Mutual funds have become one of the most sought after products in the financial market.
It is also a market that is continuously evolving.
A number of people wonder exactly what types of funds exist in today's market.
This is because it is one of the most flexible modes of investment and offers a variety of products that can cater to a variety of requirements as specified by the investor.
They vary based on the risk involved, the amount they can invest, the goals they have and the term for which they can be invested in.
There are three major types of mutual funds, each with sub categories.
The first is open-ended.
These schemes allow an investor to buy and sell units at any time and do not involve any fixed maturity date.
There are various types of open-ended funds.
The funds based on debt/income schemes invest a majority of the fund towards government securities, debentures and other debt instruments.
With these funds, the appreciation of capital is low but the risk levels are equally low as well making it ideal for investors looking for a steady income.
Liquid or Money Market funds are meant for investors looking to invest in short-term products while waiting for better options.
They invest in debt instruments that are short term.
Equity funds are a very popular category in the mutual fund market for retail investors.
It is a high-risk short-term investment but in the long run, investors can usually always expect a capital appreciation.
These growth schemes are ideal if you are within your prime age for earning and are looking for benefits that are long term.
The final open-ended type of mutual fund is the balanced fund.
These funds provide an investor with income and growth at regular intervals.
Close-ended schemes have a clear maturity period and can only be invested in the initial launch period.
The two types of schemes available under close-ended are fixed maturity plans and capital protection.
The first are mutual funds that have a clear maturity period.
They invest mainly in debt instruments and earn through the interest on the securities.
The latter scheme is used to protect the principal investment while also trying to generate reasonable returns.
They invest in high quality securities with fixed income.
The final major types of mutual fund are interval funds.
They operate by investing in a combination of both open and closed ended funds and allow investors to buy or sell units at pre-specified intervals.
When looking for a scheme to invest in it is important to look for advice that is customised to suit your needs.
The best schemes are those that can provide growth income and stability while not over-extending your sense of risk.
It is also a market that is continuously evolving.
A number of people wonder exactly what types of funds exist in today's market.
This is because it is one of the most flexible modes of investment and offers a variety of products that can cater to a variety of requirements as specified by the investor.
They vary based on the risk involved, the amount they can invest, the goals they have and the term for which they can be invested in.
There are three major types of mutual funds, each with sub categories.
The first is open-ended.
These schemes allow an investor to buy and sell units at any time and do not involve any fixed maturity date.
There are various types of open-ended funds.
The funds based on debt/income schemes invest a majority of the fund towards government securities, debentures and other debt instruments.
With these funds, the appreciation of capital is low but the risk levels are equally low as well making it ideal for investors looking for a steady income.
Liquid or Money Market funds are meant for investors looking to invest in short-term products while waiting for better options.
They invest in debt instruments that are short term.
Equity funds are a very popular category in the mutual fund market for retail investors.
It is a high-risk short-term investment but in the long run, investors can usually always expect a capital appreciation.
These growth schemes are ideal if you are within your prime age for earning and are looking for benefits that are long term.
The final open-ended type of mutual fund is the balanced fund.
These funds provide an investor with income and growth at regular intervals.
Close-ended schemes have a clear maturity period and can only be invested in the initial launch period.
The two types of schemes available under close-ended are fixed maturity plans and capital protection.
The first are mutual funds that have a clear maturity period.
They invest mainly in debt instruments and earn through the interest on the securities.
The latter scheme is used to protect the principal investment while also trying to generate reasonable returns.
They invest in high quality securities with fixed income.
The final major types of mutual fund are interval funds.
They operate by investing in a combination of both open and closed ended funds and allow investors to buy or sell units at pre-specified intervals.
When looking for a scheme to invest in it is important to look for advice that is customised to suit your needs.
The best schemes are those that can provide growth income and stability while not over-extending your sense of risk.
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