Monday, 17 October 2011

Type of Mutual Funds to satisfy investors needs

All leading Mutual Fund houses offer a variety of mutual fund schemes to satisfy the financial needs of investors. One can choose any one or a set of mutual funds as per his or her financial goals. The financial goals of each and every investor varies from investor to investor and the investment need is also varies. So SBI Mutual Fund, Reliance Mutual Fund, HDFC Mutual Fund, ICICI Mutual Fund and other major Mutual Fund houses give a wide range of mutual fund schemes. Each scheme has its own strategy, risk pattern and rewards. Mutual Funds can be classified in six major assets classes. These classifications are normally as per the assets which the mutual funds are invested in.

Equity Schemes 

Equity Schemes or Equity Mutual Funds offer Capital Growth or Capital appreciation and the pooled money of investors will be invested in long term and medium term equity related financial instruments of different companies. These mutual funds are good schemes for those who wish to get profit from stock exchanges and other equity related products. These equity schemes are further classified in to Equity/Growth Funds, Sector Funds, Thematic Funds, ELSS Funds, Index Funds and Market Neutral Strategy Funds.

Example of Equity Fund - Reliance Equity Fund - Retail Plan (G)

Debt or Income Schemes 

This type of mutual funds invest the money collected from investors in securities which gives fixed income such as bonds, corporate debentures, Government securities, money market instruments and this mutual fund is organized to give a regular, stable income to investors. This schemes offer short term and long term mutual funds and a major portion of such mutual funds are close ended mutual funds which has a fixed maturity period. This risk involved in this mutual fund is comparatively low with equity schemes.

Example of debt fund - HDFC Debt Fund for Cancer Cure 


Liquid Schemes 

This type of mutual funds invests in short time investment instruments such as cash assets, treasury bills, certificates of deposit, commercial paper etc. The maturity period of liquid funds are ranging from three months to one year. If the financial goal of the investor is to be fulfilled within one year this liquid fund is suitable for them. They can gain from a mutual fund and at the same time they can fulfill their short-term financial goals.

Example of liquid fund - SBI Premier Liquid Fund (SPLF)


Hybrid Schemes

The mutual fund which has a mixed investment strategy of invests in equity securities and debt securities in different proportions. The ratio will be shown in the Scheme document and the ratios may be changed from time to time, if it is mentioned in the scheme information. The investor can gain from stock markets and also from secured investments. The risk factor is a little bit less than equity schemes but more than that of pure debt schemes.

Example of Hybrid Fund - Reliance Regular Savings Fund -Hybrid Plan 


Fixed Maturity Plans (FMP)

Fixed Maturity Plans are a type of debt scheme which has a close ended nature and have a fixed maturity period. This scheme invests money in debt & money market instruments which has a maturity on or before the maturity of the scheme.

Example of FMP -  ICICI Pru FMP - Series 45 - 3 Year Plan - Retail Plan (G) 


Exchange Traded Schemes 

Exchange Traded Schemes or Exchange Traded Funds (ETF) tracks the index of a commodity, or any other assets and acts like an index fund. The ETF can be traded in stock exchange like stocks and the price varies throughout the day as per the changes of the index or the asset represented the ETF. Gold exchange traded funds are very popular now.

Example of Exchange Traded Fund - Reliance Gold Exchange Traded Fund.


The above mentioned type of mutual funds are varies as per the investment strategy and the assets invested in. To take advantages of mutual fund the investor should plan mutual funds as per the financial goals.

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4 comments :

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  2. Must say, a very well researched and well written article on various types of Mutual Fund schemes. Very useful for investors who are in a dilemma as to which will be the best investment option that suits their investment needs. Keep up the good work, All the best!

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