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Types Of Mutual Funds In India
There are many types of Mutual Funds that exist in India and there are many different kinds of funds also. The Mutual Fund industry has been in India since 1963. Today there are more than 10,000 schemes that exist in India and hence as an investor, it is important to know the types of Mutual funds that exist and the different kinds of Mutual Funds present in India. Mutual Funds deploy money by Investing in the Stock Market for equities, they also take exposure to debt instruments by investing in the debt markets.There are various types of Mutual Funds, initially, we classify them by maturity period, where there are two broad categories, open-ended and closed-ended.
Types Of Mutual Funds: By Maturity
Open-ended Mutual Funds
Open-ended mutual funds are mutual funds which are open for subscription (or in simple terms purchase) by investors at any time. These type of mutual funds would just issue new units to investors who want to get into the fund. The majority of mutual funds in India are open-ended in nature. After the initial offering period (NFO), the units of these mutual funds can be purchased. In a rare scenario, the Asset Management Company (AMC) can stop further purchase by investors if the AMC feels that there are not enough and good opportunities to deploy the fresh monies. However, for redemption, the AMC has to buy back the units.
Closed-ended Mutual Funds
Closed-ended mutual funds are mutual funds that are closed for further subscription (or purchase) by investors after the initial offering period (NFO). Unlike, Open-ended funds, investors cannot buy fresh units of these types of mutual funds after the NFO period. Hence, investing in closed-ended funds is possible only during the NFO period. Also, one thing to note is that investors cannot exit via redemption in the closed-ended fund. The redemption takes place once the period matures. Additionally, to provide an opportunity to exit, Mutual Fund Houses list the closed-ended funds on the stock exchange. Hence, investors would need to trade the closed-ended funds on the exchange to exit them before the maturity period.
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Types Of Mutual Funds: By Investment Objective
Guided by Securities and Exchange Board of India (SEBI) norms, there are five broad categories and 36 sub-categories in Mutual Funds. The five categories of Mutual Funds are as follows:
Equity Funds
Equity Funds make money for investors by investing in the equity stock market. Some of the types of equity funds are- Large cap funds, mid cap funds, Small cap funds and sector/thematic funds, ELSS, dividend yield funds, focused fund, etc. Large-cap funds invest in companies which have a large market capitalization (hence the name large-), usually, these are very large companies and are established players, e.g Unilever, Reliance, ITC etc. Mid-cap and small-cap funds invest in smaller companies, these companies by being smaller can show extraordinary growth and provide good returns. However, since they are small they can give losses and are riskier. Thematic funds invest into a particular sector like infrastructure, power, media & entertainment etc. Not all mutual funds provide thematic funds, for e.g Reliance Mutual Fund provides exposure to thematic funds via its Power Sector Fund, Media and Entertainment Fund etc. ICICI Prudential Mutual Fund provides exposure to Banking & financial services sector via its ICICI Prudential Banking & Financial Services Fund, technology via the ICICI Prudential Technology Fund.
Best Equity Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2020 (%) Aditya Birla Sun Life Digital India Fund Growth ₹92.09
↓ -1.67 ₹735 23.8 60.5 61.1 27 21.2 59 ICICI Prudential Technology Fund Growth ₹103.96
↓ -2.34 ₹938 23.3 70.1 70.8 28.9 20.9 70.6 Franklin India Feeder - Franklin U S Opportunities Fund Growth ₹49.5076
↓ -0.62 ₹2,545 3.8 13.9 39.6 25 20.8 45.2 SBI Banking & Financial Services Fund Growth ₹21.704
↓ -0.25 ₹1,997 33.6 45.3 7.3 11.3 20.6 4.8 Mirae Asset Tax Saver Fund Growth ₹24.179
↓ -0.22 ₹5,044 25.8 40.9 23.9 11.4 20.4 21.5 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Debt Funds
Debt fund are mutual funds that invest in fixed income instruments, also known as Bonds & gilts. The broad categories of debt mutual funds are Gilt Funds and bonds funds. Bond Funds may be long term, medium to long term, medium term fund or short-term in nature. Gilt funds invest into government securities (which are issued by the Reserve Bank of India). Bonds funds are classified by their maturity period (hence the name, long term or short term)
Best Debt Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2020 (%) IDFC Government Securities Fund - Investment Plan Growth ₹27.8077
↓ -0.05 ₹2,178 1.1 1.9 14 11.4 10.1 13.7 Kotak Gilt Investment Fund - Provident Fund & Trust Plan Growth ₹78.34
↓ -0.12 ₹890 2.3 2.9 13.5 10.2 9.5 13.3 Kotak Gilt Investment Fund - Regular Investment Plan Growth ₹76.5741
↓ -0.12 ₹890 2.3 2.9 13.5 10.2 9.5 13.3 ICICI Prudential Constant Maturity Gilt Fund Growth ₹19.0893
↓ -0.04 ₹327 1.1 2.6 13.5 11.8 10.6 13.6 IDFC Government Securities Fund - Constant Maturity Plan Growth ₹35.8333
↓ -0.09 ₹344 1.2 2 13.3 12.8 10.9 13.2 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Hybrid Funds
Hybrid funds are a type of mutual fund as the name goes invest both in equity and debt. They can be Balanced Fund or Monthly Income Plan (MIPs). Balanced funds invest have more equity in the portfolio compared to MIPs. Some of the types of hybrid funds are arbitrage funds, dynamic Asset Allocation, conservative hybrid funds, balanced hybrid funds, etc.
Best Hybrid Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2020 (%) BNP Paribas Substantial Equity Hybrid Fund Growth ₹15.4949
↓ -0.13 ₹483 19.4 24.4 16.2 11.3 14.9 Canara Robeco Equity Debt Allocation Fund Growth ₹205.62
↓ -1.81 ₹3,906 16.2 25.3 20.2 11.1 13.8 19.7 Axis Triple Advantage Fund Growth ₹25.5215
↓ -0.17 ₹630 17.3 25.1 17.2 10.9 12 18 Edelweiss Balanced Advantage Fund Growth ₹31.06
↓ -0.20 ₹1,924 16 23.4 24.4 10.9 11.7 22.6 Mirae Asset Hybrid Equity Fund Growth ₹18.41
↓ -0.15 ₹4,139 18.6 26.1 15.9 9.5 14 13.7 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Solution Oriented Schemes
Solution oriented schemes are helpful for those investors who wish to create long-term wealth that mainly includes Retirement planning and a child’s future education by investing in Mutual Funds. Earlier, these plans were a part of equity or balanced schemes, but as per SEBI’s new circulation, these funds are separately categorised under solution oriented schemes. Also these schemes used to have a lock-in for three years, but now these funds have a mandatory lock-in of five years.
Best Solution Oriented Schemes
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2020 (%) Tata Retirement Savings Fund - Progressive Growth ₹36.6037
↓ -0.46 ₹889 16.2 29 15.6 6.6 15.4 14.4 Tata Retirement Savings Fund-Moderate Growth ₹37.1355
↓ -0.41 ₹1,252 14.3 25.3 16.1 6.7 14.1 15.1 ICICI Prudential Child Care Plan (Gift) Growth ₹165.87
↓ -1.39 ₹671 20.7 27 11.9 6.2 11.5 8.8 Axis Childrens Gift Fund - Compulsory Lock-In Growth ₹16.6797
↓ -0.14 ₹526 17.6 24.6 14.6 9.1 11.1 15.5 Tata Retirement Savings Fund - Conservative Growth ₹23.4161
↓ -0.10 ₹157 5.4 9.1 11.8 6.7 9.7 11.8 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Other Mutual Fund Schemes
Index Fund/Exchange Traded Fund (ETF) and fund of funds (FoFs) are categorised under other schemes.
Best Performing Other Mutual Fund Schemes
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2020 (%) ICICI Prudential Nifty Next 50 Index Fund Growth ₹29.758
↓ -0.47 ₹893 25.3 30.1 16.1 2.2 13 14.3 IDBI Nifty Junior Index Fund Growth ₹25.2043
↓ -0.40 ₹46 25.2 28.9 15.5 1.8 12.2 13.7 Kotak Asset Allocator Fund - FOF Growth ₹110.46
↓ -0.41 ₹87 14 22.7 25.5 13.5 13.2 25 IDFC Asset Allocation Fund of Funds - Moderate Plan Growth ₹26.069
↓ -0.12 ₹23 9 15.1 9.8 5.9 8.6 9.3 ICICI Prudential Advisor Series - Debt Management Fund Growth ₹34.1424 ₹170 1.8 3.6 9.4 8.1 8.4 9.7 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
Gold Funds
The last type of mutual funds are Gold funds, these invest into gold. These are for investors who want to take exposure to gold via mutual funds. The Gold mutual funds invest in gold ETFs (exchange-traded funds). Unlike physical gold, they are easy to purchase and redeem (buying and selling). Also, they offer transparency of price for investors for buying and selling.
Best Gold Funds
Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 5 YR (%) 2020 (%) Kotak Gold Fund Growth ₹20.3349
↑ 0.10 ₹749 -2.5 -0.3 22.6 17.3 12.7 26.6 Axis Gold Fund Growth ₹15.2544
↑ 0.10 ₹197 -1.8 0.1 23.4 16.9 12.8 26.9 Aditya Birla Sun Life Gold Fund Growth ₹15.336
↑ 0.15 ₹206 -2.3 0 22.6 16.7 12.5 26 SBI Gold Fund Growth ₹15.3059
↑ 0.11 ₹842 -2.6 -0.3 22.8 16.7 12.4 27.4 ICICI Prudential Regular Gold Savings Fund Growth ₹16.256
↑ 0.08 ₹402 -2.4 -0.6 23 16.5 12.4 26.6 Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 15 Jan 21
These are the broad types of mutual funds. To invest in a mutual fund one must do some research and also take into consideration the time horizon for investment as well the ability to take a risk.
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