EQUITY SAVINGS FUNDS Ideal for investors seeking FD-plus returns, low volatility

Market volatility has made equity allocation difficult, especially for conservative investors. Equity Savings Funds (ESFs) offer a solution.

- SARBAJEET K SEN

Market volatility has made equity allocation difficult, especially for conservative investors. Equity Savings Funds (ESFs) offer a solution. A recent new fund offer (NFO) of an ESF from WhiteOak Capital Asset Management Company (AMC) highlights their growing appeal.

"ESFs offer a blend of equity, debt, and arbitrage with lower volatility than pure equity funds, which is appealing amid recent market swings. They also deliver tax-efficient returns," says Harshad Borawake, head of research and fund manager, Mirae Asset Investment Managers (India). As of January 31, 2025, ESFs managed assets worth ₹42,161 crore (Association of Mutual Funds in India data).

How ESFs work

ESFs allocate up to 65 per cent of assets across stocks and arbitrage. Typically, 15-35 per cent is invested in stocks, and the rest in spot-future arbitrage and bonds. Though fund managers have flexibility in stock and bond selection, portfolios usually comprise largecap stocks and high-quality bonds, besides government securities.