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Why Should you Invest in Equity Mutual Funds?

Updated on June 14, 2024 , 566 views

“Predicting rains doesn’t count, building arks does.” - Warren Buffet

Many investors are confused whether to invest in equities considering it to be as a risky fund. But, risk isn't all about these funds, if one considers these funds as part of their long-term investment, one can make good profits over the long-run. In fact, every mutual fund comes with an objective, and Equity Funds are considered to be funds that will give you good returns in the long-run. In short-term, these funds are risky, but the longer you invest these funds can be less risky and they tend to deliver good returns. So, let's see some the other important advantages of these funds that can provoke you to invest in these funds.


Top 6 Benefits of Equity Funds

1. Liquidity

Since stocks are actively traded across all major exchanges, every day, this makes equity funds a highly liquid investment. It provides investors, the convenience of buying and selling their stocks depending on the Market situation. By Investing in equity Mutual Funds, the money is usually credited to your Bank account in 3 days.

2. Capital appreciation

The another benefit of investing in equity fund is to get Capital appreciation. It is one of the Financial Instrument which can give you high Inflation beating returns. If there is an increase in stock prices, it would reflect in appreciation in the invested money. Therefore, one can accumulate good amount of wealth over a period of time.

3. Dividend Income

Investing into blue-chip companies may help investors earn a steady Income in the form of dividends. A majority of such companies usually pay out regular dividends even in volatile market conditions, typically paid quarterly. Having a diversified Portfolio can provide investors with a steady dividend income in the year.

4. Portfolio Diversification

With Best Equity Mutual Funds investors can diversify their portfolio through regularly investing. It means that they can invest in stocks of different economic sectors. So, even if a particular stock drops in value, the others may help investors make up for that loss depending on the market situation.

5. Financial Goal Oriented Funds

If you have long-term Financial goals, equity mutual fund can be one of the best vehicles to achieve the goal. The funds are categorised into large-cap, mid-cap, small cap, etc. and accordingly the returns vary from fund to fund. The higher the risk associated, the more you have chances of getting higher returns to achieve your target amount.

6. Ideal Investment Vehicle

In many ways, equity funds are ideal investment vehicles for investors that are not as well-versed in financial investing or do not possess a large amount of capital with which to invest. Equity funds are practical investments for most people.

The attributes that make equity funds most suitable for small individual investors are the reduction of risk resulting from a fund's portfolio diversification and the relatively small amount of capital required to acquire shares of an equity fund. A large amount of investment capital would be required for an individual investor to achieve a similar degree of risk reduction through diversification of a portfolio of direct stock holdings. Pooling small investors capital allows an equity fund to diversify effectively without burdening each investor with large capital requirements.

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5 Best Equity Mutual Funds to Invest

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)Sub Cat.
Invesco India PSU Equity Fund Growth ₹67.5
↑ 1.38
₹9572647.199.139.730.454.5 Sectoral
ICICI Prudential Infrastructure Fund Growth ₹188.39
↑ 1.38
₹5,00518.232.7693928.944.6 Sectoral
Nippon India Power and Infra Fund Growth ₹364.539
↑ 4.05
₹5,0432436.381.238.929.158 Sectoral
DSP BlackRock India T.I.G.E.R Fund Growth ₹328.872
↑ 4.17
₹3,81530.538.680.238.228.549 Sectoral
SBI PSU Fund Growth ₹33.0806
↑ 0.34
₹2,35220.942.1101.638.125.654 Sectoral
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 14 Jun 24
*Some of the best equity funds are listed above sorted on last 3 year CAGR returns.

How to Invest in Equity Mutual Funds Online?

  1. Open Free Investment Account for Lifetime at

  2. Complete your Registration and KYC Process

  3. Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!

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All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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