Types of Mutual Funds : Mutual Fund

Types of Mutual Funds

Mutual fund are very popular concept of investing. So before we discuss you must know what is mutual fund? Mutual Funds is the way to collect funds from the public and invest the same in different sectors as diversified investment. Here we will discuss about mutual funds and it’s types. To know more about mutual fund visit here.

Types of Mutual Funds

Here are some types of mutual funds to know;

01. Equity Mutual Funds

As the name suggests, in this type of mutual fund, fund managers collect funds and invest in equities or you can say stocks. In this category the amount is invested in large companies as well as medium and small companies. On this basis the fund is decided as large cap, midcap and small cap respectively. This holds large share of mutual fund market. Since funds are purely invested in equities so are high risk weighted investments.

02. Fixed Income or Debt Funds

Investment in this type of mutual fund provides some fixed returns. This type of fund holds very limited risk because money is invested in government bonds, corporate bonds and other debt instruments.

03. Index Funds

In index funds is also one of the popular mutual funds. In this type of funds money is invested in indices like nifty, bank nifty in India and in Dow Jones Industrial Average (DJIA) in USA. This type of fund is costlier and provides slow returns.

04. Balanced Funds

In this fund the portfolio is divided into different funds like equity and debt funds and also in large-mid-small cap funds. So this becomes less risky to invest. This is very popular fund in public who are not willing to bear high risk and market fluctuations.

05. Money Market Funds or Liquid Funds

This is also one of the fund which is low risk weighted. In money market funds, funds are pooled in various short term money market instruments. These instruments can be treasury bills or any other short term debt instruments. Money market funds are also famous for giving risk free returns for many years. These funds are also called liquid funds because it provides liquidity of money market. 

06. Income Funds

Income funds are known for giving regular fixed income to its investors. This fund involves Government corporate Bonds those are risk free to invest. People also buy this who wishes regular income as pension after retirement. Because in this fund there is fixed amount received as returns so its called income fund.

07. International Mutual Funds

In this category of mutual fund, funds are invested in overall world market including the domestic market. Generally people are not aware about the market conditions and particularly global market. In this case fund hoses collect money from the public who are willing to invest in global market and invest in leading sectors all over the world. This is more fluctuating in nature so needs much expertise to predict the market move as per the international political, social, and economical happenings.

08. Exchange Traded Funds (ETFs)

Exchange traded funds are those with some added value. These funds can be traded over the stock exchanges likewise stocks. For trading the fund on the exchange the investors can take margins, can short selling can trade in the same way as stocks. As ETFs provides more liquidity so are popular among the investors. for more information you can visit.

09. Gilt Mutual Funds

This type of fund is actually invested in government securities for long term. Due to this feature these are called risk free and perfect for those who don’t want to take risk on their capital amount.

10. Specialty fund

These types of funds are targeted fund to some specific criterion. In other words these can be invested in some defined category of sector. For instance targeted investing particularly in commodities or real estate or energy sectors can be in the sector specific only.

11. Tax Saving Mutual Funds

Tax Saving Mutual Funds are done to save taxes on income but here investment is done for some specific period of time. There lock in period for this fund for three years. Moreover 80 percent of the fund in this category is invested in equities.

Conclusion

In discussions you can understand the various types of investment options opportunities. You can choose what best suites to your requirements. While investing in any of these types all scheme related documents must be read carefully to avoid any adverse condition. Instead of diversification of risks mutual funds also have the feature of market fluctuations. So with all these points analyze and decide your investing. Happy Investing!!!

FAQ

01. What is Mutual Fund?

Mutual Fund is the way to collect funds from the public and invest the same in different sectors as diversified investment.

02. Equity Mutual Fund?

In Equity mutual funds, fund managers collect funds and invest in equities or you can say stocks so its called equity mutual fund.

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3 thoughts on “Types of Mutual Funds : Mutual Fund”

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