Equity Mutual Funds

Sector Specific Funds

Sectoral funds invest in a particular sector of the economy such as infrastructure, banking, technology or pharmaceuticals etc.

• Since these funds focus on just one sector of the economy, they limit diversification, and are thus riskier.
• Timing of investment into such funds are important, because the performance of the sectors tend to be cyclical.

Examples of Sector Specific Funds — Equity Mutual Funds with an investment objective to invest in:

• Pharma & Healthcare Sector
• Banking & Finance Sector
• FMCG (fast moving consumer goods) and related sectors
• Technology and related sectors

Value Funds (Strategy and Style Based Funds)

Equity funds may be categorized based on the valuation parameters adopted in stock selection, such as:

• Growth funds identify momentum stocks that are expected to perform better than the market
• Value funds identify stocks that are currently undervalued but are expected to perform well over time as the value is unlocked

Equity funds may hold a concentrated portfolio to benefit from stock selection.

• These funds will have a higher risk since the effect of a wrong selection can be substantial on the portfolio's return

Equity Linked Savings Scheme (ELSS)

• ELSS invests at least 80% in stocks in accordance with Equity Linked Saving Scheme, 2005, notified by Ministry of Finance.
• Has lock-in period of 3 years (which is shortest amongst all other tax saving options)
• Currently eligible for deduction under Sec 80C of the Income Tax Act up to ₹1,50,000