Types of Mutual Funds in India

Getting a handle on what's under the hood helps you become a better investor and put together a more successful portfolio. To do this one must know the different types of funds that cater to investor needs, whatever the age, financial position, risk tolerance and return expectations. The mutual fund schemes can be classified according to both their investment objective (like income, growth, tax saving) as well as the number of units (if these are unlimited then the fund is an open-ended one while if there are limited units qthen the fund is close-ended).

This section provides descriptions of the characteristics -- such as investment objective and potential for volatility of your investment -- of various categories of funds. These descriptions are organized by the type of securities purchased by each fund: equities, fixed-income, money market instruments, or some combination of these.

Classification according to investment objectives

Mutual funds can be further classified based on their specific investment objective such as growth of capital, safety of principal, current income or tax-exempt income.

In general mutual funds fall into three general categories:

Equity Funds are those that invest in shares or equity of companies.
Fixed-Income Funds invest in government or corporate securities that offer fixed rates of return are
While funds that invest in a combination of both stocks and bonds are called Balanced Funds.

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