Types of Mutual Funds in India

Mutual Funds

Mutual funds have recently gained a lot of attention as an effective investment channel. Your investment goal will decide which type of fund to utilize for your needs.

Types of Mutual Funds in India

Open-Ended Funds: 

These funds have units available for purchase or redemption at any time of the year.  In effect, these funds will let investors invest heavily for as long as they like. The amount that may be invested in the fund is unlimited. They also likely to be actively managed, which means that a fund manager selects the places for the placement of investments.

Due to the active management of these products, fees can be greater than for passively managed funds. Because of the fact that they are not limited to any particular maturity dates, they are the perfect investment for individuals who want both investment and flexibility. Therefore, investors have the liquidity they need because they may withdraw their money at any time.

Types of Mutual Funds in India

Close-Ended Funds: 

These are funds in which units can only be purchased during the initial offer period. At a predetermined maturity date, units may be redeemed. These plans are frequently listed for trading on a stock market to offer liquidity. 

In contrary to open ended mutual funds, the units or stocks must be sold through the stock market at the current price in order to be sold after already being bought.

Interval Funds: 

These funds combine the advantages of both open-ended and closed-ended funds because they can be opened for share buybacks at various points over the fund's tenure. During certain times, the fund management company makes an offer to repurchase units from existing unitholders. Shares may well be sold by unitholders in favour of the fund if they so choose.

Liquid funds: 

These schemes invest money largely in short- or extremely short-term products, such as T-Bills, CPs, etc., in order to provide liquidity. They are thought to be low risk assets with moderate returns that are best suited for investors with short investments.

Balanced funds:

These mutual fund schemes, as their title suggests, invest equally in equities and debt. Based on market risks, the allocation may continue to change. They are better suited for investors seeking a balance between moderate returns and relatively low risk.

Fixed income or debt mutual funds:

These funds invest the majority of its capital in debt-based fixed income securities, such as bonds, debentures, and other liabilities that bear fixed dividends. They are ideal for investors aiming to generate a regular income with a low-risk appetite because they feature a low-risk, low-return perspective. They are, however, exposed to credit risk.



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Location: India

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