The number of mutual fund accounts in India grew by 17% in 2022 as against 2021. This number indicates the growing popularity of mutual funds among investors. If you are also keen to invest, then you must know about different types of mutual funds.

Here is an overview of different mutual funds you can consider based on different categories:

Category: Investment Objective

Growth Funds

If your investment goal is long-term capital appreciation, then you should invest in growth mutual funds. These funds invest in equity stocks that have good potential for high growth.

Income Funds

Income funds are among the types of funds that invest in debt instruments and fixed-income securities such as bonds. These funds are suitable for people who want consistent income on their investments.

Liquid Funds

You should invest in liquid funds when you want a short-term maturity period of up to 91 days. These funds put your money in money market instruments such as commercial papers, treasury bills, government securities, and certificates of deposits.

Category: Organization Structure

Open Ended Funds

There is no fixed entry or exit time in the open-ended scheme in mutual funds. Hence, they have high liquidity. However, you have to purchase or redeem at the Net Asset Value (NAV) prevailing at that time. 

Closed Ended Funds

These funds have pre-determined maturity tenures during which you have to redeem them. Basically, they have a lock-in period. 

Interval Funds

A combination of open-ended and closed-ended funds, the interval funds have a fixed maturity date. However, you are allowed to trade these funds at specific intervals at the prevailing NAV. Interval funds are a little complex to understand. Hence, it is advisable to consult a mutual fund advisor before you invest.

Category: Asset Class

Equity Funds

These types of mutual fund schemes are quite popular among investors with a high risk-tolerance mindset. If you are comfortable allocating 65-85% of your investment to equity stocks, then you can opt for it. Do note that equity funds are vulnerable to stock market volatility.

Debt Funds

Debt mutual funds are a good option for conservative investors. These funds invest 65-85% of your money in debentures, government bonds and fixed-income assets that provide steady income.

Hybrid Funds

These funds offer the best of both worlds – equity and debt. They are ideal for portfolio diversification.

Category: Others

Thematic Funds

These types of mutual funds in India invest your money in equity funds of companies with a common investment theme like international stocks, infrastructure stocks, commodity stocks, etc. 

Sector Funds

These mutual funds invest in a particular sector like information technology, real estate or pharmaceutical sector.

Conclusion

The biggest advantage of mutual funds is that you can diversify your money conveniently and affordably. However, they are still subject to market risks. Hence, you should not hesitate to seek professional guidance from a mutual funds investment advisor.

Ajmera x-change is a leading mutual fund advisory services provider. You can trust us completely for customised, practical and effective advice as per your investment goals. Get in touch to start your mutual fund investment journey!