Confused Between Equity or Debt? Here’s Reliance Equity Savings Fund For You

Equity Savings Mutual Fund provides a midway to the conservative investors who cannot decide whether to invest in equity or debt. Reliance Equity Savings Fund is a top player in the category of equity savings mutual fund who has been consistent since the launch in 2015 to allow investors to enjoy a decent but consistent growth in returns. The experts at MySIPonline have analysed the scheme to assist the investors. Read to know why the fund is beneficial for those who are confused to invest between pure equity or pure debt mutual funds.

What is the Objective of Reliance Equity Savings Fund?

The fund was launched after the Union budget of 2014 due to changes in taxation law for debt mutual funds in India. The short term capital gains tax is applicable on non-equity funds for 36 months. As equity savings fund are considered as equity schemes for tax treatment, the short term capital gains tax are only applicable for 1 year. After that 10% of the gains are taxed above Rs 1 Lac. The STCG for debt schemes is charged at the rate of 20% with indexation. Hence, Reliance Equity Savings Fund is beneficial for the investors who want to enjoy the gains at low risk of debt funds. The corpus of the fund is divided into 3 parts as one part is invested in equities, another part in debt, and the third part is kept in cash to grab the arbitrage opportunities. The equity part of Reliance Equity Savings Fund is in higher proportion to gain better returns.

What Can be Expected?

The fund aims to deliver decent capital appreciation through a diversified portfolio. The equity investments are oriented towards large-cap stocks and the debt tools are of lower credit ratings which allow consistent capital gains. The fund has performed remarkably well in the positive market and disallowed negative returns under unfavourable market conditions. The investors can invest in this fund for 15 months or more and can expect a capital gain of 8-10% according to current market conditions. In the last 3 years, the fund has maintained an annualised returns of 8.46% (as of 29th March). The annual gains of the fund were best in 2017 when it provided a 17.64% hike to the invested amount and became a top performer in the category.

What is the Risk Involved?

Even though more than 60% of the corpus is invested in equity stocks, the risk associated is quite low as debt tools and arbitraging conserves the volatility. Although, compared to peers of the category, it has a higher risk factor as the standard deviation is higher than the benchmark and category average. The fund is suitable for the conservative investors who seek capital gains of debt funds but want to enjoy the tax treatment of an equity fund. Those who want more gains can go for a fund with higher equity allocation.

Reliance Equity Savings Fund provides a midway between risk and returns through a mix of equity, debt and arbitrage opportunities. The fund is more suitable for conservative investors. To know if the fund can fulfil your financial objective or not, connect with the experts at MySIPonline and start investing today.