Aditya Birla Sun Life Equity Mutual Funds

Investment Objective 

The Aditya Birla Sun Life Equity Mutual Fund mainly aims at giving investors an opportunity over the long run throughout their investment tenure. This scheme primarily deploys capital in equity and equity-related securities in accordance with the fund’s mandate detailed in the scheme information documents. The fund manager conducts a thorough analysis of the market to pick quality stocks that provide returns in line with the benchmarks of the category.

The strategy to pick the underlying stock can be value, growth, or growth at reasonable prices. Capital appreciation is a result of an increase in the underlying stock prices over a pre-determined investment period. This can also occur once the dividends provided by the scheme are further invested in the scheme to purchase additional units of the underlying stocks. Please note that this investment scheme does not guarantee that the investment objective will be met.

Risks Involved in Aditya Birla Sun Life Equity Mutual Funds

The Aditya Birla Sun Life Equity Mutual Fund exhibits a moderately high to high market risk as compared to other balanced funds and debt funds. The fund value is subject to fluctuation according to the changes in the price of the underlying stock. The underlying stock value prices may be affected by changes in volume, exchange rates, interest rate, tax laws, government policies, and other economic factors.

The scope of the risk is also dependent on portfolio diversification. Theme or sector-based Aditya Birla Sun Life Equity Mutual Fund usually has a higher investment risk than diversified equity funds. Likewise, large-cap equity funds have a lower market risk in comparison to small-cap or mid-cap funds. Investors should assess their risk-taking capability before investing in these funds.

Return Potential of Aditya Birla Sun Life Equity Mutual Funds

The returns from this investment scheme are correlated to the risk taken on by the investor. The Aditya Birla Sun Life Equity Mutual Fund provides higher returns than balanced or debt funds. Typically, these funds are known to provide a return of 12% over an investment horizon of five years. It is important to note that these funds do not assure steady returns, and the performance of the fund might vary from one period to the other. 

Due to the high investment risk, an equity focussed fund might have a greater return potential as compared to a diversified portfolio. Alternatively, funds with large capitalisation units are known to provide steady returns over different market cycles. To enhance returns, the investor can consider incorporating a few small-cap or mid-cap funds into the portfolio.

Who Should Invest in Aditya Birla Sun Life Equity Mutual Funds?

The Aditya Birla Sun Life Equity Mutual Fund is an ideal investment choice for people who wish to gain long-term capital appreciation over an investment horizon of five years or more. Since the fund value is subject to the volatility of the market, these are meant for investors with a large appetite for risk. The high return potential of Aditya Birla Sun Life Equity Mutual Fund makes it perfect for achieving long-term financial goals like purchasing a home, retirement planning, children’s education, etc. 

To fully realise the investment potential of Aditya Birla Sun Life Equity Mutual Fund, the individual should consider staying invested through the entire investment horizon, which usually ranges from 10 to 12 years. This would imply only investing surplus money in these schemes, which you will not require in the near future.

Things To Consider Before Investing in Aditya Birla Sun Life Equity Mutual Funds

Given below are some of the things you should consider before investing in the  Aditya Birla Sun Life Equity Mutual Fund:

• Investment Objective: Your investment objective will help you determine the amount you want to invest, along with the investment duration. The equity fund is ideal to invest in for long term goals like retirement planning, purchasing property, wedding expenses, etc.

• Investment Horizon: The Aditya Birla Sun Life Equity Mutual Fund provides optimum returns for long investment horizons of over five years. This is because these schemes are more volatile during a short investment period. If you are looking for shorter investment choices with returns, debt funds may be more suited to your needs.

• Right Time to Invest: Should you deploy capital when the market is at a high or low? The answer is that the best time to invest in  Aditya Birla Sun Life Equity Mutual Fund is today; there is no wrong time to start investing. The earlier you start, the better your returns could be.

Tax on Aditya Birla Sun Life Equity Mutual Funds

If the mutual fund scheme is redeemed after one year from the purchase date, the proceedings will be liable to long-term capital gain taxation. The current tax rate stands at 10% if your long-term capital gain is over Rs. 1 lakh. If the mutual fund is redeemed one year from the purchase date, short-term capital gains tax will be applicable. The current tax rate is 15%.