Equity Savings funds

What are Equity Savings funds?

Equity savings funds are open ended equity schemes investing in equity, arbitrage and debt. As per SEBI mandate the schemes should invest minimum 65% of total on equity and equity related instruments and minimum 10% in debt instruments.

The fund manager typically maintains a 30%-35% equity allocation and rest is invested in derivative markets depending on the market valuations.

Why one should invest in Equity Savings funds?

The equity portion of the portfolio provides potential for higher returns, whereas the debt component provides stability to returns.

Equity savings funds perform a balancing act between risk and return. Equity savings funds provide better stability and downside protection as compared to pure equity funds. Downside protection means when the markets fall.

Invest in Equity Savings Funds to get better returns

Who should invest in Equity Savings funds?

Equity savings funds are suitable for conservative investors. Investors with horizon of 1-3 yrs can invest in Equity Savings funds.

What is tax implication on Equity Savings funds?

Since Equity Savings funds invest 65% of total assets in equity and equity related instruments they carry taxation as per equity oriented schemes. Gains earned on equity oriented schemes are taxable depending on holding period. Gains on investment horizon of upto 1 year are called short term capital gains and tax rate applicable is 15%.

Gains on Investment horizon of more than 1 Year are called Long Term Capital  Gains. LTCG over and above Rs.100,000 are taxable at 10% without indexation

How to invest in Equity Savings Funds:
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Equity Savings Funds

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