Equity savings funds are hybrid mutual funds that invest in a mix of equity, debt and arbitrage opportunities to deliver stable returns and capital appreciation. This diversification reduces the overall risk of the portfolio.

The allocation to different asset classes depends on the fund's investment objective and prevailing market conditions.

The equity allocation can generate long-term capital appreciation, especially during a bullish market. These funds hedge equity exposure through derivative instruments and generate income from debt securities.

The debt and arbitrage strategies generate regular income and are suitable for investors seeking a steady income stream.

Further, the tax benefits associated with these funds can help investors generate higher overall returns compared with pure debt funds.

Managed by seasoned fund managers, equity savings funds leverage their expertise to identify appealing investment prospects and mitigate risks.