What are the different types of Mutual Fund Schemes in India?

By Advisorymandi
22-April-2019 5:34:34 PM

A mutual fund is one reliable option of investment in India. With the introduction of mutual funds, it becomes easy for newbie investors and people who aren’t familiar with the stock market and direct equity investments. It is an investment option of pooling money in accordance with objectives as disclosed. Normally, mutual funds come out with a variety of schemes with different objectives. If you are planning to invest in mutual funds then you must aware of different mutual fund schemes, performances, and their features.

Read also: How to Check the Performance of a Mutual Fund Scheme?

Note: Don’t forget to choose the mutual fund scheme that is registered with the Securities & Exchange Board of India (SEBI) before you put your money in securities.


Different Types of Mutual Fund Schemes in India

Mutual fund schemes can be classified based on the following characteristics:

  • Asset Class
  • Structure
  • Investment Goals
  • Risk

Schemes According to Asset Class

There are four different types of mutual funds based on asset class which is as follow:

  • Equity Funds
  • Debt Funds
  • Money Market Funds
  • Hybrid Funds

Equity Mutual Funds

Equity mutual funds are the types of funds that only invest in stocks, rights, warrants, and other equity related instruments. These are also known by the name – stock funds. Such funds are quite risky and address to appreciate capital over the medium to short-term period.

An investor can choose the equity fund based on priorities and preferences.


Debt Mutual Funds

The debt oriented schemes are to address the financial stability to the investors. The debt mutual fund schemes are the types of mutual fund schemes that generally invest in fixed income securities such as bonds, government securities, corporate debentures, and other debt securities, etc.

If we do equity funds Vs debt funds – then debt funds are less risky compared to equity mutual funds.

Money Market Funds

The money market is not much different than the stock market. In the stock market, investors trade stocks but in the money market the investors’ trade money. The money market is also known by the name cash market and these schemes efficient in providing easy liquidity and moderate income.

Money market funds are for those who are not ready to take high risks and looking out for short term investment instruments such as treasury bills, government bonds, and commercial paper, etc. The fluctuation in money market funds is comparatively less than the other funds.

Hybrid Funds

Hybrid funds are also known by the name balanced funds. Such balanced funds allow investors to invest in both equity and debt funds simultaneously. However, the ratio of equity and debt can be varied or fixed. These funds address to provide both growth and regular income.

Since the equity is involved in hybrid funds thus they do affect by the stock market fluctuations but overall Net Asset Value (NAV) doesn’t change much compared to equity mutual funds.

Schemes According To Structure

It is the broad categorization of mutual fund schemes based on a structure which are as follows:

·         Open-Ended Funds

·         Close-Ended Funds

·         Interval Funds


Open-Ended Funds

Open-ended mutual fund schemes do not have any maturity period – an investor can trade their funds as their convenience and exit whenever they want at the current net asset value (NAV). There are no constraints in the time period of a scheme.

Close –Ended Funds
Close-ended funds are quite the opposite of open-ended funds. In a close-ended fund scheme, there is a stipulated maturity period which made investors allow on a specific period of time at the launch of the scheme. Here investors can buy or sell the scheme’s units on the stock exchanges where the units are listed.

Thus, in order to provide the exit route, some close-ended funds give the facility of selling back to the mutual fund.

Interval Funds
Interval funds have the specialty of both closed and open-ended funds. In interval fund schemes investors and enter and exit the scheme at the specific intervals only.

Schemes According To Investment Goals
When someone invests his/her money in the scheme, it is to achieve financial goals at the expected time. Thus, it is important to check for mutual fund schemes based on one’s investment goals.

Here there is a classification of mutual fund schemes based on investment goals which are as follows:

  • Growth Funds
  • Income Funds
  • Liquid Funds
  • Tax-Saving Funds
  • Pension Funds

Growth Funds
Growth mutual fund schemes are generally for investors who have a surplus of money to be pooled in riskier plans. Thus, growth funds put a huge portion of capital in shares and growth sectors.

Income Funds
If you are a risk-averse individual who is looking for investing in a mutual fund scheme over 2-3 years then income funds would be right for you since it distributes money in bonds, certificates, and other securities.

Liquid Funds
Liquid funds are not much different from income funds and belong to the category of debt funds except the NAV of liquid funds calculated for complete 365 days however the other funds calculate only business days.

Tax-Saving Funds
Have you heard about ELSS? – No! Well, if you haven’t then we would like to inform you that ELSS (Equity Linked Saving Scheme) is one of the tax-saving funds that have gained popularity among investors. The tax-saving funds are efficient in building wealth as well as saving on taxes only in a period of 3 years.

Pension Funds
It is not wise to solely rely on savings especially when you need to secure yourself and the financial future of your family after retirement. In such a case, pension funds help in creating wealth by putting a portion of income in pension mutual fund schemes that can help in most the contingencies such as wedding and medical, etc.

EPF is an example of such pension funds.


Apart from this, there are some miscellaneous funds such as real-estate funds, international funds, and index funds among others. So, if you really are considering investing in mutual funds then it would be recommendable to learn about the types of mutual fund schemes, features, and performances.

Nevertheless, if you have any query or would like to add something then doesn’t forget to mention in the comment section below.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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[…] Besides, as per mutual fund disclaimer – mutual fund investments are subject to market risks-the reference is not limited to equity mutual funds but also to debt funds and other types of mutual fund schemes. […]