Overview of Mutual Funds

Types of mutual fund in India- depends on the return factor.
Mutual funds India are the best way to invest. The mutuals are the funds in which different investors or people who are wanting to make money investing in it. Every mutual fund registers with SEBI (Securities Exchange Board of India) and therefore, very safe. The mutuals are numerous in the number. Every plan in mutuals has its own benefits and effective factors. Many investors do invest in securities like bonds, stocks, money market instruments or other assets.

A mutual fund is operated collectively to get the greatest feasible returns. The person pushing this investment vehicle is a licensed fund manager. To understand various mutual funds one need a list of types of mutual funds. Let’s discuss the various types of mutual fund in India.

types of mutual funds in india

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Types of mutual funds in India

The investment which is offering flexible and numerous option are what a new age mutual fund investment made of. Mutual funds assist in diversifying the horizons of investments by rendering various mutual funds. The risk portfolio of mutual funds is simply divided into contrast asset classes like debt, equity and money market etc. Also, have it types based on financial goals, whether it offers long term or short term investment.


Structural distribution of mutual funds– open-ended funds, close-ended funds, and interval funds. They are comprehensive in nature and the variance depends on how adaptable is the purchase and sales of singular mutual fund units.

  • Open-Ended mutual funds

An open-ended fund is the most popular type of mutual fund accessible. This mutual fund investment instrument trades with the units that are bought or redeemed during the year. Such purchases or redemption are done to endure NAV. These funds give liquidity to the investors, so they are favoured by investors. These funds don’t have any restrictions in a time period or a number of units.
An investor can buy/purchase funds at their facility and exit when they like at the prevailing NAV all. This is why it’s unit capital changes regularly with new entries and exits.

  • Interval Funds

The funds which are a blend of traits of open-ended and closed-ended are called interval funds.
Interval funds are closed funds with a choice to buy/sell funds or exit straight for a specific pre-decided duration.No transactions will be allowed for at least 2 years. This is fit for those who want to save a lump sum for an important goal i.e. 3-12 months.

  • Close-Ended Mutual Funds

The funds dealing in the units that can is bought through the first process period only. SEBI mandates investors to be provided with both the repurchase choice or listing on stock exchanges to exit the scheme. The cost of the closed-ended mutual funds is based on the demand and supply exactly similar to stocks.
The units are available for the redemption on the particular maturity date. They are not liquid and the costs are smaller than the normal price per unit due to the smaller volume of trading. Investors cannot enter either exit from the scheme until the time of the scheme ends.
In order to provide liquidity, these schemes are listed on the stock exchange on trading purposes.

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Based on Asset Class

These are the most popular kind of mutual funds in India.
  •  Equity Funds

Equity mutual funds are funds that invest usually in equity stocks and shares of the company. They are supposed to be risky but they serve to give greater returns in the long run. They are also named as stock funds. As equity funds come with uniform growth, the risk of expending money is approximately higher.

  • Debt Funds

Debt funds spend in fixed-income securities like bonds, securities and treasury bills. they are also durable and light volatile to the market provisions.
There are many types of debt funds FMPs, Liquid Funds, Short Term Plans, Monthly Income Plans, Gilt Funds and many more. They have a fixed interest rate and maturity date.

  • Money Market Funds

A money market refers to the mutual funds that are extremely liquid. It is a good option for the investor who wants to spend in abundant funds.
These funds do invest in liquid instruments. Where the money invests in short-term investments like DC, treasury bills etc. They are referred to as a quite safe investment option. As one can get quick and reasonable returns on investment.

  •  Hybrid or Balanced Funds

Balanced mutual funds are funds blend of debt funds and equity funds. The ratio can be changeable or fixed. In short, it catches the greatest of 2 mutual funds by dividing.

Balanced mutual funds tend in to invest an equivalent amount in equity and debt funds to manage the risk level balanced in the investment.

Based on Investment Goals/Objectives

  • Growth Funds

Growth funds normally put a large portion in shares and growth sectors. the main purpose is capital appreciation. That is fit for investors usually Millennials. Who has a surplus of unused money to be shared in riskier plans. With high returns or are positive about the scheme.

  • Capital Protection Funds

The primary objective of these funds is to preserve the money invested. If preserving head is preference- Capital Protection Funds can assist the mission while gaining almost less returns. That is 12% at best. So the funds get divided in among equity and fixed income investments.

  •  ELSS or Tax-Saving Funds

ELSS or tax saving mutual funds come in the section 80C of the Income Tax Act, 1961.
They are getting a reputation as it helps investors the dual advantage of creating wealth as well as save on taxes. all in the under lock-in period of only three years. This is extremely fit for long-term and salaried investors. Investing predominantly in equity and related products- it has been identified to get non-taxed returns from 14-16%.

  • Fixed Maturity Funds

In fixed maturity funds, the investment is performed in closed-ended debt funds holds a fixed date of maturity.

  • Income Funds

Income Funds refers to the family of debt mutual funds that share their money in a blend of bonds, certificate of deposits and securities among others.
Money gets invested in fixed income instruments like government bonds and debentures under income funds. The purpose of the income fund is a steady income on investment with the current extension of capital.

  • Pension funds

Putting away a part of your income in a preferred Pension Fund to increase over a long time to guard financial future next retiring from regular employment. The returns on the pension fund can be withdrawn- lump sum/regular pension or mixture of both. Keeping in mind the long-term objective of growing a regular pension to the investor when he/she retires. Where equity benefits the investment raise and debt funds manage a balance of risk in the investment. The money in the pension funds gets invested in equity and debt instruments.

  • Liquid Funds

Liquid mutual funds a part of debt funds family. Money market with the security of up to 91 days. The money goes invested in short-term financial instruments like treasury bills, DC for the mission of giving ease of taking out money anytime. The best sum permitted to invest is Rs 10 lakhs. Liquid funds are supposed to be low risk with average returns. Also, are perfect for people watching for short-term investment.
One point that distinguishes Liquid Funds from other debt funds is how the Net Asset Value is calculated.

Based on Risk

  • 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.

Based on Specialty

  • 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.


 Investors expect what? Always high return on the investment made by them on mutual funds. That can be seen when investors choice mutual funds wisely according to his demands and needs. Also, The professional management, tax deduction, diversification and liquidity are a matter of concern in each mutual fund’s plans. There is various type of mutual fund in India it’s not easy to pick one but definitely it can complete your investment objectives if one is aware of their needs.
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