Equity mutual funds invest directly in company’s shares. It simply means that an equity investor is a proportionate owner of a company's business and profits and losses. Hence, equity mutual funds have high returns potential.

Here are the advantages of equity mutual funds so that investors know of why should they invest in equity mutual funds:

• Expert management: Equity funds are monitored by experts with an immense knowledge of mutual funds. These expert fund managers know every aspect of mutual funds. They analyse the markets and alter funds (whenever required) accordingly to leverage the market trends.
• Tax benefit: ELSS (Equity Linked Savings Scheme - a type of equity fund) as per the Section 80C of the IT (Income Tax) Act, 1961, offers tax benefit of up to ₹ 46,800/- by investing ₹ 1,50,000/-
  For other equity mutual funds, tax is levied as per the STCG and LTCG norms.
• Diversification: This reduces the risk exposure of equity funds due to the widespread of your investments across the stocks of various companies. This helps to spread out your risk across various instruments.
• High returns potential: Equity investing majorly invests in stocks of companies. Stocks represent proportionate ownership of a company's business and its profits and losses. Due to this, they have high returns potential that can outpace the market average.
• Convenience: One can invest in one-go with lump sum investment mode or like an instalment with SIP investment mode. For monthly salaried employees who can’t invest in one-go then SIP is the best option for them.
• Liquidity: The redeemed amount from equity funds are credited to your bank account in three days due to which equity mutual funds offer high liquidity.
• Affordable: One can start investing with an amount as low as ₹ 500/- in equity mutual funds by starting their SIP at a predefined time interval. This makes it easier on our wallets when it comes to investing.

Get a detailed idea about the advantages and the disadvantages of equity mutual funds