These funds can predominently invest in equity asset class. This class is generally known for its un–precedent behaviour and consider risker than others. However, this class is more rewarding one if you can invest for longer period of time. The capital market swing in either direction due to many factors such as political environment or world's economic scenario. These are divided into four categories:
In this category, mutual fund invest only in top 100 companies in terms of market capitalization. These funds can invest minimum upto 65% of their total corpus in large cap companies. These funds are more stable and little bit less risky than mid-cap/small-cap funds.
These type of funds invest in mid-cap companies. These funds have an exposure of about 65% in mid-cap category stocks. Mid-cap stocks have the pontetial to give higher return compared to large cap but they are prone to higher risk as well. These schemes are suitable for longer time atleast for 10 years.
These types of funds invest in smaller companies. These schemes are very volatile and must be careful while selecting them. Companies ranking from 251st onwards, considered as a small–cap companies. Although, these funds have potential to generate higher returns on one hand and risky on the other.
Multi–cap funds can invest in any of the scheme discribe above. The allocation to Large–cap, mid-cap, and small–cap can vary from scheme to scheme. Generally, they have an exposure of around 65%-70%, 25-20% and rest of corpus respectively.
These are designed for those who want to save tax u/s 80C of Income–Tax Act, 1961 on one hand and also want to create wealth by investing in stock market. These schemes have locking period for 3 years.
Equity Income/Dividend Yield Funds:
These are designed for those who want to earn dividend as a regular income. But, it is not guaranteed that they generate regular and handsome dividend. One should be very carefully while investing in these schemes.
Value fund invests in shares of fundamentally strong companies that are currently under-valued in the market with the hope of good returns over long time.
These schemes have an exposure to a maximum of 30 stocks.It is necessary to mention in their objectives where they are focused (vig; large-cap, mid-cap, small-cap).
They invest in perticaul sector such as banks, power, pharma, etc. They are more riskier as they expose their portfolio to specific sector only and if this perticular sector have some problem, then fund performance may get detoriate. So be careful before investing.
These schemes have an exposure to a perticular theme such as infrastructure. The minimum investment in equity & equity related instruments of a particular theme shall be 80 percent of total assets.
These funds can predominently invest in debt asset class. These funds can consider as a income generator. The major source of return from debt funds is regular income from interest. The interest is pre-defined by the issuer guaranteed either by government undertaking or by physical assets of an issuer. They invest in different debt securities such as government bonds, corporate bonds, commercial papers, money market instruments for different time period. Since interest is pre-defined the returns are also limited. They are sub–categories into following heads:
It is an open–ended debt scheme. The life span for these funds is only for 1 day, i:e the funds get matured overnight.
It is also an open–ended debt scheme. They invest in debt and money market instruments which get matured within 91 days.
Ultra Short Duration Funds:
They invest in debt and money market instruments which get matured between a time frame of 3 months to 6 months.
Low Duration Funds:
They invest in debt and money market instruments.It is suitable for those investors who is willing to prak their investment for 6 months to 12 months.
Money Market Funds:
They invest only in money market instruments.It is suitable for those investors who is willing to prak their investment upto 12 months.
Short Duration Funds:
They invest in debt & money market instruments.It is suitable for those investors who invest for time ranging from 1 year to 3 years
Medium Duration Funds:
They invest in between 3 years to 4 years in debt & money market instruments.You can switch your already invested money to these schemes if you are nearby to your goal.
Medium to Long Duration Funds:
They invest with a maturity in between 4 years to 7 years in debt & money market instruments.The portfolio duration may be 1 year to 7 years.
Long Duration Funds:
They invest with a maturity above 7 years in debt & money market instruments. Not suitable for those investors who have such a time frame for investment. Equity as an asset class is good option to invest.
Dynamic Bond Funds:
They invest with any maturity plan in debt and money market instruments. Suitable for less risky investors.
Corporate Bond Funds:
They invest with ratings either AA+ or higher corporate bonds. The minimum investment should be 80 per–cent of total asset in corporate bonds with higher ratings.
Credit Risk Funds:
They invest with ratings lesser than that of AA+ or lower corporate bonds. The minimum investment should be 65 per–cent of total asset in corporate bonds with lower ratings.
Banking & PSU Funds:
They invest in debt instruments of banks and PSUs, municipal corporation bonds. Minimum 80 per–cent should be invested in these bonds.
Glit fund means those invest only in government securities called G–Secs.The minimum investment should be 80 per–cent across maturity.
They invest predominantly in floating rate instruments. The minimum investment should be 65 per–cent across maturity.
These funds can predominently invest in combination of different asset classes such as equity, debt, money market instruments. The allocation of these asset classes depends on objective of the scheme. Due to multiple asset class, these funds are little bit less riskier and any other asset class. The returns are also somewhat lower and eqity asset class due to debt component in its portfolio. They are sub–divided into following categories:
Conservative Hybrid Fund:
They are largely invested in debt funds with 75 per–cent to 90 per–cent while 25 per–cent to 10 per–cent in equity and equity related instruments.
Balanced Hybrid Funds:
As the name suggest they invest in both equity and debt funds according to their scheme objective. Generally, they have an exposure of around 50 per–cent to 60 per–cent in equity & around 50 per–cent to 40 per–cent in debt market.
Dynamic Asset Allocation or Balanced Advantage Funds:
The main feature of these funds is that they allocate automatically their funds in between equity and debt instruments.No predetermined fund allocation should be done. According to market situation they reduce or increase their exposure in equity and debt.
The investment objective of such funds is to provide financial solution to particular requirement. They are sub–divided into following categories:
The objective of these funds is to provide good wealth required post retirement. These funds have locking period of 5 years or upto the age of 60 years, whichever is earlier, from date of allotment.
An open ended fund for investment for children having a lock-in for at least 5 years or till the child attains age of majority (whichever is earlier). Scheme having a lock-in for at least 5 years or till the child attains age of majority whichever is earlier.
These are very special funds and their objective is to meet out certain criteria. They are sub divided into following categories:
The objective of these funds is to meet the performance of its benchmark index, eg, index fund having Nifty50 as benchmark need to match the performance of Nifty50 index.
Fund of Funds:
An open ended fund of fund scheme investing in an underlying fund. The minimum investment in the underlying fund shall be 95 percent of total assets.