EQUITY SCHEMES

EQUITY SCHEMES

Equity schemes invest the amounts that they collect from investors into stocks of various companies listed on the stock exchanges as well as those that are unlisted. These schemes are also called growth schemes because the idea behind such investments is to earn a high return through the rise in the value of the investment.

The wide range of stocks available in the market and the different nature of styles of management of the schemes will result in a different profile for various schemes within this area. For example a scheme which invests in large cap stocks will be different from a scheme that will invest its funds into mid cap companies.

In addition there are schemes, which are diversified across various sectors without any bias towards market cap of the stocks it holds. In terms of other styles one can see funds that select stocks based on their dividend yield and these are called dividend yield funds.

There is a chance of a high gain in such schemes and in the last three years the returns on many schemes have even crossed more than 100% in a single year. Many investors however forget that there is a downside to the whole investment as a fall in the equity market can result in a fall in the value of the scheme leading to a capital loss for the investors.