Based on the Asset Class in India there are three primary types of Mutual Funds.

1. Equity mutual funds:

Equity funds, also known as stock funds, are mutual funds that invest principally in stocks. There are different varieties of equity mutual funds in the market based on the structure of the fund and the fund manager’s outlook on different stocks. The Equity funds are sub-classified depending upon their investment objective, as follows:

  • Diversified Equity Funds
  • Mid-cap Funds
  • Small-cap Funds
  • Sector Specific Funds
  • Tax Savings Funds (ELSS)

Equity investments are ideal for a longer time frame and therefore, should be the vehicle of choice when investing for long-term goals such as your child's education or your retirement.

2. Debt mutual funds:

Debt Mutual Funds invest are a mix of debt or fixed income securities which include Treasury Bills, Government Securities, Corporate Bonds, Money Market instruments and other debt securities based on different time horizons. These funds have a fixed maturity date & pay a fixed rate of interest. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. Debt funds can be further classified as:

  • Gilt Funds
  • Income Funds
  • MIPs
  • Short Term Plans
  • Liquid Funds

Debt Funds rank lower on the risk-return grid and are suitable for shorter investment time frames.

3. Gold fund:

A mutual fund that invests primarily in gold-producing companies or gold bullions. The price of shares within a gold fund generally correlates very closely to the spot price of gold itself. This gold investment is a paper investment and does not attract any making charges that gold jewellery would.

Gold Funds are a great option for those who want to buy gold in few years.


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