Equity Savings Mutual Funds

Equity savings funds are an open-ended hybrid mutual fund that invests in equity, arbitrage and debt instruments. In accordance with SEBI regulations, these funds invest at least 65% of their total assets in equity and equity-related instruments (including arbitrage) and at least 10% in debt and money market instruments. The net equity exposure must range between 15% and 40% of the total assets. The combination of equity, debt and arbitrage provides it a balance between growth and risk. 

Equity Savings Funds invest across equity, debt and arbitrage opportunities to balance growth potential and risk. The fund manager actively manages and rebalances the portfolio based on market conditions and the scheme’s strategy. The fund’s NAV changes according to the performance of its underlying investments. 

This fund can be suitable for the following investors: 

• Want equity with a cushion: Investors looking for equity exposure while balancing their portfolio with debt and arbitrage can consider these funds. 
• Prefer moderate risk: These funds can be suitable for those who want market-linked returns without taking pure equity exposure. 
• Have a longer view: Investors who can stay invested for the medium to long term may consider Equity Savings Funds.

Through Paisabazaar, you can easily invest in equity savings fund by following the below steps:

• Log in to the Paisabazaar app by your registered mobile number
• Click on ‘Mutual Funds’ on the homescreen
• Explore and select your preferred Equity Savings Funds based on your goals and risk tolerance
• Choose the investment mode between SIP and Lump sum
• Complete your KYC verification and start investing in

The process takes just a few minutes, and you can then start your investment in an Equity Savings Fund. 

Equity savings funds are classified as equity-oriented funds and are therefore taxed under equity mutual fund rules. The tax treatment depends on how long you hold the units, i.e., whether the gain is short-term or long-term.

• Short-Term Capital Gain (STCG)- Taxed 20% if the units sell within 12 months.  
• Long-Term Capital Gain (LTCG)- Taxed at 12.5% if the units hold for more than 12 months. Gains up to Rs 1.25 lakh in a financial year are tax-free.