When volatility spikes, equity savings stay steady

Equity savings funds typically split their money across equity, arbitrage and debt – roughly a third each. The arbitrage portion behaves much like a liquid fund: The fund manager buys a stock in the cash market and sells it in the futures market at the same time, locking in a return with virtually no equity risk for that part of the portfolio. This balanced mix makes them a smart option for conservative investors looking for moderate equity exposure over a three-to-five-year horizon. They’re also well-suited for retirees aiming to generate regular income with relatively low volatility. Highlights & trends Performance: Equity savings funds ended 2024 with a solid 12 per cent return. So far in 2025, gains have been more modest at 3.25 per cent, reflecting the market downturn starting late 2024. Yet, these funds are built to cushion blows during sharp declines, and they did just that. Between September 2024 and early March 2025, the equity market fell around 15 per cent, while the average equity savings fund declined by just 3 per cent. This ability to hold steady during sharp corrections makes them especially valuable for i

This article was originally published on June 20, 2025.