Invesco Equity Mutual Fund

Overview

The long-term goal of Invesco MF Equity funds is to give investors a chance to increase their wealth. According to their mandate, defined in their plan information documents, these funds invest primarily in equities and equity-related securities in a particular proportion. After a thorough study, the fund manager will select high-quality equities to guarantee that the portfolio returns meet expectations and category benchmarks.

The underlying stock-picking technique may be growth at fair prices, value, or growth. Increases in the underlying stock prices over a specific investment horizon lead to capital appreciation. Additionally, it occurs when the dividends paid out by the fund are reinvested to buy more plan units. However, the Invesco MF Equity fund does not promise that the investment objective will be achieved.

Risks Involved in Invesco Equity Mutual Fund

Market risk is reasonably high when comparing Invesco MF Equity funds to debt and balanced funds. The fund's value may change as and when the underlying stock price does. Changes in the stock market's price and volume, interest rates, currency rates, governmental policies, tax regulations, and other economic developments could impact stock values.

The degree of portfolio diversity also affects how much risk there is. The market risk of the sector- or theme-based Invesco MF Equity funds is higher than that of diversified equity funds. Comparatively speaking, large-cap equity funds will be less risky than small-cap or mid-cap equity funds. Before investing in a scheme, investors may consider their risk tolerance.

Return Potential of Invesco Equity Mutual Fund

Returns are a byproduct of the investor's assumed risk. Compared to debt funds and balanced funds, Invesco MF Equity funds produce superior returns. These funds have a track record of delivering returns that hover around 12% on average during periods longer than five years. However, Invesco MF Equity funds do not ensure guaranteed returns, and the products' performance may change over time.

A focused fund may have a more significant return potential than a broad equities fund due to its increased risk. On the other hand, large-cap funds are renowned for offering consistent returns during all market cycles. To increase returns, consider diversifying the portfolio with a few small- or mid-cap funds.

Who Should Invest in Invesco Equity Mutual Fund?

Investors looking for long-term financial appreciation over five years or more can choose Invesco MF Equity funds. These funds are intended for investors with a comparatively higher risk tolerance because the fund value may increase or decrease depending on market conditions. Invesco MF Equity funds are the best choice for long-term objectives like funding a child's education, saving for retirement, and purchasing a home due to their high potential for return generation.

You must maintain your investment during the designated investment horizon, typically 10–12 years or even more, to realise the full potential of equity funds. This could also imply keeping only those surpluses in these accounts that are earmarked for long-term investments, which you won't require anytime soon.

Tax on Invesco Equity Mutual Fund

Your investments in this fund cannot be sold for three years from the purchase date. You will be subject to long-term capital gain tax if you sell your interests after three years. If your total long-term capital gain surpasses 1 lakh in a fiscal year, the current tax rate is 10%. There are no cess or surcharges involved. However, your investments in this fund are deductible from your taxable income under section 80c. (At the moment, tax deductions are limited to Rs. 1.5 lakh annually).