InvestorQ : What are the types of Mutual funds ?
Ishita Jain made post

What are the types of Mutual funds ?

Answer
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Shreya Karn answered.
2 years ago


Equity Funds

These funds have most of its investment in equity shares. The principal objective of equity fund is to tap the capital appreciation of the companies. These are highly risk funds as they are directly linked to the stock markets. It is best suited for long-term investors who are looking up for growth. Equity funds is further bifurcated into Diversified funds, Sector specific funds, and Index based funds.

  1. Diversified Funds invest in different companies ranging from large-cap, to mid-cap, to small cap thus; diversifying the return on a company of every growth phase.
  2. Sector Funds invest in companies only to a sector-specific, like only pharmaceutical sector, FMCG, Infrastructure, etc.
  3. Index Funds invest in those companies that form the part of Index of the stock exchange.

Tax Saving Funds

These funds majorly investment in the equity market as they are offer tax benefits to investors. Under Section 80 C of the Income Tax Act, one can claim the deduction if invested in tax-saving funds. They are best suited for employees and taxpayers to get a tax rebate and also invest for long-term growth.

Debt Fund

These Funds majorly invest in fixed income securities like corporate bonds, debentures, government securities, etc. Investors that are risk-averse and are looking for fixed periodic investment in long-term should invest in Debt Funds.

Balanced Fund

These funds invest in both, equity shares and debt. It has growth of equity along with steady income of debt funds. This is hybrid fund is suitable for moderate risk-taker investor.