types of mutual funds in india

Types of mutual funds in india?

There is a different companies who provide different schemes of mutual funds in India, which is categorized on the basis of investment objective, asset class, equities and structure.

1.types of mutual funds based on asset:

a.equity funds:

Equity funds are invested in equity stock or shares of  companies. Depending on the scheme objective,investment could provide a higher result, that’s the reason they are considered as high-risk funds.

b.Debt Funds:

Debts Funds are invested in the debt securities like government bonds, company debentures, and fixed income assets. As they provide fixed returns, they are known to be a safe investment instrument.Debts securities/funds are subject to lower risk and fully secured beacause goverment bonds/securities are fully secured.

c.Money Market Funds:

Money Market Funds are invested in liquid instruments, such as Commercial papres, tressury-Bills like goverment tressury bills,commercial papers of companies(e.g.public and private). They are considered to be safe investment option, as you get an immediate yet moderate return on your investment. They are a perfect option for investors who want to invest their excess funds.

d.Hybrid or Balanced Funds:

Hybrid or Balanced Funds is mix of equity fund and debt fund.The debt investments ensure a basic interest income,which the fund manager hopes to top up with capital gains on the equity portfolio.Hybrid or Balanced Funds is a mixture of stock and bonds schemes.The golden balance is 50:50 ratio between equity debts.Balanced funds/schemes of indian mutual funds tend to have at least 65% equity subjection     

e.Sector Funds:

Sector funds, investment is a mix of equities that are recall across different sectors of the market. Sector Funds,on the other hands,are expected to invest in only on the specific sector/market.For instence, infrastructure fund investors make investments restricted to infrastructure companies or investment instruments offered by the infrastructure companies. Returns on an investment are directly proportionate to the performance of that particular sector. The risk factor associated with these schemes varies sector to sector.In india, on account of a mix of legal frameworks.the recent SEBI measures should address these issues.     

f.Index Funds:

These funds are investment instruments that represent specific index on the exchange in order to replicates the returns and the movement of the index, viz. purchasing shares from the BSE Sensex.SEBI insists that 95% of the total assests should be in such replicating investment for index funds and  exchange trade funds(ETFs).