Not ready for full-risk equity? This fund promises growth, income, balance on investment; check details

In today’s market, investors often face the challenge of balancing growth ambitions with the need for safety. The Edelweiss Equity Savings Fund has emerged as a compelling middle-ground solution, blending equity, debt, and arbitrage strategies to deliver steady, tax-efficient returns for conservative-to-moderate investors.

The fund is structured as an open-ended hybrid scheme, allocating across three asset classes: equity, debt, and arbitrage. This diversified mix is designed to provide regular income while capturing long-term capital appreciation, without exposing investors to the full volatility of traditional equity funds. According to Edelweiss Mutual Fund’s August 2025 product note, the fund carries a moderate risk profile, making it suitable for those who seek returns above conventional debt instruments but wish to limit downside exposure.

Equity allocation

Equity forms approximately 25% of the fund, managed through a factor-based strategy emphasizing quality and low volatility. Around 75% of the equity portion (roughly 18–19% of total assets) is invested in large-cap companies, while the remaining 6% targets mid- and small-cap opportunities primarily from the NSE 500 universe. This approach aims to balance growth potential with downside protection, making the equity component more resilient during market swings.

Debt strategy

Debt instruments account for about 30% of the portfolio, primarily AAA-rated securities with an average maturity of three to five years. Using an accrual-based, buy-and-hold approach, the fund avoids high-credit-risk and long-duration debt, preserving capital while generating steady income. Over the past three years, government securities have formed roughly 14% of the debt allocation, with corporate exposure limited to 1–7%, including HDB Financial Services, NABARD, and NHB.

Arbitrage for tax-efficient returns

The largest component, arbitrage (40–45%), leverages price differences between spot and futures markets to generate tax-efficient returns. This strategy tends to perform well in bullish or volatile periods, though returns can compress in falling markets. Notably, between February and April 2025, arbitrage opportunities surged due to PSU dividend announcements and budget-related market movements, demonstrating the strategy’s adaptability in different market cycles.

Performance and Returns

Edelweiss Equity Savings Fund has delivered steady returns, outperforming peers across multiple timeframes. With a year-to-date (YTD) gain of 5.53%, the fund has consistently ranked among the top performers in its category. Its three- and five-year returns of 10.88% and 10.95% respectively surpass the hybrid equity savings category average, reflecting its strong asset allocation and balanced strategy. Ranked 1st over the one-year horizon, it demonstrates reliability for moderate-risk investors seeking stability with growth.

Return Over Time (%)
Fund Name                                  YTD    1D    1M    3M    6M    1Y    3Y    5Y    7Y    10Y
Edelweiss Equity Savings Reg    5.53    0.12    1.38    2.09    7.42    7.03    10.88    10.95    9.33    9.06
VR Equity Savings TRI    4.96    0.32    1.35    -0.15    8.04    2.70    10.36    11.89    9.50    9.63
Hybrid: Equity Savings (Category)    3.98    0.11    0.98    0.89    6.27    4.66    9.59    10.54    8.15    8.15

Who should invest?

The fund is suitable for first-time mutual fund investors, retirees seeking predictable income, or those looking for medium-term portfolio diversification (3–5 years). Its moderate-risk design allows investors to participate in equity market gains without assuming the full volatility of aggressive equity funds.

The Edelweiss Equity Savings Fund is tailored for cautious investors who prioritize stability, steady returns, and tax efficiency over high-risk wealth accumulation. By blending debt, equity, and arbitrage, it offers a balanced investment avenue for navigating today’s volatile markets with confidence.