Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
Types of Mutual Funds: In our previous article we have studied details about what are mutual funds, advantages to invest in mutual funds etc. Now in this article we will know more about types of mutual funds.
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Risk is present in every investment but when we have proper knowledge then it is possible to minimize risk and earn income from it. So after knowing about different types of mutual funds it is possible to choose the right fund as per need. This will help every investor to fulfill short term and long term goal.
Mutual funds are of different types based on various characteristics like asset class, investment goals and risk.
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
Table of Contents
Types of Mutual Funds:
Mutual funds Based on Asset Class are:
- Equity Funds
- Debt Funds
- Money Market Funds
- Hybrid Funds
Mutual funds Based on Investment Goal Class are:
- Growth Funds
- Income Funds
- Liquid Funds
- Tax-Saving Funds
- Aggressive Growth Funds
- Capital Protection Funds
- Fixed Maturity Funds
- Pension Funds
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
Mutual funds Based on Structure are:
- Open-ended funds
- Closed-ended funds
- Interval funds
Mutual funds Based on Risk are:
- Very Low-Risk Funds
- Low-Risk Funds
- Medium-risk Funds
- High-Risk Funds
Mutual funds Based on specific industries are:
- Sector Funds
- Index Funds
- Funds of 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
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
Now let’s check in Detail:
What are Equity Funds?
These funds are directly related with stocks and hence the risk is higher in comparison to other funds. The return on these funds depends solely upon the performance of stocks.
What are Debt Funds?
The investments of debt funds are in bonds, securities and treasury bills from where fixed return is possible and so are secure in comparison to to other funds.
These funds are very good for those who want a regular income wit minimum risk.
Here one can invest in Gilt Funds, Liquid Funds, Fixed Maturity Plans, Short-Term Plans, Long-Term Bonds and Monthly Income Plans.
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
What are Money Market Funds?:
These funds are run by government in association with banks, financial institutions and other corporations. These are short term plans upto 13 months.
T-bills, dated securities, Bonds and certificates of deposits come under this. The fund manager manages the funds and disburses regular dividends in return.
What are Hybrid Funds?:
These are balanced funds and are having combination of both bonds and stocks. These funds are actually having the combination of equity (60%) and debt funds.
Hybrid funds are good for those investors who want to take benefits of both equity and debt funds.
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What are Growth Funds?:
Growth funds are good for those who want to invest in growing sectors. Risk is higher and return is also higher in these funds.
What are Income Funds?
These funds invest money in a mix of bonds, certificate of deposits and securities among others. If anyone want good return in 2 or 3 years then these funds are better.
What are Liquid Funds?:
One can invest maximum Rs 10 lakh in these funds. upto 91 days. The NAV of liquid funds is calculated for 365 days (including Sundays) while for others, only business days are considered.
These funds are also belonging to the debt fund category.
What are Tax-Saving Funds?These are called Equity Linked Saving Scheme(ELSS) with the lock-in period of 3 years. These funds are very good for those who want to save tax every year.The return is also good in these funds.
What are Aggressive Growth Funds?:
These are highly volatile funds and so returns are also higher but very risky. Those whose aim is to earn money with high risk can enter in this segment.
What are Capital Protection Funds?
If your aim is of safe investment then these funds are good. returns are no very high but 12% is expected per year. Here the money is invested in bonds or Certificates of Deposits with equities. The returns of these funds are taxable.
What are Fixed Maturity Funds(FMP)?
These funds works like Fixed deposits and we can invest in for 1 month to 5 years.
The money is invested in bonds, securities, money market etc.
What are Pension Funds?:
These are very helpful for people who want to secure their financial status in old age. One can start pension from early age so as to get a fix return after a particular age.
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
What are Open-Ended Funds?
There is no lock-in period in these funds and so entry an exit is easy. Investor can get return as per Net Asset Value(NAV) at the time of exit.
What are Closed-Ended Funds?
A closed-end mutual fund is an investment vehicle fund that raises capital by issuing a fixed number of shares at its inception, and then invests that capital in financial assets such as stocks and bonds.
What are Interval Funds?
Interval funds have traits of both open-ended and closed-ended funds. These funds are open for purchase or redemption only during specific intervals. If anyone want to invest lump sum amount for short term then this fund is good.
What are Sector Funds?
These are related with any specific sectors like as IT sector, pharma sector, and banking sector. If any investor want to enter in any specific sector fund then it is possible through these funds. This is helpful for those who predict that any specific sector will grow in coming years.
What are Funds of Funds(FoF)?
These funds are also called “multi-manager mutual funds” and in this investments are done in the units of another Mutual Fund scheme.
FOF is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities.
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
What are Real Estate Funds?
These funds invest in securities of companies from the real estate sector. Real estate companies get money from these funds. When sector grow then the investors get good return.
What are Index Funds?
in this mutual fund money is put in an index not on specific stock. These funds are not popular in India.
What are International/ Foreign Funds?
If anyone want to invest in Indian stock as well as in foreign stock then these funds are better option.
What are Global Funds?
In this the money is invested in markets worldwide including investment in home country.
Global funds can be quite risky to owing to different policies, market and currency variations, though it does work as a break against inflation and long-term returns have been historically high.
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
FAQs (Frequently asked Questions):
What is asset management company(AMC)?
When we want to buy mutual funds then it is necessary to take the help of AMC.This is actually mediator between mutual funds companies and investors.
What is the best time to start mutual funds investments?
Anyone can start from anywhere a any time.
Is mutual fund risk free?
No! Mutual funds are not risk free, there are different types of mutual funds and risk also vary as per funds. Some funds are very risky and some are less risky.
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Conclusion:
Mutual funds are good for those who don’t want to make research on companies. These are less risky in comparison to enter directly in share trading. But before investing do read the terms and conditions minutely.
There are different types of Mutual funds some are less risky and some are very risky, some are for long term investment and some are for short term goal. So choose as per your need and fund availability.
This article in money making tips free is for educational purposes and not to be treated as personal advice. Mutual fund investments are subject to market risks, read all scheme related documents carefully.
Types of mutual funds, which fund is best for whom 2024, informative article on mutual funds.
