Equity Mutual Funds

A Mutual Fund is an investment vehicle through which investors pool their money to earn returns on their investments. The corpus of funds is managed by an investment professional known as Fund Manager. The Fund Manager invests the corpus in different securities such as bonds, stocks, gold and other asset classes as per scheme’s defined objective and seeks to generate returns. The gains (or losses) on the investment are shared collectively by the investors in proportion to their contribution.

Equity Funds are mutual fund schemes which invests their assets in stocks of different companies based on the investment objective of the underlying scheme. These funds are a great investment option for capital appreciation as they have the potential for long term wealth creation.

As per SEBI’s classification, Equity Mutual Funds are categorised in to following sub-categories:

• Large Cap Funds: These funds invest a minimum of 80% of their assets in stocks of large cap companies.
• Mid Cap Funds: These funds invest a minimum of 65% of their assets in equity shares of mid cap companies.
• Small Cap Funds: These funds invest a minimum of 65% of their assets in equity shares of small cap companies.
• Flexi Cap Funds: These funds invest in equity shares of large cap, mid cap and small cap companies in any proportion based on market conditions.
• Multi Cap Funds: These funds invest at least 25% each in equity shares of large cap, mid cap and small cap companies.
• Large and Mid-Cap Funds: These funds invest a minimum of 35% each in equity shares of large cap & mid cap companies.
• ELSS are a tax-saving mutual funds that allow you to save taxes up to Rs. 46,800 in a financial year u/s 80C, minimum investment in equity & equity related instruments - 80% of total assets.
• Dividend Yield Funds: These funds invest predominantly in dividend yielding equity shares, minimum investment in equity & equity related instruments - 65% of total assets.
• Value/Contra Funds: These funds follow value/contrarian investment strategy, minimum investment in equity & equity related instruments - 65% of total assets.
• Focused Funds: These funds have investments with a limit on the number of equity shares in their portfolio (maximum 30), minimum investment in equity & equity related instruments - 65% of total assets.
• Sectoral/ Thematic Funds: These funds have investments focused on a particular sector/theme, minimum investment - 80% of total assets.

Here are some salient features of Equity Mutual Funds in India:

• Tax Exemption under section 80C: The Equity Linked Saving Scheme or ELSS offers tax exemption under Section 80C of the Income Tax Act with exposure to equity with a lock in period of 3 years and offers great potential for earning good returns,
• Portfolio Diversification: Equity Funds allow you to gain exposure to several good equity shares. Hence, equity portfolio is diversified an offers a better opportunity of earning good returns.

There are two ways of investing in mutual funds - via a systematic investment plan (SIP) or investing through a one-time lump sum mode. The primary difference between the two is in a lump sum you invest the whole amount in one go and in SIP, you invest at fixed intervals such as monthly.

Following are the capital gains applicable for Equity Funds:

• Short Term Capital Gain Tax (STCG): If you sell your investments within one year, the profits are considered short-term capital gains (STCG) and are taxed at 15%.
• Long Term Capital Gain Tax (LTCG): Any gains from investment held for longer than a year are considered as Long-Term Capital Gains (LTCG). Gains of up to Rs 1 lakh from direct equity (stocks) and equity mutual funds are tax-free in a given fiscal year. Gains over Rs 1 lakh are taxed at a rate of 10%.

Yes, most of the Equity Fund schemes levy an exit load if you withdraw from your investments before one year. For more details regarding exit load applicable, please refer factsheet of Asset Management Companies.

After you place your order, you can view the details of your transaction from the Order Book in ICICIdirect.com. Also an email will be sent to your registered email address.

As decided by the AMC, there is a minimum transaction amount indicated against each scheme. You will get to see the minimum transaction amount for each scheme while placing your Mutual Fund order.

Yes, you can transact at any time of the day. However, in order to get the applicable NAV for the current day you would have to transact before the cut-off time of the scheme and it is subject to realisation of funds by the AMC. If you place any order after the said cut-off time, you would be eligible for applicable NAV of the next day. As per SEBI guidelines the cut-off time for accepting orders in Non-liquid funds (including Equity Funds) is 1500 hrs. However, taking into account internal transaction processing time, ICICIdirect.com has kept the cut-off time, for accepting orders in Equity Funds as 1400 hrs.

Yes, you can place your request even on a holiday. However, the request would be processed on the next business day and your order will be processed as per applicable NAV of the next business day.