Types of Mutual funds

In the past few posts, we are discussing about mtual funds. Let’s take the discussions further today in this post where we will discuss about the kinds of mutual funds that are traded in the market.

Well classifying mutual funds lands up at uts different type. These can be classified as

1.Mutual Funds By Structure

2. Mutual funds By Investment Objectives

3.Mutual Funds By Load

4.Mutual funds By Schemes

Mutual Fund By Structure:

Open-ended Funds

Open-end mutual fund is available for subscription through out the year and as such do not have a fixed maturity. You can conveniently buy and sell units at Net Asset Value ("NAV") related prices whenever you wish.

Closed-ended Funds

Unlike the open ended mutual funds, closed-funds have stipulated maturity period that range from 3 years to 15 years. And these kinds of funds are open for subscription only for a fixed period of time.Once they have been subscribed, they are realized only at maturity.

Interval Funds

Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

By Investment Objective

Growth Funds

The apple-eye of investors, growth fund are known for investing a big part of its corpus in equities. As such the returns from such funds are exceptionally good .Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.

Income Funds

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.

Balanced Funds

Balanced funds have their corpus inveted in both equities and fixed income securities. So they provide you both return as well as balanced growth.In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

Money Market Funds

Money market funds strives to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market.

Mutual funds By Load

Load Funds

A mutual fund that charges commission for entry or exit is known as Load fund.So every time you sell units in the fund, commission is payable.Typically entry and exit loads range from 1% to 2%.

No-Load Funds

A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund.

Mutual Funds By Schemes

Tax Saving Schemes

Tax saving schemes offer tax rebates to the investors under specific provisions of the Income Tax law of the government. For example if you invest in ELSS schemes, you are allowed deductions under section 88 of the Income tax act.

Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like Infrastructure, FMCG, Pharmaceuticals etc.

Index Schemes

Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50

Sectoral Schemes

Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.