MID-CAP FUNDS: Mid-Cap Funds focus on medium-sized companies, usually ranked between 101 and 250 by market capitalization. These companies have growth potential and offer a middle ground between large-cap stability and small-cap high growth. They come with moderate risk and potential for significant returns.
LARGE-CAP FUNDS: Large-Cap Funds invest mainly in well-established companies with large market capitalizations, typically those ranked in the top 100. These companies are known for their stability and reliability, offering lower volatility compared to smaller companies. They provide steady growth and are generally less risky.
MULTI-CAP FUNDS: Multicap equity funds put their money into businesses of all types and in all kinds of industries. Large or mid-cap funds can't choose how to split their money between big, medium, and small companies. Because they are so flexible, they can also change the business as the market changes.
SMALL-CAP FUNDS: Small-Cap Funds invest in smaller companies, typically ranked beyond the top 250 by market capitalization. These companies are often in the early stages of growth and offer high potential returns, but with increased volatility and risk. They are suitable for investors seeking high growth potential.
FLEXI-CAP FUNDS: As to SEBI's notice, a Flexi-Cap Fund is a dynamic equity program that is open-ended. It invests in companies that have any market capitalization. in particular, big, middle, and small-cap businesses. The entire assets of the scheme must be allocated at least 65% to equities and equity-related products.
ELSS: Mutual funds that save taxes are called Equity Linked Savings Schemes, or ELSS in India. They combine Section 80C tax deductions with the advantages of equity investing. Long-term investors favor ELSS because of its 3-year lock-in period, which allows for tax savings and the possibility of large gains.
FOCUSED FUND: Focused mutual fund is a type of equity fund that invests only in a limited number of stocks. As per the guidelines of Securities and Exchange Board of India (SEBI), these funds can invest in a maximum of 30 stocks. However, these funds like Multicap mutual funds can invest in any segment in the Market: Large cap, Midcap, Small cap and so on.
LARGE AND MID- CAP FUNDS: Equity funds that invest in the top 200 firms in India are known as large and mid cap mutual funds. These funds bring together India's biggest companies, and mid-sized companies that are challenging those big companies for the top slot.
THEMATIC FUNDS: Equity mutual funds with a theme component are called themed funds. As they choose businesses and industries linked by a concept, these funds have a wider focus than sectoral funds. Cement, power, steel, and other industries are among the sectors that an infrastructure theme fund will invest in.
SECTORAL FUNDS: Sectoral funds are equity funds that invest in businesses in the same industry or sector, such as technology, healthcare, or energy. These funds let investors invest all their money in sector-specific enterprises. These funds aim to capitalize on growth opportunities and trends within that specific sector, providing investors with concentrated exposure and potential high returns aligned with sector performance. However, they also come with higher risk due to their lack of diversification.
AGGRESSIVE MUTUAL FUNDS:In between pure equity and pure debt funds, hybrid funds operate. A hybrid plan that takes advantage of investment opportunities in both asset classes can be made in a variety of ways. In order to meet their goals, the majority of hybrid funds adjust the portion of money allocated to equity. However, SEBI established a new hybrid fund category called Aggressive Hybrid Fund in order to clearly distinguish between balanced hybrid funds with up to 60% exposure to equities and those with a larger exposure.
ARBITRAGE FUNDS:Arbitrage involves the simultaneous purchase and sale transactions of an asset in two different markets (i.e., cash and futures markets) to profit from inefficiencies in the prices across these markets. And the funds that work on this principle are called Arbitrage funds.
BALANCED FUNDS:Balanced funds hold stocks, bonds, and sometimes money markets. These hybrid funds usually stick to a relatively stable mix of equities and bonds that reflects either a moderate equity or conservative fixed-income bias. These funds combine equity and debt, providing investors the best of both worlds. Equities boost balanced funds, while debt protects them from downturns. Balanced funds are suited for medium-term investors seeking safety, income, and modest capital appreciation. A minimum and maximum investment in each asset class is normally determined for this form of mutual fund.
CONSERVATIVE FUNDS:Conservative Hybrid Funds are hybrid mutual funds that allocate between 75% and 90% of their entire assets to debt instruments and the remaining 10% to 25% to equities. With a small portion allocated to equities, conservative hybrid funds generally invest in FD-like securities. These funds aim to minimize risk while offering higher returns than bank fixed deposits.
LIQUID FUNDS:In liquid funds, short-term assets like treasury bills, government securities, repos, certificates of deposit, or commercial paper are invested in as debt. According to SEBI rules, liquid funds can only invest in debt and money market securities with 91-day maturities. Liquid funds' returns depend on the market price of their securities. Since short-term securities prices are less volatile than long-term bonds, liquid funds offer more steady returns than other debt funds.
LOW DURATION FUNDS:Low Duration Mutual Funds are one of the Debt funds. These Funds are mutual funds that invest primarily in short-term debt securities with relatively short maturities, typically up to 1 year. They aim to minimize interest rate risk and offer more stable returns compared to funds with longer durations. These funds are ideal for investors seeking short-term investments with lower volatility and moderate income, often used for managing liquidity or preserving capital in a low-interest-rate environment.
SHORT DURATION FUNDS:Short-term funds are fixed-income funds that provide loans to corporations for a duration of 1 to 3 years. These funds primarily invest in high-quality companies that have a demonstrated history of timely loan repayment and sufficient cash flow from their business operations to support their borrowing.
MEIDUM DURATION FUNDS:Medium duration funds are debt funds that give money to good businesses for at least three years. Because the loan terms are longer, the profits on these funds are affected by changes in interest rates that companies borrow during good and bad economic cycles.
OVERNIGHT FUNDS:Open-ended debt funds invest in overnight assets or securities with a one-day maturity. Overnight fund is the new debt fund category introduced as part of SEBI’s (Securities and Exchange Board of India) mutual fund reclassification exercise in 2018. It buys overnight reverse repos, CBLOs, and other next-day debt products. Since investments mature the next day, the fund has no credit risk. These funds are cheaper than other debt funds since they don't actively manage their debt.
CHIILDREN FUNDS:Children's fund is a mutual fund with child-focused aims and terms. These are popular investments that address rising education and other costs. Most kid mutual fund plans invest in equity and debt. Depending on risk appetite and time horizon, investors can invest more in debt or equities. These mutual funds have a 5-year lock-in but can be extended until the child turns 18. For most people, children's mutual funds are good long-term investments because investors can't withdraw money until the policy matures. It also reduces market volatility for investors. More returns are earned by holding the investment rather than selling when the market falls.
RETIREMENT FUNDS:For the purpose of saving for retirement, investors have a number of different alternatives available to them, such as government pension schemes, life insurance policies, and so on. As an alternative to the conventional methods, mutual funds have started to address the significance of having a surplus during retirement. By investing in a pension or a retirement mutual fund, investors can ensure that their retirement plans are structured in such a way that their requirements are satisfied once they have retired from their professional careers.