What are the types of different mutual funds?

Classification of Mutual Funds based on Investment objective:

1. Liquid Funds:

  • Invest in highly liquid money market instruments and debt securities of very short tenure
  • Liquid funds are preferred by investors to park their money for short periods of time typically 1 day to 3 months due to short redemption period of 1 working day

2. Debt Funds:

  • A debt fund is a Mutual Fund scheme which invests in Fixed income instruments, such as Corporate and GOvernment bonds, corporate debt securities and money market instruments etc. that offer capital appreciation.
  • Debt funds are ideal for investors who want regular income, but are risk-averse

3. Equity Funds:

  • An equity fund is Mutual Fund scheme that invests predominantly in Equity stocks
  • In the Indian context, as per SEBI Mutual Fund regulations, an equity Mutual Fund scheme must invest at least 65% of the scheme’s assets in equities and equity related instrument.
  • Aim to provide growth rather than capital appreciation over time

4. Hybrid Funds:

  • Invest in a combination of equity and debt securities.
  • Proportion of equity and debt may vary.
  • Aim to provide for both income and capital appreciation.