How to choose an equity fund

The mutual fund universe is huge with more than 569 open-end equity funds available. With this kind of choice, picking a mutual fund can be a task. This quick primer will help you understand how to pick an equity fund. Here are six factors to consider when choosing an equity fund: 1. Investment horizon: Your investment horizon determines whether you should go for an equity fund or a debt fund. For long-term goals - those that are more than five years away - equity is the best asset class. While equity is volatile in the short term, over the long term, the volatility is ironed out. For short-term goals, debt funds are the best option. 2. Risk appetite: While debt funds are generally safe, the risk level of equity funds varies. Among equity funds, aggressive hybrid funds are the least risky and mid-cap and small-cap funds are the riskiest. Aggressive hybrid funds combine both debt and equity and

This article was originally published on November 19, 2021.