Types of Mutual Funds
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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

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