Equity savings funds vs debt funds | Are equity savings funds a good substitute for debt funds?

Lately, especially after the tax change for debt funds, equity savings funds are being projected as a substitute for debt funds. Equity savings funds have historically generated returns of 8-9% pa, enjoy equity-like taxation and have about two-thirds of their portfolio allocated to safer instruments like debt and arbitrage. So, in this video, we explore if equity savings funds can indeed act as a substitute for debt funds.
To do so, we compare the returns and volatility of equity savings funds with those of three debt categories: money market, short duration and medium duration. We also compare the historical probabilities of equity savings funds yielding a negative return over short time periods. Finally, we assess for what purpose and for whom equity savings funds are suited. You can watch the video to get an insight into all these aspects.
Chapters
00:00 INTRODUCTION
01:35 WHAT ARE EQUITY SAVINGS FUNDS?
04:01 RETURNS - EQUITY SAVINGS FUNDS VS DEBT FUNDS
05:34 RISK - EQUITY SAVINGS FUNDS VS DEBT FUNDS
08:35 WHO SHOULD INVEST IN EQUITY SAVINGS FUNDS?
#ETMoney
👉 To invest in Direct Plans of top Mutual Funds for free, download the ET Money app: etmoney.onelink.me/unJQ/5ca1ae3b
👉 Subscribe to ET Money Hindi
kzbin.info/door/zWtyDo9KmEC1JoAqa1LIEw
👉 Learn about Investments, Tax-Saving and Future Planning www.etmoney.com/learn
👉 Follow us on:
► Facebook: ETMONEY/
► Twitter: etmoney
► Instagram: etmoney_official
► LinkedIn: www.linkedin.com/company/et_money/

[@abhishekchatterG]

I haven't seen a better explanation to Equity Savings Fund than this presentation. Amazing work etmoneu team

[@ETMONEY]

Hello, we are happy to know that you found this video useful. Please share it with your friends and family as well and help spread the word.

[@thedefender2191]

I am invested in ICICI prudential equity savings fund and doing good for last 3 years with no negative return in any quarter.

[@ManishSharma-yg4xq]

Guys I am must say your videos are very clear not one of the best it’s on top of!! Keep it up 👍

[@amarbs]

Very good explanation. Detailed analysis.

[@mitulvaghasia5038]

Great learning with simple way

[@ravimurru1]

wonderful information.

[@milindsharma7544]

Great video. Please make a video comparing arbitrage funds with debt funds.

[@ETMONEY]

Hello, thanks for your suggestion. Will share it with the content team.

[@seajaey1]

Superb video!

[@meghanaabhyankar9151]

6:10 Are all the standard deviations for 1 year rolling returns? The numbers are different though.

[@kulkarnirajendra]

Very nicely explained

[@ETMONEY]

Hi, glad to know that you found this video helpful. Please don’t forget to share it with your friends and family.

[@raeesraja5178]

Sir I cancelled my lock sip in etmoney app now I want to withdraw money but I can't find any option please help me sir

[@Dushyantgiri]

Equity saving funds with ecposuee to gold?

[@PraneshSR3]

Does this work like liquid fund or arbitrage fund.... ie. whether can i take out cash in case of emergencies or not ?

[@ETMONEY]

Hello, you can take out money anytime from equity savings funds. However, given the equity exposure of these funds, it would be advisable not to treat them at par with liquid and arbitrage funds. As discussed in the video, these funds can give high losses in the short term.

[@namitajain68]

What about parking a chunk of retirement corpus in equity savings funds for SWP after a few years? I have about one fourth of my portfolio in hdfc equity savings.

[@ETMONEY]

Hello, it would be advisable to have a debt fund if you are planning a regular SWP. That way, your corpus will be relatively safer. However, equity savings funds can have a role in retirement as well. They can be used to park your retirement corpus so that it earns inflation-adjusted returns. The equity component of equity savings fund can help you counter the effect of inflation. However, for SWPs, a debt fund is often better.

[@namitajain68]

@@ETMONEY thank you for your guidance. I have half my portfolio in ppf and am planning to start senior citizen scheme after 4 years (after I turn 60) - won't it be a good substitute for debt fund SWP? Hoping to postpone equity savings MF SWP for as long as possible while living in current income.

[@manishgdave1474]

Pl make video on conservative Hybrid fund which invest upto 25% in equity

[@ETMONEY]

Hello, thanks for your suggestion. Will share it with the content team.

[@arjunps6776]

How do equity savings fund compare with arbitrage funds? That would be a good analysis. I assume arbitrage funds provide slightly lower returns at much lower volatility.

[@ETMONEY]

Hello, you are right. Equity savings funds would have a higher risk and higher return profile as compared to arbitrage funds. But the difference could be steep and not slight.

[@fanofkimi]

@etmoney: good information. It would be great you also add equity to final comparison on top of debt funds so that everyone knows where this stands between equity and debt

[@ETMONEY]

Hello, glad to know that you liked the video. Please share it with your friends, family and colleagues. Will share your observation with the content team.

[@Maknahar]

As these funds have such a large arbitrage, it would have been nice to compare them with arbitrage funds.

[@ETMONEY]

Hello, I understand that you would have liked to see a comparison between arbitrage and equity savings funds. Arbitrage funds have a similar risk-return profile as liquid debt funds. However, they enjoy equity-like taxation. So, in terms of taxation, equity savings and arbitrage funds have the same treatment. But on the returns front, equity savings funds would have done better. And on the volatility front, arbitrage funds would be better. So, for your short-term investment needs, arbitrage funds are good. For the medium term, equity savings funds are good, provided you can handle the volatility involved.

[@swamidasdalvi4845]

This content is wonderful. 👍 The narration could use better enunciation as in the case of Shankar Nath's videos which are brilliant but often don't inform as well as ET Money videos.

[@ETMONEY]

Hello, thanks for your feedback and appreciation. It has always been our endeavour to improve our videos so that they become more and more useful to our viewers.

[@rajitsehgal1263]

Are these returns absolute or Cagr.

[@ETMONEY]

Hello, we have considered rolling returns in CAGR terms.

[@pavanramappa7464]

The ideal comparison should be between equity arbitrage and debt fund..

[@ETMONEY]

Hello, the idea of this video was to see if equity savings funds can act as a substitute for debt funds. That's why we have used debt funds for comparison. However, I am noted your suggestion and will share it with our content team.

[@ssp160]

The return comparison for 3-5 years post taxation should have been shown.

[@ETMONEY]

Hello, thanks for your suggestion. Will share it with our content team.

[@vinothkumar-di8wx]

Quant small cap best

[@rajitsehgal1263]

Only arbitrage funds are proper substitute.

[@ETMONEY]

Hello, arbitrage funds have a risk-return profile like liquid funds. So, they are good for your short-term investments. If you would like to earn higher returns on your medium-term corpus and can bear some volatility, equity savings funds could be the right option.

[@Johnbulok]

I really appreciate the dedication in each video you post. Long term investor's know that the market and economy will recover eventually, and investors should be positioned for such a rebound, I gained $180k from bitcoin in 2023, before the market crash and now I am buying again, adding more at a time. Having a good financial advisor like Ethan Jackson, will add to your success in the crypto market.