Thursday, June 14, 2018

Equity Income Funds vs Debt Funds

Best SIP Funds to Invest Online 


Equity-income funds are not as safe as debt funds but are far more safe than equity funds. Equity-income funds are typically one-third equity, one-third arbitrage and one-third debt. Arbitrage position is almost like a liquid fund. In arbitrage, the fund manager buys a share and at the same time sells it in futures market. He is actually not exposed to equity risks for this one-third of his investment. The tax treatment is like equity because arbitrage position is technically equity but by character it is fixed income.

Equity-income funds qualify as a very tax efficient way of investing with low risk but it is not as safe as a debt fund because around 35 per cent is exposed to pure equity. However, it is not very risky. It is an excellent way of investing if you are holding it for three to five years and if you are a risk averse person and also want to optimize the reruns in a tax-efficient way.

And you can very well invest a lumpsum because this is something where only one-third of your money will be exposed to equity.

SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich

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