My Smart Investment "MUTUAL FUND": Different Types of Mutual Fund in India (Part-2)

In Previous section Different Types of Mutual Fund in India (Part-1) we know about the Open-Ended, Closed-Ended and Interval Funds.

By Investment Objective it can be classified as more four categories.

1. Equity Fund

An equity fund generally invests in equity market that means in stocks. The fund can be again managed actively known Active Fund or may be passive management in case of Passive Funds witch follows one of any equity market index is also known as Index fund. It invests at a minimum of 65% of fund value in equity market, it may be increase to 100%.

2. Debt Fund

Debt mutual fund generally invests in mix of debt or fixed income securities such as treasury bills Government Securities Corporate Bonds money market instruments and other Debt securities of different time horizons. Generally Debt securities have a fixed Maturity date & pay a fixed rate of interest. They are further classified on the basis of the maturity of the debt that they hold. Note that Debt is less volatile but also returns less. Equities are more volatile in the short term, but also return more over the long term.

3. Balanced or Hybrid Fund

Hybrid fund is a category of mutual fund whose portfolio is a mix of equity (Stocks) and Debt (Bonds). The proportionality of equity and debt may vary over time or remain fixed.

the volatility is low in compare to equity fund as a part of fund is invested in Debt category.

4. Money Market Fund.

Money Market fund is an Open-Ended Mutua Fund offers a potentialy rewarding parking facility for short-term Idea Cash. Its provides the flexibility of withdrawing cash as and when required, and proves to be an investment through its earnings, while it is parked in the fund. As this type of fund can be used as a bank S/B account which relatively gives a increased return.