Types of mutual funds in India

Based on Investment Goals/Objectives

• Low Risk

These types of mutual funds invest in the debt market. Where the risk to the investment is low. In such cases, fund managers suggest putting money in either one or a mixture of liquid. That is ultra short-term or arbitrage funds. Returns could be 6-8%, but the investors are available to switch when costs become more durable. Investments tend to be long-term. But due to the lowering risks associated with it, the returns are also considered.

• Medium Risk

These investments carry medium risk to the investor. Here, the danger factor is of medium level as the fund manager spends a part in debt and the rest in equity funds.
The NAV is not that subtle, and the ordinary returns could be 9-12%.
They are also perfect for those who are ready to take some risk to get great returns on their investment. The investment portfolio is a blend of debt funds and equity funds.

• High Risk

These investments are high. Plus for those who are ready to take a high risk on their investment. General performance evaluations are mandatory as they are sensitive to market volatility. For an expectation of great returns in the form of interest and dividends. High-risk Mutual Funds require effective fund management.
High-risk investment invests a bulk of the money in equity stocks of the company.
You can assume 15% returns, though the largest high-risk funds usually give 20% returns- 30% at best.

• Very Low-Risk Funds

Liquid Funds and Ultra Short-term Funds in 1 month to 1 year are not risky at all. Naturally, their returns are low -6% at best. Investors wish this to satisfy their short-term financial goals and to hold their money secure until then.

• Sector Funds

Investing singularly in one particular sector, theme-based mutual funds.
As these funds invest solely in particular sectors with only some stocks. The risk factor is on the high-priced side. One must be continually informed of the numerous sector-related trends. In case of any drop, just exit quickly.
But, sector funds also give high returns.

• Index Funds

The index fund is a kind of investment which is created to meet the functioning of a market index like BSE. An index fund only recognises stocks and their similar ratio in the market index. Also, put the money in a related proportion in related stocks.
These funds give wider disclosure to the market, less running cost and less portfolio turnover.

• Fund of Funds

Funds of funds are the types of mutual funds that spend in other mutual funds. The returns singly depend upon the achievement of the target fund. These types of funds are also introduced to as multi-manager funds. Purchasing one fund that invests in many funds rather than investing in different effects diversification as well as saves on prices.

• Emerging Market Funds

In emerging market funds, the investment is done in the developing countries which are becoming economically at a great rate. These funds are held risky as a lot of different factors depending on the performance of political and financial situations of the appropriate developing country.

• International Funds

Preferred by investors seeing to increase their investment to different countries. Foreign Mutual Funds can get investors great returns even when the Indian Stock Markets do manage properly.

• Global Funds

These are related to international funds and invest their money in the companies stationed in all parts of the world. The only variation from international funds is that investment can also be made in the same country as the mutual fund investment.

• Real Estate Funds

As the name sounds, the real estate funds invest their funds in real estate business. The investment in a real estate project can be done at each phase of the project
Real Estate Fund can be a perfect choice as the investor is just an implied participant by settling their money in organised real estate companies or trusts rather than projects.

• Commodity Focused Stock Funds

Ideal for investors with enough risk-appetite.Also, seeing to expand their portfolio, commodity-focused stock funds give a hit to diddle in various and different trades.
Returns are not cyclic and are both based on the review of the stock company or the property itself.

• Market Neutral Funds

These funds do not invest straight away in the market. They invest in securities, treasury bills with the purpose of regular and fixed growth. For investors asking protection from adverse market trends while providing good returns. Market-neutral Funds meet the target like a hedge fund.

• Inverse/leveraged Funds

These funds don’t work as a regular mutual fund. They make a profit when the market drops and acquire a loss when the market performs great.
The risk factor in such funds is very high as they can make you huge loss or profit as per the market conditions.

• Asset Allocation Funds

Asset Allocation Funds can set the equity-debt distribution. It is almost like Hybrid Funds. But needs high expertise in sorting and allocation of the stocks & bonds. These funds allow the portfolio manager to accommodate the designated assets to obtain results. The number of investment gets split into such funds to invest in various instruments like equity and bonds.

Conclusion