Loading...

Equity Savings Funds

Equity Saving Funds allocate a minimum of 30%-35% of their total assets to equity assets, with the remaining portion invested in debt income funds and arbitrages.

time horizon

3 to 5 years

total funds

22 Funds

total aum

₹43,097 Cr Total AUM

Hybrid

Explore Equity Savings Mutual Funds

Sort By

Fund nameFund sizeExpense Ratio
3Y Returnsfilter toggle
HSBC Equity Savings Fund Direct Growth
HSBC Equity Savings Fund Direct Growth

Equity Savings Moderately High risk

₹548 Cr0.61%14.2%
Kotak Equity Savings Fund Direct Growth
Kotak Equity Savings Fund Direct Growth

Equity Savings Moderate Risk

₹7,804 Cr0.66%12.9%
Sundaram Equity Savings Fund Direct Growth
Sundaram Equity Savings Fund Direct Growth

Equity Savings Moderate Risk

₹989 Cr0.61%12.5%
Invesco India Equity Savings Fund Direct Growth
Invesco India Equity Savings Fund Direct Growth

Equity Savings Moderately High risk

₹340 Cr0.73%11.5%
UTI Equity Savings Fund Direct Growth
UTI Equity Savings Fund Direct Growth

Equity Savings Moderate Risk

₹613 Cr0.8%11.2%
HDFC Equity Savings Fund Direct Growth
HDFC Equity Savings Fund Direct Growth

Equity Savings Moderately High risk

₹5,463 Cr0.91%11.1%
SBI Equity Savings Fund Direct Growth
SBI Equity Savings Fund Direct Growth

Equity Savings Moderately High risk

₹5,616 Cr0.66%11.0%
DSP Equity Savings Fund Direct Growth
DSP Equity Savings Fund Direct Growth

Equity Savings Moderate Risk

₹2,161 Cr0.43%11.0%
Mirae Asset Equity Savings Fund Direct Growth
Mirae Asset Equity Savings Fund Direct Growth

Equity Savings Moderately High risk

₹1,353 Cr0.33%11.0%
Mahindra Manulife Equity Savings Fund Direct Growth₹571 Cr0.69%10.5%

Get your investment
reviewed in few clicks

Identify red flags in your mutual funds and how to fix them

Rated ★4.5+ onappstoreplaystore
WM logo

All about Equity Savings Funds

What are Equity Savings Funds?

Equity savings funds are open-ended hybrid mutual funds that invest primarily in equity (minimum 65%), debt securities (minimum 10%), and arbitrage opportunities. This mix offers potential for capital appreciation with less volatility than pure equity funds, plus better tax efficiency than typical debt funds.

Fund managers can actively balance investments based on market conditions, helping manage risk. The arbitrage component seeks to profit from market price fluctuations. 

Investors seeking moderate risk, short-term investment alternatives, and tax advantages may find equity savings funds suitable.

As of April 2024, this fund category has average assets under management (AUM) of Rs 31,281.86 crore with 22 schemes, the oldest being 27 years old, according to the Association of Mutual Funds in India (AMFI).

Source: AMFI website as of April 2024

Who Should Invest in Equity Savings Funds?

Equity savings funds in India offer a balanced investment experience, blending equity, debt, and arbitrage for investors seeking both growth potential and stability. This combination makes them a suitable option for a range of investor profiles.

Growth Oriented Conservative Investors

If you want growth potential but worry about market volatility, equity savings funds could be a suitable option. They balance the growth opportunities of equity and the reliable income and stability of debt instruments.

Suitable for Moderate Risk Tolerance

If you want the potential for better returns than pure debt funds but worry about the volatility of pure equity funds, equity savings funds could be your solution. They offer a mix of risk and return, with built-in diversification for stability, perfect for moderate risk-takers who value growth and capital protection.

Investors Seeking Tax Benefits

Equity savings funds can be a smart choice for tax-conscious investors since they are taxed as equity funds. They are especially beneficial for investors in higher tax brackets.

Portfolio Diversification

Equity savings funds offer convenient diversification across equities, debt, and arbitrage opportunities. This helps reduce overall portfolio risk compared to investing in any single asset class.

Taxation of Equity Savings Funds

Short Term Capital Gains (STCG) TaxLong Term Capital Gains (LTCG) Tax
Gains from an index fund held for up to 12 months are taxed at 20%.Gains from an index fund held for more than 12 months are taxed at 12.5% with an exemption of up to Rs 1.25 lakh in a year.

Dividend Taxation

These funds pay out dividends when you invest in their IDCW (Income Distribution Cum Withdrawal) option. Dividends are taxed at your marginal income tax rate, and TDS (Tax Deducted at Source) at 10% applies to dividends received more than Rs 5,000 per AMC per financial year.

Advantages of Equity Savings Funds

Equity savings funds offer a range of benefits, as shown below.

Professional Management

Equity savings funds put your investment in the hands of experienced professionals who actively adjust your asset mix based on market conditions, maximising your potential returns while carefully managing risk. For example, ICICI Prudential Equity Savings Fund is managed by Manish Banthia, who has 13 years of experience in fund management. (as of April 2024)

Downside Protection

Equity savings funds strike a balance between risk and stability. Their debt allocation acts as a shock absorber during market downturns, providing protection for your principal investment.

Tax Efficiency

Equity Savings Funds offer tax benefits, especially for high-income investors. Their classification as equity funds provides favourable tax treatment compared to other investment options.

Potential for Capital Appreciation

Equity savings funds aim to balance growth potential with risk management. Their equity investments provide exposure to higher-return assets, while allocations to other asset classes offer stability.

Disadvantages of Equity Savings Funds

Equity savings funds also face some drawbacks, as shown below.

Limited Growth

Equity Savings Funds prioritise stability by investing less in equities than pure equity funds. This offers some downside protection but may also limit potential growth in the bull market.

Moderate Returns

Equity Savings funds invest in a mix of debt securities, and their performance is influenced by market conditions. Economic factors, credit risk, and overall market volatility can impact the fund's returns.

Interest Rate Risk

Equity savings funds, because they invest in debt securities, are susceptible to fluctuations in interest rates. When interest rates rise, the value of existing bonds tends to decrease, potentially affecting the fund's performance.

Complex Structure

Equity Savings Funds invest in diverse assets, including equities, debt, and arbitrage opportunities. This complex structure can make it challenging for investors to grasp the fund's strategy and asset allocation.

Conclusion

Equity savings funds provide a compelling option for Indian investors seeking a balance between growth potential and stability. Their blend of equity, debt, and arbitrage offers a less volatile investment experience compared to pure equity funds, along with potential tax benefits. If you have a moderate risk tolerance, seek diversification, and are looking for a tax-efficient investment, you can consider equity savings funds. However, remember that their focus on stability might somewhat limit growth potential compared to pure equity funds. Before investing, consider your financial goals, risk tolerance, and tax situation to ensure equity savings funds align with your needs.

Still got questions?
We're here to help.

Equity savings funds are mutual funds that invest in a mix of stocks for growth and debt instruments for stability. This offers potentially higher returns than fixed deposits but with more complexity and some stock market risk.
Fixed deposits in India offer guaranteed returns with minimal risk but also lower potential growth. On the other hand, equity savings funds invest in stocks and bonds, aiming for higher returns but with some market risk and potentially lower predictability compared to FD.
As of April 2024, equity savings funds have an expense ratio ranging from (0.25% to 1.78%).
Equity savings funds are ideal for an investment horizon of more than 1-2 years.

Explore Other Hybrid Funds

By Equity-Debt Allocation

By Solutions

Others

Other Types of Mutual Funds

Disclaimers: Data can be sourced from Morningstar, Bloomberg, CRISIL, etc. Information gathered and provided herein is believed to be from reliable sources.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Mutual Fund distribution services are offered through Dezerv Distribution Services Private Limited, a wholly owned subsidiary of Dezerv Investments Private Limited (collectively referred to as “Dezerv”) with AMFI Registration No.: ARN- 248439.Read More