What are the different types of Mutual Funds

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finance 629Jun

Equity Mutual Funds

Equity mutual funds as the name suggests are those funds that procure a basket of equity stocks. Holding of particular stocks depends on the type of mutual fund. Within equity stocks there are subcategories like small-cap, mid-cap and large cap stocks, these funds are named according to which stocks the fund would invest in. Funds also name the funds in accordance with the investment approach such as, growth fund, income oriented and value etc. 


Equity linked saving scheme is a type of mutual fund that invests in equity and helps you save income tax. The ELSS mutual fund has a lock-in period of 3 years and provides income tax saving benefits under section 80c of the income tax act. 

Exchange traded Funds (ETF’s)

An ETF is an Exchange Traded Fund, which unlike regular Mutual Funds trades like common stock on a stock exchange. The units of an ETF are listed in stock exchanges and the NAV varies in accordance with market movements. 

Flexi Cap Funds 

Flexi Cap funds are those funds that invest in equities across various market capitalisation spectrum, which are – Large Cap, Mid Cap and Small cap companies. 

Focused Cap Funds

As the name suggests, focused cap funds are those funds that invest in different market cap stocks. However the portfolio of such scheme is restricted only upto 25 -30 stocks. 

Small Cap Funds 

Small-cap mutual funds primarily invest their funds in stocks of the companies with a market capitalization of less than Rs. 5,000 crore. The volatility and risk is typically high in such small cap schemes. 

Mid-cap Funds 

A mid-cap fund is a pooled investment that focuses on companies with a market capitalisation in the mid range of listed stocks. SEBI has specified that companies ranked between 101-250 based on their market capitalisation will be put under the head of mid-cap companies.Mid-cap stocks tend to offer investors greater growth potential than large cap stocks, but with less volatility and risk than small cap stocks.

Debt Funds (Fixed income funds)

Debt funds are mutual fund schemes which invest in fixed income generating securities such as Commercial Papers (CP), Certificate of Deposit (CD), Corporate Bonds, T-Bills, government securities and other money market instruments. Debt funds are of different types like Liquid Funds, Short term funds, Medium term funds, and Long term funds depending on their holding of papers of different maturity periods.

Balanced Fund 

This is a hybrid scheme. A balanced fund is a mutual fund that typically contains a component of both; equity and debt. Balanced funds stick to a rather dedicated asset allocation of equity and debt. Generally equity exposure is in the range of 65%- 70% while balance 35%-30% exposure is in debt.

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