Equity savings funds: Keeping up with inflation

These funds invest roughly one-third of investors' money each in equity, debt, and arbitrage. Equity : This asset class helps grow your capital and beat inflation. Debt : This brings stability. Arbitrage : Takes advantage of price differences in cash and derivatives markets. Arbitrage offers debt-like risk-return opportunity and equity-like tax advantage. Perfect for a medium-term investment horizon of around three to five years or regular income seekers. Highlights & trends Calling it quits: Sachin Relekar left Bandhan Mutual Fund to join Axis Mutual Fund in 2024. No new launches: None. No launches since 2019. Performance: Although these funds have limited equity exposure, they offered 17 per cent returns last year, while the market (Sensex) returned 24 per cent. Additionally, these funds consistently generate over 8 per cent returns over any three-year period, outpacing inflation. Investor interest: Increased after the removal of indexation benefits from debt funds in March 2023. Top traction: The majority of inflows are driven by three funds—ICICI, Kotak, and SBI—making them the top three by assets in the category. Category snapshot Parameters 2024 How many funds? 22 Assets  Rs 32,968 crore Asset-weighted expense ratio 0.65% Average net equity exposure 31.23% Avg mid & small-cap as a % of net equity 29% Asset-weighted returns 7.31% Average worst 1-yr return in 5 years -10% Average return of top quartile funds 10.49% Average return of bottom quartile funds 5.32% Note: Returns as of June 30, 2024. Expense and portfolio level attributes as of May 31, 2024. Funds at a glance Name Rating 3Y SIP returns (%) Risk grade Equity allocation (%) Arbitrage allocation (%)