Sign In  |  Register  |  About Sunnyvale  |  Contact Us

Sunnyvale, CA
September 01, 2020 10:10am
7-Day Forecast | Traffic
  • Search Hotels in Sunnyvale

  • CHECK-IN:
  • CHECK-OUT:
  • ROOMS:

Different Types of Mutual Funds in India

Do you have a mutual fund investment? Or are you thinking about it? Either that, don’t you feel that the mutual fund market is growing bigger than ever? We can see so many AMCs on the big screen; we can see fund managers become celebrities. Most importantly, you can see everyone investing in mutual funds, beginning from students to older people. What makes mutual funds so desirable, right? The answer to this might be very simple, but that is the truth.

Mutual funds hold options and variety for all different kinds of investors. If you are someone who wants to invest for the short term, you’ve got it. If you are someone who wants to liquidate easily, you’ve got it. If you are someone who does not want to take the risk, you have got that too.

So, what are these types of mutual funds? Let’s find out.

Types of Mutual Funds

1. a) Based on Asset Class

  • Equity funds are mutual fund investments that invest in company equity stocks/shares. These are high-risk funds, but they also generate significant rewards. Specialty funds such as infrastructure, fast-moving consumer products, and banking are examples of equity funds. They are market-related and likely to fluctuate.
  • Money market funds invest in liquid assets. Money markets, often known as cash markets, involve hazards such as interest risk, reinvestment risk, and credit risk.
  • Debt funds are funds that invest in debt securities. They are regarded as safe investments with fixed returns. These funds do not deduct tax at source; thus, if the earnings from the investment exceed Rs. 10,000, the investor must pay the tax.
  • Balanced or hybrid funds invest in a diverse range of asset classes. In some circumstances, the proportion of equity is greater than the proportion of debt, whereas, in others, the reverse is true. This method balances risk and return. Franklin India Balanced Fund-DP (G) is an example of a hybrid fund because it invests 65% to 80% of its assets in equities and the balance 20% to 35% in the debt market. This is because debt markets are less risky than stock markets.

2. b) Based on the Structure

  • Open-Ended Funds are funds in which units can be purchased or redeemed at any time during the year. All acquisitions and redemptions of these fund units are made at the current NAVs. Essentially, these funds allow investors to invest for as long as they wish. There are no limits on the sum of money that can be invested in the fund. They are also typically actively managed, which implies that a fund manager selects where investments will be placed. Because of the active management, these funds may charge a greater fee than passively managed funds. Since they are not tied to any set maturity time, they are an excellent investment for those seeking both investment and liquidity. This implies that investors can withdraw their cash whenever they desire, providing them with the liquidity they require.
  • Closed-End Funds are funds with units that can only be purchased during the first offer period. Units are redeemable at a predetermined maturity date. These schemes are frequently listed for trading on a stock exchange to offer liquidity. Unlike open-ended mutual funds, once the units or stocks are purchased, they cannot be returned to the mutual fund; instead, they must be sold on the stock market at the current share price.
  • Interval Funds are funds that combine the characteristics of open-ended and closed-ended funds by allowing for the buyback of shares at certain periods throughout the fund’s tenure. During these intervals, the fund management business offers to repurchase units from existing unitholders. If unitholders so desire, they might sell their shares in favor of the fund.

3. c) Speciality Based

  • Sector Funds are funds that invest in a certain market sector, such as real estate. Infrastructure funds invest exclusively in infrastructure-related instruments or enterprises. The performance of the chosen sector determines the returns. The risk associated with these schemes is determined by the sector. 
  • Index funds are funds that invest in products that represent a specific index on an exchange in order to match the index’s movement and returns, such as purchasing BSE Sensex shares.
  • Fund of funds are mutual funds that invest in other funds, and their returns are determined by the success of the target fund. These funds are also known as multi-manager funds. These investments are relatively safe since the funds in which investors invest hold other funds beneath them, effectively compensating for risk from any one fund.
  • Global funds are funds in which the fund’s investment can be in any company in the world. These differ from international/foreign funds in that investments can be made in the investor’s home country.
  • Real estate funds are funds that invest in companies involved in the real estate industry. These funds could be used to invest in realtors, builders, property management organizations, and even credit companies. Real estate investments can be undertaken at any level, including projects that are in the planning stage, half constructed, and fully completed.
  • Commodity-oriented stock funds do not invest in commodities directly. They invest in companies involved in the commodities market, such as mining corporations or commodity producers. Because of their connection to the commodity, these funds can sometimes behave similarly to the commodity.
  • Emerging market funds are funds that invest in developing countries with promising future possibilities. They do carry additional risks as a result of the country’s volatile political and economic realities.
  • International funds, often known as foreign funds, invest in businesses located in various parts of the world. Similar businesses could also be found in developing countries. The only companies that will not be invested in are those in the investor’s home country.
  • Inverse/leveraged funds are funds that function differently from standard mutual funds. When the markets fall, these funds earn money, and when the markets rise, these funds lose money. They are normally intended solely for people who are willing to face enormous losses while also providing massive rewards because of the higher risk they carry.
  • Funds for asset allocation is available in two varieties: target date funds and target allocation funds. Portfolio managers in these funds can change the allocated assets to achieve results. These funds divide the invested funds and invest them in a variety of products such as bonds and stock.
  • Market-neutral funds are named market neutral since they do not directly invest in the markets. They invest in treasury bills, ETFs, and equities with the goal of achieving a consistent and consistent gain.
  • Gilt Funds invest in government assets over the long term. They are almost risk-free because they are invested in government securities and can be an excellent investment for individuals who do not wish to accept risks.
  • Exchange-traded funds are funds that are traded on stock exchanges and are a combination of open and closed-ended mutual funds. These funds are not actively managed; rather, they are passively managed and can provide a lot of liquidity. Because they are controlled passively, they have lower service charges (entry/exit load) connected with them.

4. d) Risk-Based

  • Low-risk mutual funds are mutual funds in which investors do not wish to incur a risk with their money. In such circumstances, investments are made in locations such as the debt market and are often long-term investments. Because they are low-risk, the returns on these investments are also low. Gilt funds, which invest in government securities, are an example of a low-risk fund.
  • Medium-risk investments are investments that pose a medium level of risk to the investor. They are perfect for investors who are willing to incur some risk in exchange for bigger profits. These funds can be utilized as an investment to accumulate wealth over time.
  • High-risk mutual funds are appropriate for those who are willing to take larger chances with their money in order to develop their wealth. Inverse mutual funds are one type of high-risk fund. Even if the risks are considerable with these funds, the returns are larger.

5. e) Based on Objective

  • Growth funds are invested mostly in equity stocks in these schemes with the goal of capital appreciation. These are considered hazardous funds that are best suited for long-term investors. Because they are hazardous funds, they are also appropriate for investors seeking bigger returns on their investments.
  • Liquid funds invest money largely in short-term or extremely short-term products, such as T-Bills, CPs, and so on, with the goal of providing liquidity. They are thought to have low risk with moderate returns, making them excellent for investors with short investment horizons.
  • In Income funds money is invested primarily in fixed-income instruments such as bonds, debentures, and so on, with the goal of providing the investors with capital protection and regular income.
  • Tax-Exempt Securities are funds that invest largely in equity securities. Investments in these funds are deductible under the Income Tax Act. They are considered high-risk, but they also provide high profits if the fund performs well.
  • Capital Protection Funds are funds in which funds are invested in both fixed-income instruments and equity markets. This is done to safeguard the principal that has been invested.
  • Fixed Maturity Funds are those in which the assets are invested in debt and money market instruments with maturities that are either the same as or earlier than the funds.
  • Pension Funds are mutual funds that are invested in for the long term. They are generally intended to give consistent returns around the time the investor is ready to retire. Investments in such a fund may be split between stocks and debt markets, with equities acting as the riskier component of the investment, offering larger returns and debt markets balancing the risk and delivering lower but consistent returns. These funds’ returns can be taken as lump amounts, as a pension, or as a combination of the two.

Conclusion

From this long list of kinds of mutual funds in the market today, you can make sure that your type is there too. So, what is the wait for? Go ahead and start investing without doubts.

Read more investing news on PressReach.com.Subscribe to the PressReach RSS feeds:

Follow PressReach on Twitter
Follow PressReach on TikTok
Follow PressReach on Instagram
Subscribe to us on Youtube

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
 
 
Copyright © 2010-2020 Sunnyvale.com & California Media Partners, LLC. All rights reserved.