Types of Mutual Funds
Equity Funds :
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over a medium to long-term investment horizon. Equity Funds are high risk funds and their returns are linked to the stock markets. They are best suited for investors who are seeking long term growth. Equity Funds are Further classified as Large Cap Fund, Large and Mid Cap Fund, Mid Cap Fund, Multi Cap Fund, ELSS/Tax Savings Fund, Focused Fund, Index Fund, Value Fund, Contra Fund, Thematic Fund and Dividend Yield Fund.
Debt Fund / Fixed Income Fund :
Debt Mutual Funds mainly invest in a mix of debt or fixed income securities such as Treasury Bills, Government Securities, Corporate Bonds, Money Market instruments and other debt securities of different time horizons. Generally, debt securities have a fixed maturity date & pay a fixed rate of interest. They are best suited for the Short to long-term investors who are averse to risk and seeking regular and steady income. They are less risky when compared with equity funds. Debt Funds are Less Taxed Compared to Fixed Deposits. Debt Funds are further classified as Credit Risk Fund, Corporate Debt Fund, Banking and PSU Debt Fund, Dynamic Bond Fund, Long Duration Fund, Short Duration Fund, Medium to Long Duration Fund, Gilt Fund, Medium Duration Fund, Gilt Fund with 10 Yr Constant Duration, Floater Fund, Money Market Fund.
Liquid Funds / Money Market Funds :
These funds invest in highly liquid money market instruments and provide easy liquidity. The period of investment in these funds could be as short as a day or two. They are ideal for Corporates, Institutional Investors and business houses who invest their funds for very short periods. Liquid Funds are generally used for Saving for emergency purposes since the money can be easily accessible. Liquid Funds have the least risky in Mutual Funds. Liquid Funds are further classified into Overnight Fund, Liquid Fund, Ultra Short Term Fund, and Money Market Fund.
Balanced/Hybrid Funds :
Balanced or Hybrid Funds primarily invest there money in Equity, Debt and Liquid Investments. Balanced or Hybrid Investments can be Invested for a period greater than 3 Years. Investors Looking to take moderate risk on there Investments can choose Investing in Balanced / Hybrid Fund. These Funds are further classified into Conservative Hybrid Fund, Aggressive Hybrid Fund, Dynamic Asset Allocation Fund or Balanced Advantage, Equity Savings Fund, Arbitrage Fund and Multi Asset Allocation Fund
Debt Funds v/s Fixed Deposits. Which is Better? A traditional and popular investment option for Indian households is a fixed deposit in a bank. Most investors use bank fixed deposits for regular income and for achieving their financial goals. However, the interest rates on the deposits are falling and investors are looking for alternate options like debt funds. Here is…Read More
Which is Better ELSS or PPF? Savings form an important part of our life. It is important that you not only save but also invest the savings into the right products. It is essential to have knowledge of different products when making an investment decision. Equity Linked Savings Scheme (ELSS) and Public Provident Fund (PPF) are two products, which are…Read More
What is Value Investing? Before you invest your money in a value fund, it is important to understand how it works. Value funds follow the strategy of value investing to generate high returns on the investment. This form of investment chooses stocks that are trading at a discount as compared to its intrinsic value (Book Value). The key to value…Read More