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Equity Plus Fund

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March 08, 2017

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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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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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