Equity funds are a popular choice for investors looking to build wealth over the long term. These funds primarily invest in stocks and aim to provide capital appreciation. While they come with higher risk compared to debt funds, they also offer the potential for higher returns.
In this guide, we’ll explore some of the best equity mutual funds available in 2025, their benefits, and factors to consider when investing in them.
Why Invest in Equity Mutual Funds?
- High Growth Potential: Equity funds can deliver significant returns over the long term by capitalizing on market growth.
- Diversification: These funds provide exposure to a wide range of sectors and industries, reducing risk.
- Professional Management: Fund managers actively manage the portfolio to maximize returns.
- Tax Benefits: Investments held for over a year qualify for long-term capital gains tax, which is lower compared to short-term taxes.
Top Equity Mutual Funds for 2025
- SBI Equity Hybrid Fund
- Fund Manager: R. Srinivasan
- 3-Year CAGR: 18.5%
- Expense Ratio: 1.02%
- Key Holdings: HDFC Bank, Reliance Industries
- Axis Bluechip Fund
- Fund Manager: Shreyash Devalkar
- 3-Year CAGR: 20.2%
- Expense Ratio: 0.47%
- Key Holdings: Infosys, Bajaj Finance
- Mirae Asset Large Cap Fund
- Fund Manager: Neelesh Surana
- 3-Year CAGR: 19.8%
- Expense Ratio: 0.54%
- Key Holdings: TCS, Asian Paints
- HDFC Growth Opportunities Fund
- Fund Manager: Prashant Jain
- 3-Year CAGR: 17.9%
- Expense Ratio: 0.75%
- Key Holdings: ITC, Larsen & Toubro
- ICICI Prudential Focused Equity Fund
- Fund Manager: S. Naren
- 3-Year CAGR: 18.7%
- Expense Ratio: 1.05%
- Key Holdings: Tata Motors, Axis Bank
Factors to Consider When Investing in Equity Funds
- Investment Horizon: Equity funds are best suited for long-term goals (5+ years) to mitigate short-term volatility.
- Risk Tolerance: Assess your ability to handle market fluctuations before investing.
- Fund Performance: Review the fund's historical performance across different market cycles.
- Expense Ratio: Lower expense ratios can enhance net returns.
- Fund Manager Expertise: A skilled fund manager is critical for selecting high-potential stocks.
Tax Implications
- Short-Term Gains: Gains from units held for less than 1 year are taxed at 15%.
- Long-Term Gains: Gains exceeding ₹1 lakh in a financial year (held for more than 1 year) are taxed at 10%.
Who Should Invest in Equity Mutual Funds?
- Growth-Oriented Investors: Ideal for those seeking higher returns and willing to accept higher risk.
- Long-Term Planners: Best for investors with long-term financial goals like retirement or wealth creation.
- Diversified Portfolios: A great option for adding growth potential to conservative portfolios.
Final Thoughts
Equity mutual funds offer a pathway to significant wealth creation when chosen and managed wisely. By investing in top-performing funds and maintaining a disciplined, long-term approach, you can harness the growth potential of the equity markets to achieve your financial aspirations.