If the high volatility and year-to-date negative returns (around five per cent) from the equity markets are worrying you, consider investing in a class of funds called equity savings funds (sometimes also called equity-income funds). Recently, DSP BlackRock Investment Managers launched a new fund offer (NFO), which closes on Tuesday, for a fund belonging to this category.
Equity savings funds are hybrid funds that invest in equities, arbitrage opportunities and debt. Says Anup Maheshwari, head of equities and corporate strategy at DSP: “Most of the time, we will be in equities to the extent of 25 per cent, with the option to go up to 40 per cent, 35 per cent in debt and the balance 40 per cent in arbitrage.”
Mutual fund houses started launching equity savings funds aggressively after the government changed the tax treatment of debt funds in Budget 2014, allowing them long-term capital gains treatment after three years instead of one.
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