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Mutual Funds - Explained: What is an equity diversified fund and what makes it different?

22 Nov 2018

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An equity diversified mutual fund is any equity fund which invests across different industries and sectors.

While a basic equity fund picks from among all listed stocks to select around 40-60 stocks that fit with its investment strategy, a diversified equity fund along with a wide number of stocks also tries to pick stocks from across sectors. Typically, a diversified equity fund has stocks from at least 8-10 different sectors.

Within equity diversified funds, there are various categories of schemes, including large-cap, mid-cap, large-and-mid-cap, multi-cap, small-cap and tax-saving equity funds (equity-linked savings schemes or ELSS).

These funds can help you have broad exposure to the equity markets across stocks and sectors. But if you are looking to buy more specific sectors, you can go for sector and thematic funds instead. These will invest either in just one sector or a group of similar businesses that stand to benefit from a specific theme.

Given that diversified equity funds are spread out across stocks and sectors, they are considered to be less risky and, hence, more suitable for the average individual investor. On the other hand, sector and thematic funds have a fewer number of stocks exposed to similar business risks and are more suited for investors who are aware about how to manage sharp risks.

Source: Live Mint BACK

To be added soon

Priyanshu B. Tanna

SEBI registered IFA

ARN119467 & EUIN E-183966

To be added soon

Bharat Tanna

SEBI registered IFA

ARN26176 & EUIN E-044509

To be added soon

Kundan B. Tanna

SEBI registered IFA

ARN294073 & EUIN E-553599

Risk factor

Risk Factors – Investments in Mutual Funds are subject to Market Risks. Read all scheme related documents carefully before investing. Mutual Fund Schemes do not assure or guarantee any returns. Past performances of any Mutual Fund Scheme may or may not be sustained in future. There is no guarantee that the investment objective of any suggested scheme shall be achieved. All existing and prospective investors are advised to check and evaluate the Exit loads and other cost structure (TER) applicable at the time of making the investment before finalizing on any investment decision for Mutual Funds schemes. We deal in Regular Plans only for Mutual Fund Schemes and earn a Trailing Commission on client investments. Disclosure For Commission earnings is made to clients at the time of investments. Option of Direct Plan for every Mutual Fund Scheme is available to investors offering advantage of lower expense ratio. We are not entitled to earn any commission on Direct plans. Hence we do not deal in Direct Plans.

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