Types of Mutual Fund in India- Smart Working

Types of Mutual Fund in India And It's Benefits:

If you want to start investing in Mutual fund , and you don't known which fund is better for you and what are the types of mutual fund in India.

So read this article I will give you full update about type of mutual fund and it's benefits.

Mutual fund is one of the best way for investment , it can give you return according to your need ,

There are many type of fund available in Indian market .

Types of mutual fund in India
Types of mutual fund in India 

Open-ended Mutual funds :-

    Open-ended mutual funds allow to the Invester to invest addition unit and redeem at current price of NAV . It does not have any fix maturity time. Value of capital is not fix it's depend on current NAV .
Open-ended funds are mainly invest in equity market, debt , index or both mix in equity and debt.


Close-ended Mutual Fund :-

   
   These funds are for a fixed period of time, you can invest only at the time of NFO (New Fund Offer ) , the unit allotted are redeemed when term is over.

In between , If Invester wants to exit their investment they can sell units to other Investers on stock exchange.

The unit capital does not change over the time of the fund

Interval Fund :-

Interval Funds are close-ended funds which become open-ended for a specific time period . 

During this time people can buy or sell the unit like a open-ended funds. 

The time period is minimum 2 days and there is must be minimum time of 14 days . 

These fund is also have to listed on  stock exchange. 


Equity Fund :- 

       Equity funds is invest only in equity market or equity related instrument .

There is high risk and high return in equity funds, it's totally depend on the performance of stock market. 

Risk and return is similar in equity funds 
  
This funds are categories on the basis of strategy . 

 A.  Passive &Active Funds :-

Passive funds invest only in stock who represent the index. There is no selection of stocks . The return is totally based on index. 

Active funds select stock for the portfolio that can give you higher return as compare to the index. 

That fund can beat the index return and can give higher return. 


B.  Diversified fund:-

   This funds are invest in all Segment , sector,  field and size of companies. 
Diversified funds invest in deffirant different stock so there is lower risk as compare to the other fund . 

In this fund there is also low return. 

C . Based on Market capitalisation :-

On the basis of market capitalization, equity shares can be divided into large form-
Cap, Mid Cap and Small Cap Stock

1. Small Cap :   Small Cap fund invest in small capilazation company. Stock moment is very fast in this stock so return is to high then other fund. 

2. Mid Cap :-     Mid Cap fund invest in mid cap stock that have some potential for growth and high return . 

3. Large cap :-   Large Cap fund invest only in large cap stock they have good market capitalization , they stock are stable in return and performance

D .  ELSS (Equity linked Saving Scheme ) :- Elss funds give tax benefit to the Invester under income tax 80c limit up to 150000 . This fund have to invest 80% part in equity . An ElSS fund is opened fund which is for minimum 3 years of locking period. 

E .  Based on theme :-

This  types of fund invest in based on theme , multiple sector and stock . Theme based fund have to invest althest 80% portfolio in equity and equity related instrument.

Debt Funds :- 

Debt fund invest in debt instruments such like government bond , corporate bond and money market security . 

Government bonds does not have any credit risk, they are paying low interest as compare to other bonds for same tenure. 

Corporate bond have credit risk also default risk and they are paying high intresed on bonds. 
Debt fund have 2 types in Mutual Fund . 


1. Short term Debts Funds :-

Short term debt fund invest in those type of bond who have maturity less then 1 year . 
The main aim is to get high return in shorter period of time with low credit risk . 

There are 4 type of short term is given below . 

A. Over Night Fund :- This fund invest in those security who have 1 day maturity . 

B . Liquid Fund :- Liquid Funds have Mutuality is less then 91 Days bonds. 

C . Ultra Short :- Invest in Debt and money Instrument for the maturity of 3 month to 6 month . 

D .  Money Market Fund :-  Money Market Fund invest this fund having maturity is up to 1 year . 

Long term Debt Fund :- 

Long term Debt Fund is for the both capital appreciation and High income . 

This fund have maturity is up to 3 year to 15 year . The value of capital is change every time,  if interest rate change. 

Long term is risky as compare to the short term fund . In long term the credit risk and default risk is high . 

Long term fund invest in money instruments and long bonds . 

 Hybrid Fund :- 

Hybrid Funds is combination of equity and Debt Market . This invest in both equity and debt bond . 


The Risk And return in hybrid fund is depend on the Investment objective .

Hybrid mutual funds allow to the Invester to invest in equity and debt market.

Asset allocation have to mange by managers , a higher allocation in equity Market increase the risk of the fund.


Other Funds :-

There is also have many other fund apart from this like (fof) and ETFs and many other . 

ETFs( Exchange Traded Funds ) :-

ETFs are investment only those stock who is represent the index . The risk and return is similar to the index . 

At least 95% stock related to the index  security . ETFs is first offer in new fund offer units are credited in demat Invester account . 


Fund Of Fund :-

Fund of funds are invest in other mutual fund according to the investment objective. 

It's does not hold any security it is only hold unit of other mutual fund . 

Gold ETFs :-

This only invest in gold or gold related stock ,  we can hold gold in the form of unit.

Each unit of gold represent one gram of gold . This gold are 99% sure . 


Real Estate Funds :-   

This is invest in real state properties and real estate stock . The risk is high in this fund.

They also in the physical form or in the unit . At least 75 % fund invest in physical form and rest they can invest in other.


This are main types of mutual fund in India. That will help you to understand structure of M. F. And according that any new people can invest in Mutual fund .


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