IndexEquity savings fundsHow did they arise?Tax-efficient investmentsEquity savings fundsBasically, we can define equity savings funds as the sum of arbitrage funds, equity and debt funds. This is a hybrid scheme suitable for investors looking for income generation, capital appreciation and higher returns than long term fixed deposits and moderate risk appetite. Investors equally invest in equity-related instruments, debt and money market instruments, and arbitrage opportunities. A minimum of 65% of the capital is parked in arbitrage opportunities and is classified as an equity fund, while the rest of the fund is invested in fixed income securities. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay How did they come about? Three years ago, the government came up with a new program to increase the holding period of debt funds to three years. to gain indexing benefits. Otherwise investors would have been taxed at their standard rate. In short, it meant that debt and debt-oriented funds such as monthly income plans (MIPs) received the same tax treatment as fixed deposits (FDs) for holdings of up to three years. To target this specific group of investors, equity savings funds were introduced as a category to provide similar returns to MIP. Equity savings funds should be seen as an alternative to bank fixed deposits as equity savings funds are tax efficient and offer higher post-investment. tax returns. These funds are perfect for investors looking for medium to long-term investment goals. These equity schemes are less risky than balanced funds as only one-third of the amount is invested in equities. If fund categories are graphed on a risk-return axis, equity savings funds fall between MIP funds and balanced funds. Equity savings fund positioned higher than MIP (debt oriented funds) and slightly lower than balanced funds in risk-return parameters. Let's talk about the benefits of investing in equity savings funds. There are essentially three main advantages: equity growth potential, income opportunities and tax efficiency. Equity savings funds are a great investment tool for earning regular income along with capital appreciation and maintaining average market volatility. Tax-Efficient Investments Equity savings funds offer tax advantages to risk-averse investors. Equity savings funds provide tax-free returns in respect of taxes incurred on interest earned on bank deposits, when the holding period is more than one year. However, if the shares are redeemed before one year, the investor will have to pay 15% tax on short-term capital gains. For debt funds, the investor gets the benefit of realizing short-term and long-term capital gains. Short-term gains are taxed at his rate and added to the investor's total income, while long-term capital gains are taxed at 20% indexed after three years. In other words, all debt-oriented schemes, such as monthly income plans, receive the same tax treatment as bank or postal fixed deposits. Less volatile than equity fundsIn equity savings funds, much of the investment is in debt and arbitrage and therefore equity savings funds are considered less..