ₹32.17 lakh crore as of June 30, 2021, of which the AUM of equity mutual funds accounted for ₹12.68 lakh crore.
So, what are equity mutual funds, and how can you capitalize on the current trends in this market?
What are Equity Mutual Funds?
An equity mutual fund is a type of mutual fund that primarily invests in stocks. Equity mutual funds can be further categorized into thematic mutual funds and diversified mutual funds.
Thematic mutual funds invest in specific sectors or themes such as technology, healthcare, infrastructure, or emerging markets. Diversified mutual funds, on the other hand, invest across different sectors and industries to spread the risk and maximize returns.
In general, equity mutual funds are ideal for investors who have a higher risk appetite and are willing to hold their investments for the long term. Equity mutual funds are known to have a higher potential for returns than debt funds or fixed deposits, but they also come with a higher risk of loss.
Capitalizing on Current Equity Mutual Funds Trends
Here are some tips to help you capitalize on current equity mutual funds trends in India:
1. Choose the Right Fund Manager
One of the key factors that can impact the performance of an equity mutual fund is the fund manager. A good fund manager has the right knowledge and experience to make informed investment decisions. Therefore, it is essential to choose an equity mutual fund that has a competent and experienced fund manager.
2. Analyze Past Performance
While past performance is not a guarantee of future returns, it is still an essential aspect to consider before investing in an equity mutual fund. You can look at the historical performance of a fund over the last five or ten years and compare it with its benchmark index to assess its performance.
3. Invest in Diversified Funds
Diversified mutual funds invest in stocks across different sectors and industries, which helps to spread the risk and reduce the impact of any adverse events in a particular sector. Therefore, investing in a diversified equity mutual fund can be a good way to capitalize on the current market trends.
4. Follow a Disciplined Investment Approach
One of the critical factors that can impact your returns from equity mutual funds is your investment approach. Investing in mutual funds requires patience, discipline, and a long-term perspective. It is not advisable to exit a fund based on short-term market trends or news.
5. Keep an Eye on the Market Trends
Equity mutual funds are directly linked to the stock market, and the performance of the fund can be affected by changes in the market trends. Therefore, it is essential to keep track of the market trends and review your investment portfolio periodically. If you notice any adverse market trends, it may be necessary to take corrective action.
In conclusion, equity mutual funds offer a viable investment option to investors. However, like all financial products, investing in equity mutual funds involves risks, and you must carefully evaluate your investment goals, risk tolerance, and investment horizon before investing. By following the tips mentioned above, you can capitalize on the current trends in the equity mutual funds market and achieve your investment goals.
Disclaimer: The views and opinions expressed in this article are those of the author’s and do not necessarily reflect the official policy or position of any agency or organization. Any reliance you place on such information is therefore strictly at your own risk. Before trading in the Indian financial market, the investor must gauge all the pros and cons and take the necessary advice if required.
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