Funds that invest mainly in equity financial markets are known as equity mutual fund. Therefore Funds that invest in equity shares are called equity funds. Check Best equity mutual funds in India. And also check Top midcap and small cap mutual funds in this segment.
What are Diversified Mutual funds
On other hand, Diversified mutual fund invests pooled funds in different sectors. Also known as multi-cap or flexi-cap. And these funds invest in all categories of market capitalization. Like large cap, small cap and mid cap companies.
However, large cap companies provide strength to portfolio. But small and mid cap stocks add returns of portfolio over long period of time. In addition, diversified equity funds give good returns than large cap funds. You can see annual returns of diversified equity funds.
Therefore they offer by Unit-linked Insurance Plans, ULIPs mutual fund and other investment firms. Hence, companies listed on stock exchange come in all sized and categories.
Funds invest 30 percent of your money in banking sector. In addition, 20 percent in IT sector, 20 percent in Pharma sector and remaining in Debt instruments. Because, it is diversify fund as it does not depend on single sector performance. Therefore diversify fund can be an equity fund.
Since diversify is an important parameter when invests in equity market. Hence, diversified equity funds are more popular. View Mutual fund definition
How does diversified equity mutual fund work
Diversified equity fund invests in companies of various sectors and industries. And it can participate in growth across economy. Mostly, they choose to invest in companies from Pharmaceutical, Engineering, technology etc. In addition, like power or utilities, banking and oil and gas companies.
However, Diversified equity funds of both are ULIPs. And mutual funds are open with reason of giving opportunity. To give benefit from company financial growth of all sizes and across sectors.
Classification of Diversified Equity Mutual funds
There are various types of Diversified Equity mutual funds. And this is based on types of companies they invest. Hence, they are classified into three categories. Like Large cap, mid cap and small cap diversified funds. Large Cap Diversified Mutual Fund
Probably, companies market cap is greater than Rs 20,000 crores. And these funds invest in blue chip companies. Because of this these large cap diversified funds have Nifty as their Benchmark index. Since they invest in high quality companies. So long term capital loss is limited. But fund performance may differ with large cap diversified funds. See below some top large cap funds
- HDFC Top 200 Fund
- ICICI Prudential Value Discovery Fund
- Franklin India Prima plus Fund
Midcap diversified funds
However, in midcap diversified equity fund market cap of companies is 4000 to 20000 crores. And risk is connected with this is more than large cap diversified funds. Moreover, these funds can make more returns. You can find below some top mid cap diversified equity funds.
- IDFC Premier Equity Fund A
- HDFC Midcap Opportunities fund
- PPFAS Long Term Value Fund
Small Cap Diversified Funds
These are high return and high risk funds. And good manager of small cap diversified fund can do surprise for your portfolio. But this is suit for less than 35 years age. But keep in mind if you have not chosen properly they can lead to losses. You need to invest at least one small cap fund. Hence, find below some top small cap equity funds.
- Franklin Smaller Companies Fund
- Can Robecco Emerging Companies
- DPRBR Microcap Fund
Benefits of investing in Diversified equity mutual fund
Stable in Bull and Bear Markets: Diversified equity funds comprise of all market cap stocks. Due to high market cap of large cap stocks is stable in bear markets. And show fair approval in bull markets. Therefore mid and small cap stocks act as market excite. But they show high approval in bull markets and fall with bear markets.
However, different performance of this market cap gets balanced in Diversified equity fund.
Diversify your investment: Advisors need to diversify your investments. Moreover, diversify in various asset classes determine return of portfolio and not individual funds. If you are looking for stable in your investment. So you can give out larger portion of your investment in Diversified Equity Funds.
Hence, you invest left over amount in mid and small cap funds. However, if you are ready to take high risk for long term then invest in small and mid cap.
How to pick fund
You need to check the performance of the fund. For example, S&P BSE 100, S&P BSE 200, CNX 200 and CNX 500 etc. Probably, Majority of Diversified Equity Mutual Funds in India is linked to these 4 Benchmarks.
Hence, fund managers can choose stocks from different sectors and market caps. Therefore, to check consistency of returns you should look at two things. Check historical returns of fund and volatility of selected fund across different market cycles.
Finally, Read more about various funds under Diversified Equity Funds category. However, see Top Performing SIP Mutual Funds. Therefore see Top Dividend Paying Mutual Funds. Hence, Best Diversified Equity Mutual Funds for SIP in the last 5 years.