Types of Mutual Funds

What are the Types of Mutual Funds?

Friends, in our series of Investment Plans Articles, we are here today to discuss Mutual Fund Types. What exactly is a mutual fund? Did we explain this in the previous article? Since the country’s Bank FD Interest Rates have decreased, individuals are willing to invest in mutual funds. But before investing in Mutual Fund Me, you should be aware of the many types of Mutual Funds. What is the Mutual Fund intended for? This article will discuss each and every type of mutual fund. How many different types of Mutual Funds exist? To get knowledge, read this article in its entirety. How many types of mutual funds do you know?

What is a mutual fund?

When multiple individuals contribute small amounts of money to a single Mutual Fund Management Company. Because of this, this fund has reached billions of dollars. According to you, this fund management organization invests money in the stock market. A mutual fund is a pool of funds leased to numerous investors. Your money is returned to you with interest by the Mutual Fund Management Company. A firm authorized to administer mutual fund funds is an asset management company. Mutual Fund Kya Hota Hai In Hindi We provided exhaustive information in our prior article.

There are three types of Mutual Funds according to Assets Class

1) Equity Mutual Fund
2) Debt Mutual Fund
3) Hybrid Mutual Fund

Basically, Mutual Funds are classified according to the assets. This type of Mutual Fund is of three types.

1) Equity Mutual Fund

Equity Mutual Fund
Equity Mutual Fund

Equity Mutual Funds are mutual funds that invest in equity. This is entirely invested in the stock market. These mutual funds also come in numerous varieties:

Small Cap Mutual Fund

When a mutual fund invests in small cap companies, it is a small cap fund. It includes companies with a market cap of Rs 5,000 crore. These companies are in the early stages of development, so the potential for growth is huge. But apart from this, the bankruptcy rate of such companies is very high, so this investment fund is very risky.

Mid Cap Mutual Fund

Mid-cap funds Mutual funds that invest in mid-cap companies are called mid-cap funds. Companies that come under Mid Cap Fund, whose market capitalization is more than 5 thousand crores and less than 1 lakh crores. There is neither much risk nor growth in this mutual fund.

Large Cap Mutual Fund

Funds that invest in large market capitalization companies are called Large Capital Funds. Large market capitalization companies are those with a market capitalization of more than Rs 1 billion. Eg: Reliance, Tata Group, TCS, HDFC Bank.
These big-cap companies are large and long-established and they are also very popular in the market. Even most large-cap companies are among the largest in their industries. There is risk involved in this, but there is also a lot of growth involved.

Sector Fund

This fund is also very risky because your money in this fund completely depends on this sector. If your money is invested in a sector whose sector is not doing well, you may incur losses. Like ICICI Prudential Technology Direct Plan-Growth Mutual Fund.

Diversify Equity Fund

Funds that invest in companies across different sectors and different market capitals. The risk in this fund is very less and your money is invested in diversification.

Dividend Yield Scheme

In this, the company gives a part of its profit to the shareholders of the company and it is called the dividend by the way no company is required to give dividends. A dividend Yield Fund invests in stable, safe, and low-changing companies, and from here Mutual Fund gets a good dividend.

Equity Linked Saving Scheme

This is a tax-saving plan and you cannot invest in this plan for less than 3 years. Your money is kept in ELSS for 3 years. Under this scheme, you get income tax exemption on returns up to 1.5 lakhs under Section 80C.

Thematic Fund

These funds invest in Themes. HDFC Housing Opportunity Fund is a Thematic Fund, which invests in Housing Theme. This mutual fund invests in a cement company, a paint company, a construction company, etc. There are many more examples:- E-Commerce Theme Mutual Funds.

2) Debt Mutual Fund

Debt Mutual Fund
Debt Mutual Fund

The funds that invest in debt instruments such as Deeds, Bonds, and Certificates of Deposit are referred to as Debt Instrument Funds. The government or business borrows money via a debt instrument and then repays it with interest. Compared to stock funds, this investment carries a lower risk and yield. There are four varieties of debt instrument mutual funds:

  • Liquid Scheme
  • Gilt Fund
  • Junk Bond Scheme
  • Fixed Maturity Plans

Liquid Scheme Mutual Fund

Invests in money market instruments of debt funds. Money market instruments are financial instruments through which companies borrow money from investors to make short-term investments. Liquid funds invest in very short-term mutual funds. Eg: Commercial Paper, Certificate Of Deposits, Treasury Bills, Term Deposits

Liquid money is more profitable as compared to savings accounts and the risk is also very less. This money is great for short-term investments. Most importantly, you can withdraw your money from this fund anytime.

Read More: What is Mutual Fund?

Gilt Fund

Those funds are only called Government Securities. Government issues government securities, so there is no risk of default in this. Whether it is loss or profit in the scheme of the fund, you will definitely get returns, because nothing can be more reliable than the government of any country. There are two types of gold funds: short-term and long-term.

Junk Bond Scheme

Investment is made in Corporate Bounds in Junk Bond Schemes. In this, the risk of default is very high and the profitability is also very high.

Fixed Maturity Plans

Banks are like FDs and like FDs are less risky. These mutual funds invest in Bounds for a fixed period of 3-5 years. This work gives a stable return with risk.

3) Hybrid Mutual Fund

Hybrid Mutual Fund
Hybrid Mutual Fund

Numerous mutual funds invest in multiple asset classes. This mutual fund invests in both equities and debt. The name of this Mixed Mutual Fund is Hybrid Fund.

Hybrid Funds come in three varieties:

  • Monthly Income Plan (MIP)
  • Balanced Fund 
  • Arbitrage Fund

Monthly Income Plan

60 to 90% of this fund’s investments are in Debt, while the remainder is in the Share Market. This fund is primarily invested in Debt Instruments, hence it is relatively secure. It provides a monthly income plan in addition to a solid return from Share Market investments.

Balanced Fund

This sort of Mutual Fund invests money in the proportion of 50% Debt and 50% Equity. Consequently, your profit and risk are likewise equal.

Arbitrage Fund

An arbitrage Fund is utilized for investing in a fluctuating market. There is considerable risk involved. More than 65 percent of this fund is invested in stocks. The money you invest is secure, but its returns are unpredictable.


We hope that you have gained a great deal of understanding about Mutual Funds from this essay. In the last article, Mutual Funds were discussed. How to Invest in Mutual Funds? is the subject of the present essay. Mutual Fund Types In Hindi, What are Types of Mutual Funds? Basic information has been provided for all funds, including Small Cap Mutual Funds, Mid Cap Mutual Funds, Large Cap Mutual Funds, Index Funds, Debt Funds, etc. In future articles, we will provide comprehensive information on all Mutual Fund categories. You can share your questions and comments below.

Read More: Advantages And Disadvantages Of Mutual Funds

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