The demand for mutual fund investments is increasingly popular in this digitalized world. While there are a wide range of mutual fund schemes, it becomes fundamental to choose the one thatís appropriate and effective for you. The investment goals that you have in your mind are dependent on the choice of mutual fund schemes. To elucidate them in brief, hereís presenting a post thatíll enlighten you about the types of mutual fund schemes.
The different types of mutual funds Ė Mutual Fund Schemes Appropriate for You
There are a wide range of mutual fund schemes. There are many types of mutual funds in India that you can opt for. To allude briefly to the types, hereís presenting them one by one.
SCHEMES CONCERNING MATURITY PERIOD:
- Open-ended Fund
With an open-ended scheme or fund, you can avail of repurchase and subscriptions continuously. This type of mutual funds doesnít include some fixed maturity periods. One who invests in this fund can sell and buy the units conveniently at a related price (which should be NAV-based). These are then declared regularly. One key point to note here is that it happens to be a scheme that includes liquidity.
- Close-ended fund†
The close-ended fund includes some stipulated maturity period. Say, you can have five to seven years, for example. The fund remains open for investors to subscribe during a particular period of time, specifically during the schemeís launch. The investors can also invest in such a scheme during the time of some public issues. They can then sell or buy the schemeís units on stock exchanges with the lists given alongside the units. To offer an exit route, a particular type of such fund gives you the opportunity of selling the units back to the mutual fund via some periodic repurchasing options.One point to note here is that it discloses the NAV on a weekly basis. Otherwise, if you want to go for small cap funds, you can go for the sbi small cap fund.
SCHEMES CONCERNING INVESTMENT OBJECTIVE:
- Growth Scheme
The goal of this type of funds is to offer the capital appreciation to the investors over medium or long-term periods. Such schemes invest a significant part of the corpus in equities. This type of fund has some risks as well. As a matter of fact, the scheme offers a wide range of options to investors such as capital appreciation, dividend options and more. The investors can choose a preferred one accordingly.The fact whether or not itís one of the best mutual funds to invest for you, entirely depends on your preferences and goals. For the investors who go for long-term options, this can be considered a good bet.†
- Income or Debt Scheme
This type of fund offers a steady and regular income to the investors. This type of scheme can be invested in with fixed income security like corporate debentures, bonds, and other options. This fund is a bit less risky when you compare it to other schemes (especially the equity schemes). The funds donít get affected due to fluctuations in the equity market. But, the capital opportunities are just limited in this kind of funds. In case the interest rate falls then the NAVs can increase or even vice-versa! But to speak simply, the loyal investors should not bother with these fluctuations.†
- Balanced Funds†
Balanced funds are there to offer investors both regular as well as growth income. The reason is fair and simple Ė these schemes always invest in equities as well as fixed income securities in proportion that is indicated in the documents. These might be appropriate for the investors because of moderate growth. Generally, one only invests about 40 to 60 percent in debt or equity. And these funds also get affected due to fluctuations in the shared prices in stock markets. Nevertheless, the NAVs of this kind of funds can be less volatile when itís compared to equity fund schemes like hdfc equity fund.
- Liquid Fund
Liquid funds happen to be income funds but their aim is basically offering easy liquidity. They also focus on the preservation of moderate income as well as the capital. The funds invest in short-term options like the treasury bills, commercial paper, deposit certificates, government securities, and more. The returns on schemes will not be as fluctuating as the other funds, however. The funds can be appropriate for the individual investors or even the corporate investors. They can consider it as the mode to park surplus funds within a short period of time.
- Gift Fund
This type of Mutual fund schemes is known as gift fund which invests in government securities. As a matter of fact, the government security doesnít have any default risk. A point that should be noted about this scheme is that its NAVs fluctuate because of the change in the interest rate as well as other economic factors.
- Index Fund
Index Funds are like portfolios of indexes like S&P 50 index (Nifty), BSE Sensitive index, and more. As a matter of fact, the NAVS can rise or fall with regard to the indexís rise or fall. However, itís not entirely in the same percentage always. It depends on several factors out of which Ďtracking errorí is a significant one. The disclosures here are offered with documents of the mutual fund scheme accordingly.
With a wide range of mutual fund schemes available at present, it becomes difficult to pick the most appropriate mutual fund scheme for you. What can be your point of interest here is your own need. If you know what you require with one mutual fund, the decision of choosing the most appropriate one can get simpler. Another thing of concern is the goal that you have in your mind. Whether you wish to make bigger profits faster or at a moderate speed, it entirely depends on you. When you know what your objective is, choosing your type of mutual fund scheme becomes far simpler and more convenient.
Stay updated with all the insights.
Navigate news, 1 email day.
Subscribe to Qrius