What is an Equity Mutual Fund?

An equity mutual fund is a mutual fund scheme that invests mainly in equity stocks. As per current SEBI Mutual Fund Regulations, an equity mutual fund scheme must invest at least 65% of the scheme’s assets in equities and equity related instruments. Due to their exposure to the stock market and therefore to the market risks and volatility, equity mutual funds are generally considered High Risk instruments. However, they have the potential to generate higher returns than traditional fixed income instruments over a sufficiently long period of time.