Again Equity fund basically known as Stock fund can be categorized as discussed bellow.
1. Diversified Equity Fund
2. ELSS/Tax Savings Fund
3. Index Funds
4. Sectorial Funds
1. Diversified Equity Fund
Equity funds which are not specially Large cap or Small and Mid Cap oriented funds and will not include sector funds in other words it invests in companies regardless of size and sector. Its diversified the investment across the stock market in bid of maximize the return.
2. ELSS/Tax Saving Funds
As the name ELSS (Equity Linked Savings Scheme) or tax Saving Funds are basically facilitate the investor to get tax benefits on their investment. This is an equity diversified fund and investors enjoy both the benefits of capital appreciation, as well as tax benefits under section 80-C of income tax act.
This type of mutual fund have a lock in period of 3 Years from the date of investment. Investor can exit ELSS after selling it after 3 Years.
3. Index Funds
An Index fund is a type of mutual fund with having a portfolio to match or follow the component of a market Index. Index fund is a passive form of fund management that has been successful in outperforming most actively managed mutual funds. Basically it gives a return as nearer return of the tracked Index.
4. Sectorial Fund
Sector Fund is a stock mutual fund, Exchange-traded or closed-end fund that invests solely in businesses that operate in a particular industry or a sector of the economy. Because the holdings of this type of fund are in the sae industries, there is an inherent lack of diversification associated with these funds.
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