Types of Mutual funds

1.Equity mutual funds: This type of mutual funds invest into equity markets. Equity funds are further classified as

 

  • Diversified or Multi Cap Fund: This type of mutual funds invest across different companies of equity markets irrespective of size of companies.

 

  • Large Cap mutual Funds: This type of funds invest in shares of large companies.

 

  • Mid Cap Funds: This type of funds invest in shares of mid-size companies.

 

  • Small Cap Funds: This type of funds invest in shares of small size companies.

 

  • Sectoral Funds: This type of funds invest in shares of companies belonging to particular sector like banking, pharma, Infrastructure etc.

 

  • Index Funds: This type of funds invest in same pattern as indices like CNX Nifty Index and S&P BSE Sensex. Fund performance is then directly linked to performance of these indices.

 

  •  Tax saving mutual funds or equity linked saving scheme (ELSS): Investment in these funds is exempted from income tax under section 80 C of the Income Tax Act, 1961.Investment in these schemes have lock in period of 3 years.

 

2.Debt funds: This invest in debt / fixed income instruments like corporate bonds, debentures, government securities (GILTS), commercial papers etc.

 

  • Gilt funds: This type of debt mutual funds invest in goverment securities.

 

  • Liquid funds:This type of debt mutual funds invest in highly liquid type of instruments with low maturity.

 

 

3.Balanced Funds:This type of funds invest both in equity and debt instruments.