Unlocking Growth: Who should consider including Equity Funds in their Portfolios?

Types of investors who may consider investing in equity funds

🔹Keen to invest in equities but lack time and expertise

Several investors are keen to invest in the stock markets; however, they often lack the expertise and time to conduct the required research and regularly monitor the market movements. Equity funds are recommended for such investors. Additionally, if investors want to start investing in equities with smaller capital, equity funds are a good choice as there is no minimum investment value. Once you invest, you don't need to regularly monitor the market movements. The fund manager along with their teams analyze different fundamental and technical factors to make investment decisions.

🔹Long investment horizon

Equity funds tend to be more volatile in the short term due to market fluctuations. However, historically the stock markets have given high returns in the longer period. If your investment horizon is five years or longer, equity funds can be an excellent option to create wealth. Additionally, these funds are appropriate to meet long-term financial goals like children's higher education or retirement planning.

🔹Higher risk tolerance

When compared to debt instruments like bonds and other fixed-income securities, equities have a higher risk. If you have a higher risk appetite and tolerance and are willing to withstand the inherent market volatility, equity funds can be a recommended option. Investors who are comfortable seeing possible losses in the short term to enjoy higher returns in the long term may opt for equity mutual funds. A disciplined and patient approach are traits that are required in equity fund investors.

🔹Seek capital appreciation

Another category of investors who may consider investing in equity funds is those seeking capital appreciation. These funds have a higher possibility to deliver significant price appreciation over the long term. Additionally, investors may benefit from the returns earned via periodic dividends paid by the companies held in the fund portfolio. Investors who prioritize capital appreciation at risk of capital preservation may choose equity funds as part of their investment portfolio.

🔹Keen to diversify

Equity funds invest in companies across different industries. Some of these funds invest across geographies, which offers an excellent way to diversify your investments and benefit from international opportunities. Diversification is important to mitigate investment risks and equity mutual funds are an excellent strategy to achieve this goal.

Equity investments require an in-depth knowledge and expertise of the stock markets and risk management strategies. Additionally, it requires regular monitoring and portfolio shuffling based on economic factors and market conditions. Most investors lack the time and knowledge and may consider choosing equity mutual funds to maximize their potential returns. To learn more about equity funds and to start your investment journey, visit our website.