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Types of Mutual Funds in India

Updated on July 14, 2024 , 55888 views

The Mutual Fund industry has been in India since 1963. Today, there are more than 10,000 schemes that exist in India, and growth of the industry has been massive. The AUM of the Indian MF Industry has grown from ₹7.66 trillion as on August 31, 2013 to ₹46.63 trillion as on August 31, 2023 more than 6 fold increase in a span of 10 years. To add, the total number of folios as per MF parlance as on April 30, 20213 stood at 15.42 crore (154.2 million)

Looking at such eye-tempting growth, many people are attracted to invest, which is a great step for securing the future. Before you start, ensure your research well. It is important to know the basics of MFs such as types of Mutual Funds, risk & return, diversification, etc. MFs deploy money by investing in the stock market for equities, they also take exposure to debt instruments. Likewise, they also invest in gold, hybrid, FOFs, etc. The basics classification is by maturity period, where there are two broad categories of mutual funds - open-ended and closed-ended.

Open-ended Mutual Funds

The majority of mutual funds in India are open-ended in nature. These funds are open for subscription (or in simple terms purchase) by investors at any time. They issue new units to investors who want to get into the fund. After the initial offering period (NFO), the units of these 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.

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Closed-ended Mutual Funds

These are 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.


Different Types of Mutual Funds

Guided by Securities and Exchange Board of India (SEBI) norms, there are five main broad categories and 36 sub-categories in Mutual Funds.

1. Equity Mutual Funds

Equity Funds make money for investors by investing in the equity stock market. This option is suitable for investors looking for long-term returns. Some of the types of equity mutual funds are-

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
Nippon India Small Cap Fund Growth ₹176.403
↑ 0.39
Motilal Oswal Midcap 30 Fund  Growth ₹98.1908
↓ -0.12
Invesco India Infrastructure Fund Growth ₹68.6
↓ -0.43
Invesco India PSU Equity Fund Growth ₹70.6
↓ -0.32
Kotak Small Cap Fund Growth ₹273.53
↑ 1.21
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 16 Jul 24

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.

2. Debt Mutual Funds

Debt fund invest in fixed income instruments, also known as Bonds & gilts. Bonds funds are classified by their maturity period (hence the name, long term or short term). As per tenure, the risk also varies. The broad categories of debt mutual funds, such as:

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
DSP BlackRock Credit Risk Fund Growth ₹40.5514
↑ 0.02
Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹34.9131
↑ 0.04
Sundaram Short Term Debt Fund Growth ₹36.3802
↑ 0.01
Sundaram Low Duration Fund Growth ₹28.8391
↑ 0.01
IDFC Government Securities Fund - Investment Plan Growth ₹33.1121
↑ 0.05
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 16 Jul 24

3. Hybrid Mutual Funds

Hybrid funds are a type of mutual fund that invests both in equity and debt. They can be Balanced Fund or Monthly Income Plan (MIPs). The portion of investment is higher in equities. Some of the types of hybrid funds are:

  • Arbitrage funds
  • Dynamic Asset Allocation
  • Conservative hybrid funds
  • Balanced hybrid funds

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
JM Equity Hybrid Fund Growth ₹125.475
↓ -0.22
ICICI Prudential Equity and Debt Fund Growth ₹368.15
↓ -0.04
HDFC Balanced Advantage Fund Growth ₹505.835
↑ 0.59
ICICI Prudential Multi-Asset Fund Growth ₹696.023
↑ 1.78
BOI AXA Mid and Small Cap Equity and Debt Fund Growth ₹38.67
↓ -0.03
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 16 Jul 24

4. 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
HDFC Retirement Savings Fund - Equity Plan Growth ₹50.008
↑ 0.06
Tata Retirement Savings Fund - Progressive Growth ₹65.5278
↓ -0.19
HDFC Retirement Savings Fund - Hybrid - Equity Plan Growth ₹37.783
↑ 0.06
ICICI Prudential Child Care Plan (Gift) Growth ₹314.75
↓ -0.05
Tata Retirement Savings Fund-Moderate Growth ₹63.2177
↓ -0.16
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 16 Jul 24

5. Gold Funds

The Gold mutual funds invest in gold ETFs (exchange-traded funds). Ideally suitable for investor who wants to take exposure in gold. 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.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
Axis Gold Fund Growth ₹22.0999
↑ 0.16
SBI Gold Fund Growth ₹22.1164
↑ 0.19
ICICI Prudential Regular Gold Savings Fund Growth ₹23.4189
↑ 0.24
HDFC Gold Fund Growth ₹22.5683
↑ 0.19
Nippon India Gold Savings Fund Growth ₹28.9354
↑ 0.24
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 16 Jul 24

Other Mutual Fund Schemes

Index Fund/Exchange Traded Fund (ETF) and fund of funds (FoFs) are categorised under other schemes.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
ICICI Prudential Nifty Next 50 Index Fund Growth ₹64.9914
↓ -0.39
IDBI Nifty Junior Index Fund Growth ₹54.8062
↓ -0.33
Kotak Asset Allocator Fund - FOF Growth ₹219.92
↑ 0.83
IDFC Asset Allocation Fund of Funds - Moderate Plan Growth ₹38.3323
↓ -0.01
ICICI Prudential Advisor Series - Debt Management Fund Growth ₹41.4421
↑ 0.03
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 16 Jul 24

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All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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SUNIL, posted on 22 May 20 8:26 PM

What is the future of mutual funds now after Covid 19, approximately how long it will take for the Sensex and Nifty to recover in January-February 2020 ?

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