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Mutual Funds · Category

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Equity Funds

Funds that invest mostly in shares of listed companies. They are built for long horizons, because their value can swing sharply along the way.

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

At a glance

Who typically explores it
Typically explored by investors with goals five or more years away who can leave the money untouched through market falls, and who want the potential for growth above inflation over long periods.
Time horizon
Usually five years or longer. The shorter the horizon, the more likely a market fall coincides with the moment you need the money.
Volatility
High. NAVs move daily with share prices; mid-cap, small-cap, sectoral and thematic funds tend to swing more than diversified large-cap funds.

A general description of the category. Individual schemes differ — read each scheme’s documents.

Understand

01Equity Funds

What equity funds are

An equity fund pools money from many investors and buys shares of listed companies. Over long periods, share prices tend to follow the earnings of the businesses behind them — but unevenly, with stretches of several years when they go nowhere or fall. Your units are priced every business day at the fund's NAV, so you see those swings as they happen.

02Equity Funds

How SEBI groups them

Equity funds are categorised by what they are allowed to buy, so you can compare like with like:

  • By company size. Large-cap funds invest mainly in the 100 largest listed companies by market capitalisation, mid-cap funds in the next 150, and small-cap funds in the rest. Large & mid-cap, multi-cap and flexi-cap funds combine these in different proportions.
  • By style. Value, contra and dividend-yield funds follow a stated approach; focused funds hold a concentrated portfolio of at most 30 stocks.
  • By theme. Sectoral and thematic funds concentrate on one sector or idea, such as banking or consumption.
  • Tax-saving. ELSS funds are equity funds with a three-year lock-in.

Note: SEBI revised scheme categorisation in February 2026. Among other changes, sectoral and thematic funds are now separate categories, and several style categories must hold at least 80% in equity. Always check a scheme's current category in its documents.

03Equity Funds

What to think about

  • Time, more than timing. Equity prices can fall by a third or more and take years to recover. Money you need within a few years is exposed to that.
  • Breadth. The narrower the mandate — small-cap, sectoral, thematic — the wider the swings.
  • Overlap. Several equity funds holding the same stocks add complexity, not diversification. Portfolio X-Ray shows where your funds overlap.
  • Regularity. A SIP spreads purchases across market levels through rupee-cost averaging. It doesn't remove risk, but it removes the need to pick a moment.

Use the SIP Lab to see how contribution, time and an assumed return interact — every assumption is yours to change.

Ideas to know

How gains are taxed

General education under current rules — not tax advice.

Equity Funds: tax in brief

Equity-oriented funds (at least 65% in Indian listed equity) are taxed like shares. Under current rules for the 2026–27 tax year, gains on units held for more than 12 months are long-term and taxed at 12.5% above an annual exemption of ₹1.25 lakh; gains on units held for 12 months or less are short-term and taxed at 20%. IDCW payouts are added to your income and taxed at your slab rate. Tax rules change and depend on your circumstances. This is general education, not tax advice — check the latest provisions or speak to a tax professional.

How investments are taxed in India

Schemes in equity funds

Scheme data

Live scheme data isn’t connected yet

CompoundX shows scheme figures only from a connected data provider, dated and sourced — never estimates. Once one is configured, equity funds will be listed here.
How to read a fund factsheet

Before you decide

Risks to understand

The risks that matter most for this category.

  • Market risk

    Share prices can fall sharply and stay down for long periods. An equity fund’s NAV falls with them.

  • Concentration risk

    Funds limited to one sector, theme or company size can fall much further than the broad market when that segment is out of favour.

  • Liquidity risk

    Smaller companies trade less. In stressed markets a fund may have to sell them at lower prices to meet redemptions.

  • Manager risk

    An actively managed fund can trail its benchmark for long periods. Past performance may or may not be sustained in future.

The riskometer, SIPs and common questions

The same for every category, so they’re explained once, on the mutual funds page. Each scheme in equity funds shows its own riskometer level.

Related

Next step

Small decisions compound.

Model a SIP with your own assumptions, size the goal it’s for, or talk to a CompoundX expert about how this category fits what you already own.

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Disclosures

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

Past performance may or may not be sustained in future. Calculators and illustrations on this site use hypothetical assumptions; actual returns may differ.

[To be confirmed by Compliance] Mutual-fund onboarding, KYC and transaction execution are processed through the platform of our investment platform partner, AssetPlus. CompoundX provides education, tools and relationship management, and does not hold client money or units. Registration details, where applicable, are listed on our Disclosures page.

Partner: AssetPlus · Investment platform

CompoundX works with AssetPlus as its investment platform partner. When you choose to invest in mutual funds through CompoundX, account opening, KYC and transaction execution are processed through AssetPlus' platform, which connects to the asset management companies, registrars and other market infrastructure involved.

CompoundX provides the education, financial tools, goal planning and relationship management around those investments. CompoundX does not hold client money or mutual-fund units. [To be confirmed by Compliance]

Registration details for CompoundX and its partners, where applicable, are listed on our Disclosures page.

Risk disclosure

Market-linked investments involve risk, including the possible loss of the amount invested. Past performance does not indicate future results, and the value of investments and the income from them can go down as well as up.

Deposits, bonds and other fixed-income products carry credit, interest-rate and liquidity risks; returns depend on the issuer honouring its obligations. Insurance is a contract of protection, not an investment. Read every offer document, scheme information document and policy wording carefully before you decide.