Diversified Mutual Funds in India

Diversified Mutual Funds in India

Why your Mutual fund portfolio goes negative in volatile market conditions?

Investing without a doubt is something everyone is looking forward to in 2021. It is a way everyone can make more money. Well, if you were looking for ways to start investing, and if you ever came across diversified mutual funds and want to know more about it or where to get started, you can get it from here.

What are Diversified Mutual Funds?

Let us first understand what Diversified Mutual Funds are and what they aim at.

Diversified Equity Mutual Funds seek to diversify investments in firms from a variety of industries, regardless of size or whether they are large-caps, mid-caps, or small-caps. Pharmaceuticals, Banking and Financial Services, IT, Engineering, FMCG, Oil & Gas, Power and Utilities, Automobiles, Real Estate, and so on are typical examples.

Significant caps are corporations with large market capitalizations. Similarly, as their names imply, mid-caps are mid-sized corporations with medium market capitalizations, while small-caps are tiny enterprises with small market capitalizations.

Diversified Equity Mutual Funds' principal goal is to generate long-term financial appreciation through diversified stock market investments. Furthermore, investing in multiple industries reduces risks, proving to be a wise long-term investment decision that generates strong returns even in hard economic conditions. Diversified equity funds assist investors in meeting long-term financial objectives such as children's education, marriage, retirement planning, and so on.

Mutual funds, ULIPs (Unit-linked Insurance Plans), and other insurance organizations provide Diversified Equity Funds. It allows investors to profit from the economic success of the firm in which they have invested. When a firm achieves financial success, a portion of those benefits is automatically passed on to investors who have purchased the business's stocks or shares. Because investment terms and circumstances differ amongst ULIPs, investors are made aware of the requirements through business websites and product brochures. Diversified equities funds include the HDFC Equity Fund, the Reliance Growth Fund, and the ICICI Prudential Dynamic Plan.

How are these Diversified Mutual Funds Classified?

Based on the size of the company they are categorized in the following ways:

Small-Capital Diversified Funds: Small-cap Diversified mutual funds provide excellent returns and are best suited for young investors under the age of 35 who have a high-risk tolerance. It is critical to handle this money wisely to minimize the danger of loss and assure decent returns.

Mid-Capital Diversified Funds: Mid Cap Diversified Mutual Funds invest in firms having market capitalizations ranging from Rs. 4000 to Rs. 20,000 crores. These funds are less hazardous than small-cap diversified mutual funds and often provide strong long-term returns.

Large-Cap Diversified Funds: Large-cap Diversified Equity Mutual Funds invest in firms with market size of at least Rs. 20,000 crore. Investors buy stocks or shares in well-known blue-chip businesses that use the Nifty as a benchmark index. Investing in renowned global firms ensures little risk while yielding high rewards.

Why would you need to choose diversified mutual funds over any other? Are there any benefits for why you should choose this?

Every investment has its pros and cons, here are the benefits of diversified mutual funds, and it might give an overview on why you need to make your investment option in this one.

Benefits of Diversified Equity Mutual Funds:

  • It is suitable for Diverse Market Caps and Sectors -

Diversified Equity Mutual Funds are appropriate for all industries and market capitalizations. Unlike mid-cap and large-cap funds, which invest in specific market capitalizations, multi-cap funds invest across market capitalizations. Investing across a variety of market capitalization and firms across sectors helps you avoid the unsystematic risk that might occur from investing in restricted sector-specific funds or equities.

  • Expert Professional Management -

Fund managers are portfolio management professionals due to their significant expertise and understanding of financial studies. If you are not an experienced investor, you might seek the assistance of a Fund Manager to steer you through volatile economic conditions.

Aside from the ability to predict market moves, fund managers are supported by a staff of research analysts who keep a close eye on shifting market trends. They adhere to an investing method and use risk management measures that they have refined over time. For a modest fee, you may benefit from these individuals' years of expertise.

  • Diverse Prices of Shares -

The price of shares varies as well, starting at Rs. 500 and rising to a few lakhs. As a result, it is a popular choice among new and first-time investors seeking to gain exposure to the financial market. It is also suitable for persons with low-risk tolerance.

  • Save on Additional Costs -

Investing in diversified equity mutual funds saves you money on monthly transaction costs that are incurred when investing in non-equity funds. Regular portfolio management to overcome booking profits and laggards, as well as selecting new companies with the potential for substantial capital gains resulting in additional transaction expenses.

Even if you want to work with a Fund Manager, purchasing or selling these funds in bulk provides greater economies of scale. Furthermore, you avoid paying short-term capital gains tax, allowing you to earn a bigger return on investment. The only additional cost you must bear is the lowest expense ratio, which is a yearly fee.

  • Diverse Models of Investment -

The possible forms of investment in Diversified Equity Mutual Funds are also diverse - Systematic Transfer Plans (STPs) and Systematic Investment Plans (SIPs).

You may set up a monthly SIP, in which a predetermined amount is withdrawn from your chosen bank account, therefore promoting a good saving habit. You may use STP to set up a monthly transfer from a debt fund to an equity fund. There are also Systematic Withdrawal Plans (SWPs), which allow you to withdraw a certain amount at predetermined times.

Here are some of the Best Equity Mutual Funds from India:

You can invest in these funds if you feel they match your requirements the best. They are some of the best-performing funds of 2020 that can fetch you some tremendous returns for 2021 and after.

1. Parag Parikh Long Term Equity Fund.

It is a long-term equity fund, launched on 24th May 2013. It has given returns of 19.4% since its launch. The return for this fund in 2020 was 32.3%.

2. PGIM India Diversified Equity Fund.

It is a diversified equity fund that was launched on 4th May 2015. The return for the year 2020 for this fund was 35.9%.

3. UTI Equity Fund.

It is an equity fund that was launched on 18th May 1992. It also ranked 54 in the multi-cap category. In the year 2020, it was at a 31.5% return rate.

4. Canara Robeco Equity Diversified.

It is a diversified equity fund that was launched on 16th September 2003. It was a fund that had a return of 22.2% return in the year 2020.


Here we talk about diversified equity funds, along with the benefits and some of the funds that have got the most returns and recognition in the investment market. You can make use of this information to begin your journey on choosing the most suitable funds you can invest in, along with its perks.

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