What is equity in mutual funds?

Imagine your favourite tea shop down the street. It’s always packed—the chai is kadak, the fries are masaledaar and business is booming. Now, what if the owner says, “I want to turn this shop into a chain, but I need some money. If you invest, I’ll give you a share in the business.” You agree. And now, you don’t just sip chai there—you own a part of the shop. If the business grows, your share becomes more valuable. If profits fall, your share’s value may go down too. That’s the essence of equity—owning a part of a business and growing with it. Wait, is equity the same as stocks? They are closely related, but not exactly the same. Equity simply means ownership in a business. Stocks (or shares) are the actual instruments that represent that ownership. So, when you buy a stock, you’re buying a slice of a company’s equity. Why choo

This article was originally published on June 16, 2025.