Equity Saving Fund: Striking a balance between Equity, Debt and Arbitrage

What are Equity Savings fund?

Equity savings fund essentially generate returns by investing in equity, debt and arbitrage opportunities. This last component sets them apart from other hybrid funds. Essentially, the fund manager looks to exploit the pricing inefficiencies in the cash and derivatives segments of the equity market. Thus, the fund's overall equity exposure is partially hedged, reducing its volatility as compared to an aggressive hybrid fund, where the equity exposure is fully unhedged.

Equity savings funds score over pure equity and aggressive hybrid funds on risks because of their downside protection while their equity exposure enables them to generate potentially higher returns compared with bank fixed deposits with greater tax efficiency. Their diversification makes them an attractive option for investors with a moderate risk profile, who want capital appreciation and a steady income. However, it is imperative to understand that returns of these funds are linked to arbitrage opportunities, which may not always be available in the market. Also, the underlying unhedged equity portion is exposed to the vagaries of the equity market and hence impacts the returns. Hence, investors must do proper due diligence before investing in them.

An Investor Education and Awareness Initiative by Mirae Asset Mutual Fund. All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) including the process for change in address, Phone number, bank details, etc. Investors should deal only with registered Mutual Funds details of which can be verified on SEBI website (https://www.sebi.gov.in) under ‘Intermediaries /Market Infrastructure Institutions’. For further information on KYC, RMFs and procedure to lodge a complaint in case of any grievance, you may refer the Knowledge Centre section available on the website of Mirae Asset Mutual Fund. Investors may lodge complaints on https://www.scores.gov.in against registered intermediaries if they are unsatisfied with the responses. SCORES facilitate you to lodge your complaint online with SEBI and subsequently view its status.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.