There are a variety of mutual fund schemes to satisfy the requirements of different people. There are typically three types of mutual funds.

Equityor Growth Funds

• These are typically invested in equities i.e. shares of companies
• The primary goal is wealth creation or capital appraisal.
• They have the potential to generate higher return and are best for long-term investments.
• Examples would be
  • Large capital funds which invest primarily in established businesses
  • ” Mid Cap Funds” that invest in mid-sized enterprises. Funds that invest in mid-sized businesses.
  • “Small Cap” funds that invest in smaller-sized businesses
  • “Multi Cap” funds that invest in the mix of small, medium and large size companies.
  • “Sector” funds that invest in companies that are connected to one kind of business. For example. Technology funds invest in only technology-related businesses
  • Funds which are “thematic” and are based on a single theme. For e.g. For example, infrastructure funds invest in companies that profit from the growth of the infrastructure industry
  • Tax-Saving Funds

Income, Bond, or Fixed income Funds

• They are invested in Fixed Income Securities like Government Securities or Bonds or Commercial Papers and Debentures or Bank Certificates of Deposits and Money Market Instruments like Treasury Bills, Commercial Papers, etc.
• They are safe investment options and are ideal for Income Generating.
• Examples would be Examples would be Funds short-term Flocking Rate Corporate Debt, Dynamic Bond, Gilt Funds, etc.

Hybrid Funds

• These investments can be made in Equities or Fixed Income. These investments provide the highest of both Growth Potential as well as income generation.
• Examples include aggressive Balanced Funds and Conservative Balanced Funds and Pension Plans as well as Child Plans Monthly Income Plans as well as other plans.

How can mutual funds help manage risk?

There are a variety of risk factors. If, for instance, you own shares of a company, there’s an opportunity for a Price Risk, a market risk or a Company Specific Risk. Each of these risks or any combination of them can cause a share to fall or even crash. You van visit Best mutual funds.

In a Mutual Fund, a typical portfolio holds many securities, thereby offering ” diversification“. Diversification is actually one of the biggest benefits of investing in the Mutual Fund. This ensures that portfolio performance will not be affected by a decline in the value of one or lesser securities.

Liquidity risk is an additional risk. What is liquidity? It’s the ease of converting an asset into cash. If an investor owns an investment locked in for say 10 years, and she requires money within the 3 ^fourth year. This can be a typical liquidity problem. In this moment her main focus is on cash access, not return. Mutual Funds, regulation in structure, can provide enormous liquidity. They are designed to provide investors with an ease of investing and redemption.

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