As an investor, choosing the right investment option is crucial to achieving long-term financial aspirations. Equity mutual funds have emerged as a popular choice for investors in the stock market. This article will delve into what equity funds are, how they earn, and who should invest in them.
Best Equity Mutual Funds 2024 that primarily invest in stocks, equity-linked securities, and shares of listed companies. Such funds aim to provide excellent returns over a medium to long-term horizon. However, they are considered riskier than debt and hybrid funds. Investing in equity funds through the SIP (Systematic Investment Plan) route is advised to mitigate market volatility. Here, we will discuss India’s top 10 equity mutual funds and provide an investment guide to help you make the right investment decisions.
What are Equity Funds?
Equity funds are mutual funds that invest at least 65% of their portfolio in equity and equity-linked securities. They can be actively or passively managed, depending on the investment mandate. While equity funds offer excellent returns over a medium to long-term horizon, they are also considered much riskier than debt and hybrid funds.
Top 10 Mutual Funds in India
The table below displays the top-performing equity mutual funds in India based on their 3-year and 5-year returns:
| Mutual fund | 5 Yr. Returns | 3 Yr. Returns | Min. Investment | Rating |
| Quant Small Cap Fund – Direct Plan-Growth | 24.75% | 54.95% | ₹5000 | |
| Quant Small Cap Fund Reinvestment of Income Distribution cum capital withdrawal Option Direct Plan | 23.3% | 48.67% | — | NA |
| Quant Small Cap Fund Reinvestment of Income Distribution cum capital withdrawal option | 22.52% | 46.87% | — | NA |
| ICICI Prudential Commodities Fund Direct Plan Growth | — | 46.27% | ₹5000 | NA |
| Quant Infrastructure Fund – Direct Plan-Growth | 21.32% | 43.1% | ₹5000 | |
| Quant Flexi Cap Fund – Direct Plan – Growth | 18.48% | 38.3% | ₹5000 | |
| Quant Mid Cap Fund – Direct Plan-Growth | 21.11% | 37.13% | ₹5000 | |
| Quant Infrastructure Fund Growth | 26.2% | 37.08% | — | NA |
| Quant Infrastructure Fund Reinvestment Inc Dist cum Cap Wdrl option Direct Plan | 19.7% | 36.96% | — | NA |
| Quant Infrastructure Fund Payout of Income Distribution cum capital withdrawal Option Direct Plan | 19.7% | 36.96% | — | NA |
How do Equity Mutual Funds Earn?
When investors put their money into an equity mutual fund, it creates a large pool of money, which is then invested in equity or shares of listed companies by an asset management company. Since equity mutual funds invest in multiple companies, it offers instant diversification, lowering an individual’s risk. An equity mutual fund earns through an expense ratio, which is charged from each investor and used towards the fund’s management. Additionally, the dividend earned from the stocks of companies the fund invests in is paid to the investors. Investors can also earn capital gains by selling units of the MF.
Who Should Invest in Best Equity Mutual Funds 2024?
While equity funds offer higher returns but are also considered riskier than debt and hybrid funds, investors with a moderate-to-high-risk appetite and an investment horizon of five years or more should consider investing in equity funds. Short-term investors should refrain from investing in equity mutual funds. If tax saving is your primary objective, you can invest in ELSS, the best option under Section 80C of the Income Tax Act, 1961. ELSS has a lock-in period of three years and offers higher returns than other investments covered under Section 80C. Novice mutual fund investors may choose to invest in large-cap equity funds as they invest in equity shares of well-established.Reach out to Vakilsearch to know more.
