What are the various types of mutual funds?

Mutual Fund plans come in a variety of shapes and sizes to meet the demands of different people. Mutual funds are divided into three categories.



Equity or Growth Funds

·         These mostly invest in stocks or company shares.

·         The fundamental goal is to build wealth or increase capital.

·         They have a larger return potential and are best used for long-term investments.

"Large Cap" funds, for example, invest mostly in corporations that operate large, well-established businesses.

“Mid Cap” funds invest in mid-sized businesses. Funds that invest in medium-sized businesses.

Funds that invest in tiny businesses are known as "small-cap" funds.

Multi-cap funds invest in a mix of large, mid-sized, and small businesses.

Funds that invest in companies that are related to one sort of business are known as "sector" funds. Technology funds, for example, invest solely in technology companies.

"Thematic" funds are those that invest in a specific topic. Infrastructure funds, for example, invest in companies that will profit from the infrastructure sector's growth.

Tax-Saving Funds

·              Funds that invest in income, bonds, or fixed income
· These invest in Fixed Income Securities such as Treasury Bills, Commercial Papers, and Debentures, as well as Bank Certificates of Deposits and Money Market Instruments such as Treasury Bills and Commercial Paper.
·   These are relatively safe investments that can be used to generate income.
·  Liquid Funds, Short Term, Floating Rate, Corporate Debt, Dynamic Bond, Gilt Funds, and so on are examples.

 Hybrid Funds

·         These invest in both equities and fixed income, giving them the best of both worlds in terms of growth potential and income generation.

·     Aggressive Balanced Funds, Conservative Balanced Funds, Pension Plans, Child Plans, and Monthly Income Plans are just a few examples.

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