BAJAJ ASSET MANAGEMENT LIMITED.
BAJAJ ASSET MANAGEMENT LIMITED.
Our schemes follow diverse investment strategies like megatrend investing, moat investing and more
AdvantageAll investments are driven by our in-house investment philosophy, InQuBe, a combination of the Information Edge, Quantitative Edge and Behavioural Edge.
Through our unique investment approach, we aim for market-beating returns in the long term.
SIP and lumpsum options in many schemes start with as little as Rs. 500
An equity fund is a mutual fund that invests primarily in the shares of listed companies. It collects money from multiple investors and allocates it across a portfolio of stocks with the objective of generating long-term capital growth. These funds are managed by professional fund managers and offer diversification by investing across different companies and sectors, which may help reduce the impact of individual stock movements. Such funds are generally suitable for investors who are comfortable with market-linked volatility and are seeking potential capital appreciation over the long term.
Equity mutual funds in India come in various forms, some focusing on a specific market capitalisation (such as large cap, mid cap or small cap funds), others investing in companies of all sizes (such as multi cap funds) and some focusing on specific sectors or themes.
Equity funds function through structured portfolio management, regulatory oversight, and market linked valuation, as outlined below:
Investors with a very high risk appetite who are seeking to build wealth over the long term may consider these funds. Here’s a more detailed look.
Equity mutual funds in India can be categorised into various types based on market capitalisation, investment strategy, tax treatment, and investment style:
Market Capitalisation-Based Categorisation
Investment Strategy-Based Categorisation
Investment Style-Based Categorisation
Tax Treatment-Based Categorisation
While evaluating equity schemes, it’s important to understand their key characteristics. These include:
● High equity exposure: They invest predominantly in equities and therefore are linked to stock market movements.
● Professional management: Managed by fund managers who make portfolio decisions based on research and stated investment objectives.
● Diversification: Investments are spread across multiple companies and sectors, which may help manage company-specific risk.
● Liquidity: Most open-ended funds allow purchase and redemption requests on any business day, subject to cut-off times and possible exit loads.
● Transparency: Portfolio disclosures and NAV are published periodically as mandated by SEBI.
Equity funds invest primarily in stocks and equity-related instruments of listed companies. They earn returns if the market value of the stocks in the fund’s portfolio rises over time.
For example, if the fund invests in companies that grow their earnings, expand their business or improve their market position, the value of those stocks may rise. This can lead to an increase in the Net Asset Value (NAV) of the fund. When you redeem units, if your NAV is higher than your buying price, you earn capital gains.
Equity funds may also earn income in the form of dividends from the companies in which they invest. This may be reinvested in the fund for additional potential growth opportunities. Investors can also opt to receive income from their mutual funds by choosing the Income Distribution cum Capital Withdrawal (IDCW) option, where income may be released from time to time at the fund manager’s discretion and based on the available distributable surplus.
However, returns from these funds depend on the performance of the underlying companies and overall market conditions, which can result in high short-term volatility. That’s why a long investment horizon is generally recommended for such funds.
Equity funds can offer several benefits to investors. These include:
• Long-term growth potential: Equity funds primarily invest in equity and equity-related instruments of listed companies. Over the long term, equities have the potential to generate relatively higher returns compared with traditional investment avenues such as fixed deposits, savings accounts or certain debt-oriented options.
• Compounding effect: Staying invested for longer periods may help investors benefit from the power of compounding. When returns generated on an investment also begin to earn returns over time, the overall investment value may grow at a faster pace.
• Outpacing inflation: Inflation reduces the purchasing power of money over time. Equity funds, by investing in growth-oriented companies, may offer the potential to generate returns that can outpace inflation over the long term.
• Diversification: Equity funds invest in a basket of stocks instead of a single company. This helps spread investment across different companies, sectors and market capitalisation segments. Diversification may reduce the impact of underperformance by a single stock or sector on the overall portfolio.
• Professional management: Equity funds are managed by professional fund managers who research companies, sectors, valuations and market conditions before making investment decisions. This can be useful for investors who may not have the time, expertise or resources to directly analyse and manage a stock portfolio on their own.
• Flexibility through SIPs: Investors can invest in equity funds either through a lumpsum investment or through a Systematic Investment Plan. SIPs allow investors to invest a fixed amount at regular intervals and can help build investment discipline. Since investments are made in a staggered manner, SIPs may also help investors manage market volatility over time.
• Taxation advantages: Capital gains on equity-oriented funds are taxed at a lower rate than debt funds and hybrid funds (see tax details below) Additionally, Equity Linked Savings Schemes offer tax benefits on investments of up to ₹1.5 lakh under the old regime of the Income Tax Act, 1961.
*Returns on fixed deposits/savings accounts are fixed, however, returns on mutual funds are subject to market risks.
Understanding the tax implications of equity funds in India can help you plan and optimize your investments effectively. Here are the details:
Before you invest, it’s important to align the fund’s characteristics with your financial needs and comfort level. Here are some considerations:
Investment Objective and Strategy
Understand what the fund aims to achieve and how it selects and allocates stocks across sectors and market capitalisations.
Personal Goals
Select a fund that aligns with your financial goals, whether they are long-term wealth creation, retirement planning, or another objective.
Risk versus Reward
Assess whether you are comfortable with possible fluctuations, as these investments offer growth potential but may experience market volatility.
Liquidity
Check the fund’s exit load structure and ensure the investment horizon matches your expected need for accessing the money.
Costs and Fund Details
Review the expense ratio, fund category, performance trends*, and scheme-related documents before deciding.
Past performance may or may not be sustained in future
Before investing in an equity fund, investors should conduct thorough research and consider the following factors:
Call, chat or write to us if you
need investment help
Share your details and our experts will guide you.
An equity mutual fund primarily invests in stocks or equity-related instruments. The fund may invest across companies, sectors, and market capitalisations depending on the scheme’s investment objective.
Yes, such funds are classified as very high risk due to the volatility of the stock market. They are subject to market fluctuations, economic conditions, and company-specific risks. A long investment horizon is required to potentially tide over interim volatility.
They are suitable for investors seeking long-term growth through investments in stocks of companies and are willing to accept higher risk in exchange for the potential for higher returns over time.
These funds tend to be volatile, especially in the short-term, and thus they may not be suitable for conservative investors and those with a low risk appetite. Such investors may consider debt mutual funds that offer relative stability and the potential for reasonable returns.
Investing in equity funds in India can be beneficial for those seeking higher returns compared to traditional savings options like bank deposits. However, it involves market risks, so it’s important for investors to have a long-term investment horizon and be prepared for fluctuations in value.
Equity mutual fund returns are subject to market risk and can fluctuate significantly from time to time. You can look at the past returns over three years, five years and longer intervals to get an idea of how much a scheme can potentially offer over multiple different market cycles. However, past performance may or may not be sustained in the future.
Most equity mutual funds are open-ended, meaning investors can buy or sell units at any time. However, ELSS funds have a lock-in period. Some funds may have exit loads or redemption fees for early withdrawals.
Equity schemes often have an exit load, which is a charge applied if units are redeemed within a specified period. The amount varies by scheme and may be updated with time. You may check the Scheme Information Document for details.
You may use online SIP calculators to estimate potential returns on your investment based on your investment amount, tenure and expected returns. However, the calculator’s estimates are for illustrative purposes only and actual returns will depend on market conditions – they are not fixed or guaranteed.
When selecting an equity fund, consider your investment goals, risk tolerance, and time horizon. Look for funds with a consistent track record of performance, experienced fund managers, and a well-diversified portfolio aligned with your investment objectives. Conduct thorough research and seek professional advice if needed.
There is no single equity fund type that is best for everyone, as the right choice depends on your financial goals, time horizon, and comfort with market volatility. Large cap funds may offer relatively stable exposure, while mid cap and small cap funds carry higher growth potential along with higher risk. Flexi cap and multi cap funds invest across market capitalisations, and sectoral or thematic funds focus on specific industries with greater concentration risk.
There is no single equity fund that may be considered ‘best’ for all investors. Suitability depends on individual factors such as financial goals, risk appetite, time horizon and market conditions.
There is no fixed or universally suitable time to invest in an equity fund; the decision depends on your financial goals and investment horizon. Generally, the earlier you start, the more time your money gets to potentially grow through the power of compounding.
Investors may invest in equity funds through a Systematic Investment Plan (SIP) or a lumpsum amount, either online or offline, directly with the fund house or through a registered distributor.
Yes, open-ended funds are generally liquid and you can redeem units when needed, but the value at redemption will depend on the prevailing Net Asset Value, which in turn depends on market conditions. Moreover, equity mutual funds are suitable for long-term investing, so it is advisable not to withdraw on impulse, as this may take you away from your goals. Lastly, capital gains are taxable, so it is important to familiarise yourself with tax laws.
Cut-off time in mutual funds is the SEBI-specified time by which your purchase or redemption request must reach the fund house (subject to realization and availability of the funds in the bank account of mutual fund) to determine which day’s NAV will apply.
Neither is inherently better. Mutual funds offer diversification and professional management, which can mitigate risk and make investing accessible to beginners and those who do not have the expertise or time to track the markets. Direct equity carries higher risk but more control. It may be suitable for those who are familiar with the ins and outs of trading/investing and can control and manage their portfolios independently.
Bajaj Finserv AMC’s equity fund offering continues to expand and currently includes funds such as the Bajaj Finserv Flexi Cap Fund, Bajaj Finserv Small Cap Fund, Bajaj Finserv Multi Cap Fund, Bajaj Finserv ELSS Fund, and Bajaj Finserv Banking and Financial Services Fund. You can find the latest and complete list of equity funds at the top of this page.
Need help planning your investments?
Our Investment Philosophy reflects what we, as an organisation, believe will generate a good return on equity investment for our investors in the long term. It dictates our goals and guides decision making.
Alpha (a) is a term used in investing to describe an investment strategy’s ability to beat the market.
Alpha is thus also often referred to as excess return or the abnormal rate of return in relation to a benchmark, when adjusted for risk. Essentially, it means doing better than the crowd without taking disproportionate risk.
Collecting superior information
Analysts and portfolio managers strive to collect superior information about the business and the management of the company. They try to generate superior earnings forecast and the balance strength of the company and the industry, thereby trying to 'beat the market' on information edge. This is an important source of alpha for an investor. However, over the years, retaining the information edge has become more difficult and expensive. With a whole lot of investors trying to collect superior information, how can an investor be sure to continuously have accurate and material information about the companies, ahead of others, all the time?
Processing information better
Even if you don't have material information earlier than the crowd, you can still generate better outcomes if you are able to process this information better. Investors develop models and algorithms with enhanced predictive powers to forecast the next move. Fund managers who invest based on some pure formal analytical models are quantitative managers. Here, the goal is to try and beat other investors based on the sophistication of procedures or analytics. The analytical edge can be quite useful until it gets copied by many, and then it may stop generating superior returns.
Exploiting behavioural biases
As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to maximise alpha. Modern finance assumes people behave with extreme rationality. However, researchers in behavioural finance have shown that this is not true. Moreover, these deviations from rationality are often systematic. Behavioural managers try to exploit situations where securities are mispriced by the market because of behavioural factors. At Bajaj Finserv AMC, we endeavour to combine the best of these edges.
