The different types of mutual funds in India


mutual funds are classified into different categories based on their asset class, structure, risk, and investment objectives

There is no flexible and easy way to create a diversified investment portfolio than mutual funds

Everybody needs to invest money to fulfill his or her dream in order to have a safe and secure future with the family. Life is not a bed of roses always, and the only way to secure your life is by investing your money properly. Mutual funds are a good investment option for the people as it offers different schemes to fit the tastes and needs of each investor. As a good investor, you must know different types of mutual funds in India to choose the best one that fulfills your financial objectives. Here are the mutual fund types in India to satisfy your investment needs.

Different types of Mutual funds

In India, mutual funds are classified into different categories based on their asset class, structure, risk, and investment objectives. Take a look at the different types of mutual funds in India.

  1. Mutual funds based on Asset class

Based on asset class, mutual funds are classified into:

Equity funds: Also known as stock funds, equity funds mainly investing in stocks. Money pooled from different investors invests in shares of various companies in such funds. The performance of these shares in the stock market determines its returns or losses. Equity funds are suitable for quick growth, but at the same time, the risk of losing money is relatively high in such funds.

Debt funds: Those who opt for debt funds invest their money in various fixed-income securities like securities, bonds, and treasury bills. Such funds have fixed maturity date and fixed interest rate, ideal for passive investors who look for small but steady regular income without many risks.

Money Market funds:  Money market funds are another mutual fund type based on the asset class. People invest in the money market to invest their money in bonds, certificate of deposits, T-bills, and dated securities issued by banks, government, and corporations. It is ideal for those who look for a short-term plan as the risk is relatively less in money market funds.

Hybrid funds: Also known as balanced funds, hybrid funds are a combination of both debt and equity funds. These funds are considered safest against equity funds, favorite among conservative investors.

  1. Based on Structure

Based on structure, mutual funds are classified into:

  • Open-ended funds
  • Closed-ended funds
  • Interval funds

3. Based on Investment Goals:

Mutual funds are classified into different schemes based on their investment goals. They are:

  • Growth funds
  • Income funds
  • Liquid funds
  • Tax-saving funds
  • Aggressive Growth funds
  • Capital Protection Funds
  • Capital Protection Funds
  • Fixed Maturity Funds
  • Pension Funds

4. Based on Risk

Mutual funds are classified into different types based on their risk factors as well. Such funds are:

  • Very Low-risk funds
  • Low-risk funds
  • Medium-risk funds
  • High-risk funds

5. Specialized Mutual funds

In addition to all the above funds, mutual funds are also classified into:

  • Sector funds
  • Funds of funds
  • Index funds
  • Emerging market funds
  • International/Foreign Funds
  • Global Funds
  • Real Estate Funds
  • Commodity-focused stock funds
  • Market Neutral Funds
  • Inverse/Leveraged Funds
  • Asset Allocation Funds
  • Gift Funds
  • Exchange-traded Funds

There is no flexible and easy way to create a diversified investment portfolio than mutual funds. The feature of this investment choice is that investors can find funds that suite their diverse risk appetites. You can make an informed and better investment decision by understanding the various types of mutual funds available in the market.

That’s why Comparte Investment team asks do you have “Nivesh Ki Aadat”.

With this one can say “Mutual Fund Sahi hai”,  so let me do Nivesh