Mutual Fund Classifications

Debt Funds

Liquid & Money Market Funds

A money market funds invest predominantly in highly liquid money market and debt securities such as treasury bills, commercial paper, certificate of deposit etc. Liquid funds have a maturity period of 91 days. Money market funds have a maturity period of 1 year.

Income Funds

Income Funds mainly focus on generating regular income by investing in high dividend generating stocks, corporate bonds, government securities etc. SEBI classifies income funds as those debt funds whose Macaulay duration is 4 years and more.

Fixed Maturity Plans

Fixed Maturity Plans are closed-ended debt fund which comes with fixed lock-in period and limited investment window. Investor can only invest in such securities during NFO (new fund offering). The tenure of an FMP may range from 30days to 60 months.

Capital Protection Oriented Fund

Capital Protection-Oriented Funds aim to protect investor’s capital. The minimum debt exposure is fixed at 80% which manages to generate 100% of the principal invested and the remaining 20% comprising equity manages to generate an upside to the portfolio.

Interval Funds

Interval Fund is a mutual fund wherein the fund house allows to purchaseor sell the units only during specified transaction periods (STPs) at predetermined intervals.

Multiple Yield Fund

Multiple Yield Funds are Hybrid Debt-Oriented Funds that invests predominantly in debt instruments and to some extent in dividend-yielding equities.

Short-Term Fund

Short-Term Debt Funds primarily invest in debt instruments with shorter maturity or duration (1 to 3 years).

Floating Rate Funds

A Floating Rate Fund invests in bonds and debt instruments whose interest payments fluctuate with an underlying interest rate level.

Gilt Funds

Gilt Funds only invest in fixed-interest generating securities issued by the central and state government for various tenures.

Dynamic Bond Fund

Dynamic Bond Funds are a class of debt mutual fund that alter allocations between short-term and long-term bonds based on interest rate movement.

Monthly Income Plan

Monthly Income Plan invests in a combination of debt and equity securities. It invests pre-dominantly in debt securities and 15-25% in equities.

Hybrid Debt

Monthly Income Plan invests in a combination of debt and equity securities. It invests pre-dominantly in debt securities and 15-25% in equities.

HYBRID FUNDS

Aggressive Hybrid Fund

Aggressive Hybrid Funds invest between 65-80% of their total assets in equity and equity-related instruments and the balance 20-35% in debt securities and money market instruments.

Balanced Hybrid Fund

Balanced Hybrid Funds invest between 40-60% of their total assets in equity and equity-related instruments and the balance 40-60% in debt securities.

Conservative Hybrid Fund

Conservative Hybrid Funds invest between 10-25% of their total assets in equity and equity-related instruments and the balance 75-90% in debt securities

Dynamic Asset Allocation

Dynamic Asset Allocation means adjusting the mix of assets in a portfolio based on market trends.
It is less concerned with maintaining a specific mix of assets than maximizing return potential.

Multi Asset Allocation

Multi Asset Allocation Funds are hybrid fund that must invest a minimum of 10% in at least 3 asset classes. These funds typically have a combination of Equity, Debt, Gold, Real Estate, etc.

Arbitrage Fund

Arbitrage Funds takes advantage of the price differences between current and future securities to generate maximum returns. The fund manager simultaneously buys shares in the cash market and sells it in future market.

Equity Saving Fund

Equity Mutual Fund predominantly invest in equities, arbitrage and debt securities to generate return. It invests minimum of 65% of total asset in equities, including arbitrage and a minimum of 10% in debt.

Exchange Traded Funds

Open Ended ETF

ETF trades like a common stock on a stock exchange. ETFs are similar in many ways to mutual funds, expect that ETFs are bought and sold throughout the day on stock exchanges. ETFs typically have higher daily liquidity and lower fees than mutual fund schemes.

Gold ETF

A Gold ETF is an Exchange-Traded fund (ETF) that aims to track the domestic physical gold price. Gold ETFs are units representing physical gold which may be in paper or dematerialised form.
One Gold ETF unit = 1 gm of gold.

Open Ended Other ETF

The most common types of ETF are: -
I. Long ETFs: - If the index rises then share price also rises in long ETFs.
II. Inverse ETFs: - Share prices move in the opposite direction. If index loses money, you win.
III. Industry ETFs: - Portfolio of stocks representing an industry like oil, mining, health care, etc.
IV. Bond ETFs: - Instead of stocks they own bond.
V. Currency ETFs: - Seek to capture returns of foreign currencies.

Fund of Funds (FoF)

FOF Domestic

FOF- Domestic Funds are those schemes that invest 95% of the total assets in domestic funds.

FOF Overseas

FOF-Overseas Funds are those schemes that invests in companies outside the investor’s country of residence.

Solution Oriented Fund

Solution-Oriented Retirement Fund

Retirement Fund aim to provide financial assistance to the retirees by gathering the capital during the earning age of the investor.
These funds follow an aggressive style of investment by selecting high-risk stocks in the portfolio when the investor is in the young and earning stage. As the investor approaches the retirement age, the corpus is generally shifted to a moderate or conservative plan of the same scheme. After the retirement the portfolio can conserve the gathered amount and add regular income through debt securities.

EQUITY FUNDS

1.Large Cap Equity Fund

Large Cap Equity Funds invest a bigger proportion of their total assets in companies with a large market capitalization. At least 80% of the portfolio should be invested in top 100 companies by market capitalisation.

2.Mid Cap Equity Fund

Mid Cap Equity Funds invest in stocks of mid-size companies which are considered as developing companies. At least 65% of the portfolio should be invested in companies ranked between 101-250 by market capitalisation.

3.Small Cap Equity Fund

Small Cap Equity Funds invest in stocks of small-sized companies. At least 80% of the portfolio should be invested in companies ranked below the 250th rank by market capitalisation.

4.Multi Cap Equity Fund

Multi Cap Equity fund are diversified equity funds that invest in stocks of companies with different market capitalizations. Proportion of large cap, mid cap and small cap will depend upon the risk tolerance of the investor.

5.Sectoral/The matic Equity Fund

Sectoral Funds invest in only one sector. These sectors can be infrastructure, energy, pharma, banking etc.At least 80% of the portfolio should be invested in a particular sector.
AndThematic Funds invest across multiple sectors that are related to a certain theme such as rural India, export-oriented, international exposure etc. At least 80% of the portfolio should be invested in stock of a determined theme

6. ELSS Fund (Equity Linked Saving Scheme)

ELSS is the only scheme qualifies for tax deduction under section 80(c) of the IT Act. Investment up to 1.5 lakh in ELSS is eligible for deduction from taxable income. It comes with a statutory lock in period of 3 years for each SIP.

7. Contra Equity

Contra Equity Fund follows a contrarian investment strategy which means against the market trend. The strategy involves buying of assets that are either depressed or under-performing at that point of time.

8. Equity Dividend Yield Fund

Dividend Yield Funds invest in companies which are known to declare high dividends. It invests around 70-80% of its portfolio in stocks that have a dividend yield higher than that of the market. Good for investors who want to invest in equity but with low volatility.

9.Equity Focused Fund

Focused Funds invest in a limited number of stocks which should not be more than 30. Not more than 10% of the portfolio is allocated to a single stock. It holds stocks in less than three sectors only.

10.Growth Equity Fund

Growth Fund invests in growth stocks to achieve maximum capital appreciation with little or no dividend pay-outs. Growth stock means stocks of a company with a track record of great revenue growth or younger companies with potential.

11. Equity Index Fund

Index Fund invests in stock that imitate a stock market index like BSE Sensex, NSE Nifty etc. It ensures that it invests in all the securities that the index tracks.

12. Equity Large & Mid Cap Fund

Large and Mid-Cap Fund invests in the stock of companies with large and medium-sized capitalisations.
These funds are bound to invest a minimum of 35% each of their total asset in equity and equity-related instruments of large and mid-cap companies.

13. Equity Value Fund

Equity Value Fund invests in stocks that are currently trading on discount due to some reason but have long term potential.