Equity Mutual Funds
Funds that invest mainly in shares — SEBI’s 11 equity categories explained.
Updated 30 September 2026 · SEBI rules as of 2026Overview
Equity funds invest at least 65% of assets in shares and equity-related instruments (more for some categories). They aim for long-term capital growth and are best suited to goals five or more years away. SEBI classifies open-ended equity schemes into 11 categories, and each AMC may normally offer only one scheme per category (with limited exceptions such as index funds and ETFs).
| Particular | Details |
|---|---|
| Minimum equity | 65% (80%+ for many categories) |
| Market-cap definitions | Large cap = top 100 companies; Mid cap = 101st–250th; Small cap = 251st onwards (by full market cap, AMFI list) |
| Categories | Large, Mid, Small, Large & Mid, Multi, Flexi, Focused, Value/Contra, Dividend Yield, Sectoral/Thematic, ELSS |
| Tax | STCG 20% within 12 months; LTCG 12.5% above ₹1.25 lakh per year |
| Horizon | 5+ years |
SEBI equity categories at a glance
| Category | SEBI rule | Typical riskometer |
|---|---|---|
| Large Cap | ≥ 80% in large caps | Moderately high – High |
| Mid Cap | ≥ 65% in mid caps | Very High |
| Small Cap | ≥ 65% in small caps | Very High |
| Large & Mid Cap | ≥ 35% each in large and mid caps | Very High |
| Multi Cap | ≥ 75% equity, ≥ 25% each in large, mid, small | Very High |
| Flexi Cap | ≥ 65% equity, any market cap | Very High |
| Focused | Max 30 stocks, ≥ 65% equity | Very High |
| Value / Contra | ≥ 65% equity with value / contrarian style | Very High |
| Dividend Yield | ≥ 65% in dividend-yielding stocks | Very High |
| Sectoral / Thematic | ≥ 80% in a sector or theme | Very High |
| ELSS | ≥ 80% equity, 3-year lock-in | Very High |
How equity funds make money
Rise in share prices lifts NAV.
Received from companies, reinvested in growth option.
Long holding periods smooth volatility.
Plan your investment
Frequently asked questions
Are equity funds safe?
They carry market risk; losses are possible in the short term, but diversified funds have historically rewarded long holding periods.
How much should I invest in equity funds?
It depends on your goals, horizon and risk tolerance; many planners keep long-term goals equity-heavy and short-term money in debt.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully. Information is educational and may change with SEBI / tax rules — verify with the AMC, AMFI or SEBI. FinancePortal is not an investment adviser.