Why Equity Savings Funds Are a Smart Investment Choice
13 Feb 2025
What Makes Equity Savings Funds Appealing To Investors
Equity Savings Funds generate returns via investments in equity, debt and arbitrage opportunities distinguishing them from other hybrid funds. The funds overall equity exposure is partially hedged thereby mitigating volatility as compared to other hybrid funds.
Features & Advantages of Equity Savings Funds
Risk Reward Ratio :
Since these funds invest in a mixture of asset classes, they help to optimise returns on investments while maintaining a smart risk and reward balance. Thus, this savings scheme makes for a perfect option for conventional investors who still want to earn high returns from their investments.
Allocation :
According to SEBI regulations, an equity savings fund should invest in atleast 65% in equity and 10% in debt instruments and the rest in arbitrage opportunities using hedging procedures.
Equity Component :
The equity portion aims to generate long-term, inflation-beating returns.The arbitrage component leverages market price inefficiencies to provide low-risk returns, enhancing overall fund stability. The debt portion offers market-linked fixed income returns and helps stabilize the portfolio during market volatility.
Tax Treatment :
Since 65% should be invested in equity & equity related instruments these mutual funds enjoy the tax treatment of Equity oriented schemes.
Illustration of HDFC Equity Savings Fund Reg Plan Performance
# NIFTY Equity Savings Index. Returns greater than 1 year period are compounded annualized (CAGR).
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.
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