Equity mutual funds are, as per the scheme information document, those that invest a minimum of 65% of its net assets in equity and equity-related instruments. As per the SEBI categorization of mutual fund schemes, there are 11 different types of equity mutual funds. They can be primarily categorized as per their market capitalization such as large-cap, mid-cap or small cap-funds, the investment style – value or contrarian. They can also be classified based on the sector or theme such as those that invest in a particular business sector such as banking or FMCG or thematic funds such as ESG mutual funds that invest in companies following the Environmental, Social and Governance parameter or a combination of tax savings and capital appreciation as in the case of ELSS (Equity Linked Savings Scheme), etc. Equity mutual funds are suitable for investors with a high-risk appetite and a long-term investment horizon.
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