Looking for safe growth? These equity savings funds might be your best bet
For investors wary of steep market corrections and elevated valuations in traditional equity funds, equity savings funds or conservatively managed hybrid funds can offer a safer alternative, as reported by ETBureau.
Equity Savings Funds are hybrid mutual funds that combine exposure to equity, debt, and arbitrage strategies. They're designed to offer a stable return profile while still participating in equity markets—ideal for investors seeking a conservative entry into equity investing.
These funds typically maintain a minimum of 65% in equities, with the balance allocated between debt instruments and arbitrage opportunities. This composition lowers volatility compared to pure equity funds, while aiming for better returns than fixed-income assets.
Conservative investors who want equity exposure without taking on high risk will benefit from equity savings funds. They are especially suitable for those looking for stability, tax efficiency, and moderate growth over the medium term.
These funds offer a balanced risk-return profile with lower correlation and reduced volatility. They are positioned between pure debt and pure equity funds, providing smoother returns and effective downside protection.
What attracts investors to this product is that it is taxed as an equity product. If held for more than a year, gains from these schemes are taxed as long-term capital gains (LTCG) at 12.5%.
Top-rated equity savings funds have consistently delivered competitive returns while limiting downside risk. Some schemes that wealth managers are recommending for investors with a 1-3 year time frame includes - Bandhan Equity Savings Fund, ICICI Pru Equity Savings Fund, Franklin India Equity Savings Fund, and PPFAS Dynamic Asset Allocation Fund.
Equity savings funds can be a reliable core holding for conservative portfolios. They complement traditional debt instruments and can reduce overall portfolio volatility while still offering equity upside
