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March 08, 2017 5534
Equity Plus Funds are launched by unit-linked insurance plans (ULIPs), mutual funds and other investment categories.

What is an Equity Plus Fund?

The equity plus fund aims at generating returns in accordance with a predetermined objective like outperforming a benchmark index or beating inflation or outperforming the yield on a 10-Year government bond.

'Equity Plus Funds' is the name given by ULIPs / mutual funds to their offerings that meet either of these objectives:

  • generating long-term capital appreciation in line or better than a benchmark index like the Nifty

  • beating inflation with controlled allocations to equity investments

  • generating a return higher than the 10-Year government bond by taking on limited risk through equities

How Does an Equity Plus Fund Work?

Typically, equity plus funds invest in:

  • equities - if they are geared to outperform a particular index
  • corporate bonds and government securities with limited equity investments if they are pre-disposed to beat a benchmark like inflation or the 10-year government bond

Equity plus funds look at investing in accordance with the mandate given to the fund manager. Risk is usually controlled to that end with the fund manager looking clearly at meeting the pre-defined objective. Taking on unnecessary risk is not an option for the fund manager. The investment guidelines vary across ULIPs / mutual funds and investors are informed of this through product literature / company websites.

Who Is It Suitable For?

For an investor with appetite for risk and long-term goals like saving for child's education, retirement planning or child's marriage, equity plus funds can prove useful either on a standalone basis or in combination with other investment options.

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HDFC Life Insurance Company Limited. CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101.

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