A. Based on Asset Class
Equity Mutual Funds can be defined as a pool of funds collected from various investors and invested in a diversified portfolio of equities (stocks) across different sectors and market capitalisations. Equity mutual funds are a popular investment option that offers individuals the opportunity to invest in the stock market without directly buying individual stocks.
Types | Description | Best Suited For |
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Multi-cap funds are equity mutual funds that do not focus on a specific company’s capitalisation but are exposed to all sectors and companies with different capitalisations. |
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A mutual fund that primarily invest in stocks of well-established and financially stable companies with large market capitalisation. |
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It is a type of mutual fund that primarily invests in stocks of mid-sized companies in the share market. |
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A mutual funds that primarily invest in stocks of small companies with small market capitalisation. |
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A mutual fund that primarily focuses on investing in stocks and securities of companies perceived to be undervalued by the market. |
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A mutual fund that maintains a concentrated portfolio of securities by investing in a limited number of equities or other securities. |
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A mutual fund that in most cases put money into shares of groups regarded for paying ordinary dividends to their shareholders. |
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2. Debt Schemes Mutual Funds
Debt mutual funds are a category of mutual funds that primarily invest in fixed-income securities such as government and corporate bonds, treasury bills, commercial papers, and other debt instruments. These funds aim to provide regular income along with the preservation of capital.
Types | Description | Best Suited For |
|---|---|---|
Mutual Funds focused on investing in short-term debt instruments and money market securities with very short maturity periods typically no longer, than one day. |
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Mutual Fund that offers investors a secure and highly liquid option to invest their extra cash or short-term funds. |
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Mutual Fund that caters to investors looking for a low-risk option to temporarily invest their funds (typically 91 days or less). |
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Mutual funds, also known as short-term bond funds, are a category of mutual funds that primarily invest in fixed-income securities with relatively short maturities. |
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Mutual Fund that provides investors with a balanced investment option, between short-term and long-term. |
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Mutual funds that primarily invest in debt instruments, such as corporate bonds. |
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Gilt funds are defined as a type of fund that mainly invests in government securities. |
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3. Hybrid Schemes Mutual Funds
Hybrid mutual funds, also known as balanced funds, are investment vehicles that combine different asset classes within a single fund. These funds invest in a mix of both equity and debt instruments to provide a diversified portfolio that aims to balance returns and risks.
Types | Description | Best Suited For |
|---|---|---|
Balanced funds are the type of mutual fund that invests in specific proportions of debt and equity segments. |
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Aggressive Mutual Funds are defined as hybrid funds that invest 65-80% of their total assets in equities and equity-related instruments, with the remaining 20-35% in debt securities and money market instruments. |
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Also known as Dynamic Asset Allocation Funds is a type of investment fund specifically designed to respond to the changing market conditions. |
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Arbitrage Funds are equity-oriented hybrid funds that take advantage of market arbitrage opportunities. |
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Equity Savings Funds are hybrid mutual funds that invest nearly the same proportion of their assets in equities, FD-like instruments, and safe hedge funds. |
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Money Market Funds (MMFs) are defined as a type of fund that offers investors an easily accessible way to manage their cash while preserving their invested capital.
Mutual Funds
Mutual funds are investment vehicles that pool money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities managed by a professional investment manager. When an individual invests in a mutual fund, they’re purchasing shares of the fund, and the value of those shares is based on the fund’s net asset value (NAV), which is calculated at the end of each trading day. The portion of holding of the fund is provided as ‘Units’ to each investor in proportion to the amount invested by them. The income generated from the scheme is distributed among all the investors in proportion to their investment, by calculating Net Asset Value or NAV.
Table of Content
- Know the Basics of Mutual Funds
- Types of Mutual Funds
- Difference between Various Mutual Funds
- How do Mutual Funds Work?
- Frequently Asked Questions (FAQs on Mutual Fund)
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