{"id":24405,"date":"2022-05-30T15:52:04","date_gmt":"2022-05-30T15:52:04","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?post_type=markets&#038;p=24405"},"modified":"2026-10-19T18:58:27","modified_gmt":"2026-10-19T13:28:27","slug":"the-equity-scheme","status":"publish","type":"markets","link":"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/the-equity-scheme\/","title":{"rendered":"The Equity Scheme"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"24405\" class=\"elementor elementor-24405\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-ce9f9cf elementor-section-full_width tab_container elementor-section-height-default elementor-section-height-default\" data-id=\"ce9f9cf\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-a9a130c\" data-id=\"a9a130c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-c778074 elementor-section-full_width elementor-section-height-default elementor-section-height-default\" data-id=\"c778074\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-wide\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-a724bf9 chapters_list\" data-id=\"a724bf9\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-aa1d0d9 elementor-widget elementor-widget-shortcode\" data-id=\"aa1d0d9\" data-element_type=\"widget\" data-widget_type=\"shortcode.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<div class=\"elementor-shortcode\">\t<script>\n\t\tjQuery(document).ready(function(){\n\t\t\tjQuery(\"#post_chapters a[href*='\" + location.pathname + \"']\")\n\t\t\t\t.addClass(\"current\")\n\t\t\t\t.attr(\"aria-current\", \"page\");\n\t\t})\n\t<\/script>\n\t<div class=\"desktop_chapters\"><div id=\"post_chapters\"><div class=\"post_chapters-heading\">Chapters<\/div><ul><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/background-and-orientation\/\">Background and Orientation<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/personal-finance-math\/\">Personal Finance Math<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/money-today-vs-money-tommorrow\/\">Money Today vs Money Tommorrow<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/the-retirement-part-1\/\">The Retirement -Part 1<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/assumptions-in-retirement-planning\/\">Assumptions in Retirement Planning<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/understanding-stock-funds\/\">The Role of Mutual Funds in Modern Finance<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/concept-of-fund-and-nav\/\">Concept of Fund and NAV<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/understanding-the-performance-of-your-fund\/\">Mutual Fund Factsheet<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/the-equity-scheme\/\"> The Equity Scheme<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/equity-scheme-part-2\/\">Equity Scheme Part 2<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/debt-funds-part-1\/\">Debt Funds Part 1<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/monitoring-your-portfolio\/\">Debt Funds Part 2<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/debt-funds-part-3\/\">Debt Funds Part 3<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/debt-funds-part-4\/\">Debt Funds Part 4<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/investing-in-bonds\/\">Investing in Bonds<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/index-funds\/\">Index Funds<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/arbitrage-funds\/\">Arbitrage Funds<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/measuring-mutual-fund-returns\/\">Measuring Mutual Fund Returns<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/rolling-returns\/\">Rolling Returns<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/mutual-fund-expense-ratio\/\">Mutual Fund Expense Ratio<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/mutual-fund-benchmarking\/\">Mutual Fund Benchmarking<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/mutual-fund-beta-sd-and-sharpe-ratio\/\">Mutual Fund Beta SD and Sharpe Ratio<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/sortino-and-capture-ratios\/\">Sortino and Capture Ratios<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/how-to-analyse-equity-mutual-funds\/\">How to Analyse Equity Mutual Funds<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/how-to-analyse-debt-mutual-fund\/\">How to Analyse Debt Mutual Fund<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/mutual-fund-portfolio\/\">Mutual Fund Portfolio<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/smart-beta-funds\/\">Smart Beta Funds<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/asset-allocation\/\">Asset Allocation<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/exchange-traded-funds\/\">Exchange Traded Funds<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/basics-of-macro-economics\/\">Basics of Macro Economics<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/personal-finance-part-1\/\">Personal Finance-Part 1<\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/personal-finance-review-part-2\/\">Personal Finance Review Part 2 <\/a><\/li><li><i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i>&nbsp;&nbsp;&nbsp;<a href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/know-your-funds\/\">Know Your Funds<\/a><\/li><\/ul><\/div><\/div><div class=\"chapters_toggle\"><a href=\"#\" id=\"open_chapters\" aria-label=\"View chapters\"><span>View Chapters<\/span>&nbsp;&nbsp;&nbsp;<i class=\"fa fa-chevron-right\" aria-hidden=\"true\"><\/i><\/a><a href=\"#\" id=\"close_chapters\" style=\"display:none;\" 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    <span class=\"eael-tab-title title-after-icon\" >Slides<\/span>                            \n                                                    <\/li>\n                                            <li id=\"videos\" class=\" eael-tab-item-trigger eael-tab-nav-item\" aria-selected=\"false\" data-tab=\"3\" role=\"tab\" tabindex=\"-1\" aria-controls=\"videos-tab\" aria-expanded=\"false\">\n                            \n                                                                <i class=\"far fa-eye\"><\/i>                                                            \n                                                            <span class=\"eael-tab-title title-after-icon\" >Videos<\/span>                            \n                                                    <\/li>\n                    \n                                  <\/ul>\n            <\/div>\n            \n            <div class=\"eael-tabs-content\">\n\t\t        \n                    <div id=\"study-tab\" class=\"clearfix eael-tab-content-item active-default\" data-title-link=\"study-tab\">\n\t\t\t\t        <p><div class='white' style='background:rgb(255, 255, 255); border:solid 0px rgb(255, 255, 255); border-radius:0px; padding:0px 0px 0px 1px;'>\n<div id='text_slider' class='owl-carousel sa_owl_theme owl-pagination-true' data-slider-id='text_slider' style='visibility: visible;visibility:visible;'>\n<div id='text_slider_slide01' class='sa_hover_container' data-hash='Factsheets-&#038;-The-Regulatory-Overhaul' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:405px; '><h2 style=\"text-align: left\"><strong>9.1 <\/strong><strong><b>Factsheets &amp; The Regulatory Overhaul<\/b><\/strong><\/h2>\r\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-77850 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Factsheet-and-the-Regulatory-Overhaul.png\" alt=\"Factsheet and the Regulatory Overhaul\" width=\"888\" height=\"713\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Factsheet-and-the-Regulatory-Overhaul.png 888w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Factsheet-and-the-Regulatory-Overhaul-300x241.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Factsheet-and-the-Regulatory-Overhaul-768x617.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Factsheet-and-the-Regulatory-Overhaul-50x40.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Factsheet-and-the-Regulatory-Overhaul-100x80.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Factsheet-and-the-Regulatory-Overhaul-150x120.png 150w\" sizes=\"(max-width: 888px) 100vw, 888px\" \/><\/p>\r\n<p>&nbsp;<\/p>\r\n<p>Evaluating a mutual fund requires looking past promotional highlights and understanding how structural regulations protect investors.<\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>Reading Beyond Marketing: <\/b><\/strong>Factsheets serve as information summary documents, but they are also designed to highlight favorable data. Investors should focus on hard metrics\u2014such as historical drawdown, expense ratios, and portfolio turnover\u2014rather than past performance highlights during favorable market cycles.<\/li>\r\n<li><b><\/b><strong><b>The Pre-2017 Market Landscape: <\/b><\/strong>Before SEBI\u2019s October 2017 circular on the categorisation and rationalisation of schemes, fund houses frequently launched multiple overlapping funds. Scheme names were often deceptive; a &#8220;large-cap&#8221; fund could hold high amounts of speculative small-cap stocks to artificially boost short-term returns. This distorted risk expectations and created unfair benchmark comparisons.<\/li>\r\n<li><b><\/b><strong><b>The Categorization Mandate: <\/b><\/strong>Standardized rules established precise market-capitalization boundaries, based on a ranking list that AMFI updates every six months:<\/li>\r\n<li><b><\/b><strong><b>Large-Cap: <\/b><\/strong>Ranked 1 to 100 by total market capitalization.<\/li>\r\n<li><b><\/b><strong><b>Mid-Cap: <\/b><\/strong>Ranked 101 to 250 by total market capitalization.<\/li>\r\n<li><b><\/b><strong><b>Small-Cap: <\/b><\/strong>Ranked 251 and beyond.<\/li>\r\n<li><b><\/b><strong><b>Elimination of Duplicate Schemes: <\/b><\/strong>Fund houses are generally restricted to offering only one scheme per defined category\u00a0 i.e. index funds, ETFs, fund of funds and sectoral\/thematic funds are the main exceptions. This ensures portfolio transparency and simplifies scheme selection.<\/li>\r\n<\/ul>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide02' class='sa_hover_container' data-hash='The-Structural-Framework-of-Mutual-Funds' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:405px; '><h2>9.2 <strong><b>\u00a0The Structural Framework of Mutual Funds<\/b><\/strong><\/h2>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-77852 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Structural-Framework-of-Mutual-Funds.png\" alt=\"The Structural Framework of Mutual Funds\" width=\"885\" height=\"697\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Structural-Framework-of-Mutual-Funds.png 885w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Structural-Framework-of-Mutual-Funds-300x236.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Structural-Framework-of-Mutual-Funds-768x605.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Structural-Framework-of-Mutual-Funds-50x39.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Structural-Framework-of-Mutual-Funds-100x79.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/The-Structural-Framework-of-Mutual-Funds-150x118.png 150w\" sizes=\"(max-width: 885px) 100vw, 885px\" \/><\/p>\r\n<p>To navigate mutual funds effectively, schemes are divided into five broad groups, each breaking down into specialized investment mandates.<\/p>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td width=\"207\">\r\n<p><strong><b>Primary Category<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"459\">\r\n<p><strong><b>Core Objective<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"316\">\r\n<p><strong><b>Key Subcategory Examples<\/b><\/strong><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"207\">\r\n<p><strong><b>Equity<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"459\">\r\n<p>Wealth creation via business ownership<\/p>\r\n<\/td>\r\n<td width=\"316\">\r\n<p>Large-Cap, Mid-Cap, Small-Cap, Flexi-Cap<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"207\">\r\n<p><strong><b>Debt<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"459\">\r\n<p>Capital preservation and fixed income<\/p>\r\n<\/td>\r\n<td width=\"316\">\r\n<p>Liquid, Short Duration, Gilt, Corporate Bond<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"207\">\r\n<p><strong><b>Hybrid<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"459\">\r\n<p>Balanced exposure to growth and stability<\/p>\r\n<\/td>\r\n<td width=\"316\">\r\n<p>Conservative Hybrid, Aggressive Hybrid, Multi-Asset<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"207\">\r\n<p><strong><b>Life Cycle\u00a0<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"459\">\r\n<p>Goal-based investing with a glide path to a target date<\/p>\r\n<\/td>\r\n<td width=\"316\">\r\n<p>Life Cycle Funds with 5\u201330 year target maturities<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"207\">\r\n<p><strong><b>Others<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"459\">\r\n<p>Passive tracking and asset combinations<\/p>\r\n<\/td>\r\n<td width=\"316\">\r\n<p>Index Funds, ETFs, Fund of Funds (FoFs)<\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p><b><\/b><strong><b>Sectoral &amp; Thematic Exceptions: <\/b><\/strong>Unlike standard categories, fund houses can launch multiple sectoral funds because they focus on distinct economic industries rather than general market capitalization. Under SEBI\u2019s February 2026 circular, however, a sectoral or thematic fund\u2019s portfolio may overlap no more than 50% with the fund house\u2019s other equity schemes , and new launches must use AMFI\u2019s published list of sectors and themes.<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide03' class='sa_hover_container' data-hash='Equity-Funds-Principles-&#038;-Investor-Mindset' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:405px; '><h2 style=\"text-align: left\"><strong>9.3. <\/strong><strong><b>Equity Funds: Principles &amp; Investor Mindset<\/b><\/strong><\/h2>\r\n<p><img decoding=\"async\" class=\"aligncenter wp-image-77853 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset.png\" alt=\"Equity Funds Principles and Investor Mindset\" width=\"1006\" height=\"996\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset.png 1006w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset-300x297.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset-150x149.png 150w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset-768x760.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset-50x50.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset-100x100.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Equity-Funds-Principles-and-Investor-Mindset-96x96.png 96w\" sizes=\"(max-width: 1006px) 100vw, 1006px\" \/><\/p>\r\n<p>Equity funds pool capital to purchase shares in publicly traded businesses, offering retail investors access to broad economic growth. However, capturing these gains requires the right strategic approach.<\/p>\r\n<ul>\r\n<li><b><\/b><strong><b>The Time Horizon Rule: <\/b><\/strong>Equity investments are built for compounding over long periods (7\u201310+ years). Using equity funds for short-term financial needs (2\u20133 years) exposes capital to market timing risks and severe drawdowns.<\/li>\r\n<li><b><\/b><strong><b>Managing Volatility: <\/b><\/strong>Market fluctuations are a natural feature of equity markets. Extended time in the market absorbs short-term turbulence, allowing underlying earnings growth to drive investment value.<\/li>\r\n<li><b><\/b><strong><b>Avoiding Portfolio Churn: <\/b><\/strong>Frequently hopping between funds to chase recent top performers breaks the compound growth cycle, incurs friction costs, and often leads to buying at market tops.<\/li>\r\n<li><b><\/b><strong><b>Media &amp; Noise Isolation: <\/b><\/strong>Investment decisions should be driven by long-term financial goals, not sensationalized news cycles or short-term macroeconomic predictions.<\/li>\r\n<li><b><\/b><strong><b>Plan Efficiency: <\/b><\/strong>Opting for Direct Plans over Regular Plans lowers annual fund running costs (expense ratios), compounding into significantly higher net wealth over decades.<\/li>\r\n<\/ul>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<div id='text_slider_slide04' class='sa_hover_container' data-hash=' Analyzing-Equity-Subcategories-&#038;-Portfolio-Allocation' style='padding:4.9% 5%; margin:0px 0%; background-color:rgb(255, 255, 255); min-height:405px; '><h2 style=\"text-align: left\"><strong>9.4 <\/strong><strong><b>Analyzing Equity Subcategories &amp; Portfolio Allocation<\/b><\/strong><\/h2>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-77854 size-full\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Analysing-Equity-Subcategories-and-Portfolio-Allocation.png\" alt=\"Analysing Equity Subcategories and Portfolio Allocation\" width=\"1009\" height=\"980\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Analysing-Equity-Subcategories-and-Portfolio-Allocation.png 1009w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Analysing-Equity-Subcategories-and-Portfolio-Allocation-300x291.png 300w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Analysing-Equity-Subcategories-and-Portfolio-Allocation-768x746.png 768w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Analysing-Equity-Subcategories-and-Portfolio-Allocation-50x50.png 50w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Analysing-Equity-Subcategories-and-Portfolio-Allocation-100x97.png 100w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2022\/05\/Analysing-Equity-Subcategories-and-Portfolio-Allocation-150x146.png 150w\" sizes=\"(max-width: 1009px) 100vw, 1009px\" \/><\/p>\r\n<h3 style=\"text-align: left\">\u00a0<\/h3>\r\n<p>Understanding market-capitalization mandates allows investors to construct portfolios tailored to their risk tolerance and long-term financial goals.<\/p>\r\n<ol>\r\n<li><strong><b> Large-Cap Equity Funds<\/b><\/strong>\r\n<ul>\r\n<li><b><\/b><strong><b>Regulatory Mandate:<\/b><\/strong>Must allocate a minimum of <strong><b>80%<\/b><\/strong>\u00a0of total assets to equity instruments of companies ranked within the top 100 by market capitalization.<\/li>\r\n<li><b><\/b><strong><b>Risk &amp; Return Characteristics: <\/b><\/strong>Represents established industry leaders with proven business models. These funds exhibit lower volatility relative to broader equity markets, serving as a stabilizing foundation for portfolios.<\/li>\r\n<li><b><\/b><strong><b>Investment Profile:<\/b><\/strong>Designed for investors seeking relatively stable, index-like long-term growth (like all equity funds, they do not protect capital in the short term).<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ol>\r\n<ol start=\"2\">\r\n<li><strong><b> Mid-Cap Equity Funds<\/b><\/strong><\/li>\r\n<\/ol>\r\n<ul>\r\n<li><b><\/b><strong><b>Regulatory Mandate: <\/b><\/strong>Must allocate a minimum of <strong><b>65%<\/b><\/strong>\u00a0of assets to companies ranked 101st to 250th by market capitalization.<\/li>\r\n<li><b><\/b><strong><b>Risk &amp; Return Characteristics: <\/b><\/strong>Targets mid-sized enterprises in their growth phase. While offering higher return potential than large caps over full market cycles, these stocks experience sharper price drawdowns during market corrections.<\/li>\r\n<li><b><\/b><strong><b>Investment Profile:<\/b><\/strong>Suitable for growth-focused investors with investment horizons of 7+ years who can stomach high volatility.<\/li>\r\n<\/ul>\r\n<ol start=\"3\">\r\n<li><strong><b> Small-Cap Equity Funds<\/b><\/strong><\/li>\r\n<\/ol>\r\n<ul>\r\n<li><b><\/b><strong><b>Regulatory Mandate: <\/b><\/strong>Must allocate a minimum of <strong><b>65%<\/b><\/strong>\u00a0of assets to companies ranked 251st and beyond by market capitalization.<\/li>\r\n<li><b><\/b><strong><b>Risk &amp; Return Characteristics: <\/b><\/strong>Invests in emerging businesses. Small-cap funds carry significant liquidity risk and sharp short-term price fluctuations, but offer substantial multi-bagger potential as portfolio companies expand.<\/li>\r\n<li><b><\/b><strong><b>Investment Profile: <\/b><\/strong>Recommended exclusively for aggressive, long-term investors capable of enduring extended cyclical underperformance.<\/li>\r\n<\/ul>\r\n<ol start=\"4\">\r\n<li><strong><b> Large &amp; Mid-Cap Equity Funds<\/b><\/strong><\/li>\r\n<\/ol>\r\n<ul>\r\n<li><b><\/b><strong><b>Regulatory Mandate: <\/b><\/strong>Must maintain a dual allocation floor of at least <strong><b>35% in Large-Cap stocks<\/b><\/strong>\u00a0and <strong><b>35% in Mid-Cap stocks<\/b><\/strong>\u00a0at all times.<\/li>\r\n<li><b><\/b><strong><b>Risk &amp; Return Characteristics: <\/b><\/strong>Operates as a blended equity solution. The large-cap bucket buffers against downward market shocks, while the mid-cap bucket enhances return potential.<\/li>\r\n<li><b><\/b><strong><b>Investment Profile: <\/b><\/strong>Ideal for investors looking to consolidate core growth and stability into a single fund rather than managing separate allocations.<\/li>\r\n<\/ul>\r\n<p><strong><b>Comparative Summary Matrix<\/b><\/strong><\/p>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td width=\"213\">\r\n<p><strong><b>Fund Subcategory<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"229\">\r\n<p><strong><b>Min. Primary Allocation Target<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"193\">\r\n<p><strong><b>Relative Volatility<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"227\">\r\n<p><strong><b>Return Expectation<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"165\">\r\n<p><strong><b>Ideal Investment Horizon<\/b><\/strong><\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"213\">\r\n<p><strong><b>Large-Cap<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"229\">\r\n<p>80% in Top 100 Companies<\/p>\r\n<\/td>\r\n<td width=\"193\">\r\n<p>Lowest<\/p>\r\n<\/td>\r\n<td width=\"227\">\r\n<p>Moderate \/ Steady<\/p>\r\n<\/td>\r\n<td width=\"165\">\r\n<p>5\u20137+ Years<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"213\">\r\n<p><strong><b>Mid-Cap<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"229\">\r\n<p>65% in 101\u2013250 Companies<\/p>\r\n<\/td>\r\n<td width=\"193\">\r\n<p>High<\/p>\r\n<\/td>\r\n<td width=\"227\">\r\n<p>High<\/p>\r\n<\/td>\r\n<td width=\"165\">\r\n<p>7\u201310+ Years<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"213\">\r\n<p><strong><b>Small-Cap<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"229\">\r\n<p>65% in 251+ Companies<\/p>\r\n<\/td>\r\n<td width=\"193\">\r\n<p>Highest<\/p>\r\n<\/td>\r\n<td width=\"227\">\r\n<p>Very High<\/p>\r\n<\/td>\r\n<td width=\"165\">\r\n<p>10+ Years<\/p>\r\n<\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"213\">\r\n<p><strong><b>Large &amp; Mid-Cap<\/b><\/strong><\/p>\r\n<\/td>\r\n<td width=\"229\">\r\n<p>35% Large + 35% Mid<\/p>\r\n<\/td>\r\n<td width=\"193\">\r\n<p>Moderate<\/p>\r\n<\/td>\r\n<td width=\"227\">\r\n<p>Moderate to High<\/p>\r\n<\/td>\r\n<td width=\"165\">\r\n<p>7+ Years<\/p>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p>\r\n<p>&nbsp;<\/p><\/div>\n<\/div>\n<\/div>\n<script type='text\/javascript'>\n\tjQuery(document).ready(function() {\n\t\tjQuery('#text_slider').owlCarousel({\n\t\t\titems : 1,\n\t\t\tsmartSpeed : 400,\n\t\t\tautoplay : false,\n\t\t\tautoplayHoverPause : false,\n\t\t\tsmartSpeed : 400,\n\t\t\tfluidSpeed : 400,\n\t\t\tautoplaySpeed : 400,\n\t\t\tnavSpeed : 400,\n\t\t\tdotsSpeed : 400,\n\t\t\tdotsEach : 1,\n\t\t\tloop : false,\n\t\t\tnav : true,\n\t\t\tnavText : ['Previous','Next'],\n\t\t\tdots : true,\n\t\t\tresponsiveRefreshRate : 200,\n\t\t\tslideBy : 1,\n\t\t\tmergeFit : true,\n\t\t\tautoHeight : true,\n\t\t\tmouseDrag : false,\n\t\t\ttouchDrag : true\n\t\t});\n\t\tjQuery('#text_slider').css('visibility', 'visible');\n\t\tvar owl_goto = jQuery('#text_slider');\n\t\tjQuery('.text_slider_goto1').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 0);\n\t\t});\n\t\tjQuery('.text_slider_goto2').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 1);\n\t\t});\n\t\tjQuery('.text_slider_goto3').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 2);\n\t\t});\n\t\tjQuery('.text_slider_goto4').click(function(event){\n\t\t\towl_goto.trigger('to.owl.carousel', 3);\n\t\t});\n\t\tvar resize_24086 = jQuery('.owl-carousel');\n\t\tresize_24086.on('initialized.owl.carousel', function(e) {\n\t\t\tif (typeof(Event) === 'function') {\n\t\t\t\twindow.dispatchEvent(new Event('resize'));\n\t\t\t} else {\n\t\t\t\tvar evt = window.document.createEvent('UIEvents');\n\t\t\t\tevt.initUIEvent('resize', true, false, window, 0);\n\t\t\t\twindow.dispatchEvent(evt);\n\t\t\t}\n\t\t});\n\t});\n<\/script>\n<\/p>                    <\/div>\n\t\t        \n                    <div id=\"slides-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"slides-tab\">\n\t\t\t\t        <p><img decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" \/><\/p>                    <\/div>\n\t\t        \n                    <div id=\"videos-tab\" class=\"clearfix eael-tab-content-item \" data-title-link=\"videos-tab\">\n\t\t\t\t        <p><img decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/10\/coming-soon-person-g8026473a8_1920-removebg-preview.png\" \/><\/p>                    <\/div>\n\t\t                    <\/div>\n        <\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Study Slides Videos 9.1 Risk Analysis &nbsp; There is an old saying that investors are driven by two emotions: greed and fear. It\u00e2\u20ac\u2122s time to explore the fear of losing money. Regrettably, most investors have had to confront that fear head-on in recent years. In the years, when the stock market seemed unstoppable, it was &#8230; <a title=\"The Equity Scheme\" class=\"read-more\" href=\"https:\/\/www.5paisa.com\/finschool\/course\/financial-planning-through-mutual-funds-course\/the-equity-scheme\/\" aria-label=\"Read more about The Equity Scheme\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":11088,"menu_order":9,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"class_list":["post-24405","markets","type-markets","status-publish","format-standard","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/24405","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets"}],"about":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/types\/markets"}],"author":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/comments?post=24405"}],"version-history":[{"count":14,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/24405\/revisions"}],"predecessor-version":[{"id":77855,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/24405\/revisions\/77855"}],"up":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/markets\/11088"}],"wp:attachment":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media?parent=24405"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/categories?post=24405"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}