Types of Mutual Funds

In India, mutual fund schemes are classified across the following groups:

Equity Schemes

Equity mutual funds invest predominantly in equities. They usually deliver higher returns than debts funds but they also have a high element of risk. Equity funds can be further classified under largecap, midcap, smallcap, multicap, diversified, thematic and ELSS.

Debt Schemes

Debt mutual funds invest in corporate and government bonds, corporate debt securities and money market instruments. They are also known as Income Funds or Bond Funds. These funds are less riskier than equity funds, offer regular income and are recommended to investors who are risk averse.

Hybrid Schemes

These schemes invest in two or more asset categories so that the investor can benefit from both. These kind of funds help you get a balanced portfolio with a mix of equity and debt instruments. It aims for the potential growth of equities and also provides stability to your portfolio.

Solution Oriented Schemes

These funds are important for long-term goal planning, particularly for retirement planning and a children’s education with a minimum lock-in period of 5 years.

Other Schemes

Schemes under this category include Index Funds/ETFs which replicate a particular index or FoFs where the minimum investment in the underlying fund is 95% of total assets.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.