Mutual Fund
- A mutual fund is a basket of investments like stocks and bonds, managed by professionals.
- It's a collective investment scheme where many people pool their money to invest in financial markets.
- It's a way to invest in multiple companies at once, without needing to buy individual stocks yourself.
- A mutual fund is a shared fund, where investors contribute money and get returns based on the fund's performance.
- It's a professionally managed pool of money, invested in diversified assets to reduce risk.
- Think of it as a group investment, where a fund manager decides where to put the money to try to earn profits.
Types of Mutual Funds
Equity
Funds that put your money into company shares to grow wealth over time. Stock-based funds aiming for high returns but with higher risk. Designed for long-term investors seeking capital appreciation. Funds that invest in the ownership of companies listed on the stock exchange.
Large Cap Funds
Invest mainly in top 100 large companies.
Aimed at investors seeking steady, long-term growth. And Lower risk compared to other equity funds.
Mid Cap Funds
Invest in mid-sized companies ranked 101 to 250 in market capitalization.
Aim for higher growth potential but come with more volatility.
Suitable for investors who can take moderate risk.
Small Cap Funds
Invest in smaller companies ranked beyond 250 in market value.
High potential for returns, but very high risk and volatility.
Best for aggressive investors with long-term goals.
Multi Cap Funds
Invest across large, mid, and small-cap companies.
Offer diversification within the equity space.
Fund manager decides the proportion based on market conditions.
Flexi Cap Funds
Like multi-cap, but more freedom in choosing the proportion of large/mid/small caps he manager has complete flexibility to allocate based on opportunities.
A dynamic equity fund that moves with market trends.
Sectoral / Thematic Funds
Invest in specific sectors like IT, Pharma, or Banking, or themes like ESG.
Higher risk due to concentrated exposure.
Good for informed investors with sectoral knowledge.
ELSS Equity Savings
Tax-saving mutual fund under Section 80C of the Income Tax Act (India).
Invests mainly in equities and offers both tax benefit and growth.
A dual-purpose fund: grow wealth and save tax.
Hybrid Funds
Hybrid funds are mutual funds that invest in a mix of equity (stocks) and debt (bonds or fixed-income securities). Reduces risk by investing in different asset classes. Less risky than pure equity funds, but more rewarding than pure debt funds.
Debt Funds
Debt funds are a type of mutual fund that invests in fixed-income securities like:
Government Bonds, Corporate Bonds, Treasury Bills, Commercial Papers, Certificates of Deposit These instruments pay regular interest and have a fixed maturity date, making debt funds more stable and less risky than equity funds.
Other Assets
Gold ETF
Gold ETFs are financial instruments that track the price of gold and are traded on stock exchanges like shares. Instead of holding physical gold, investors hold units of a fund that owns gold on their behalf.
Traders use Gold ETFs to capitalize on short-term movements in gold prices.
Helps reduce overall risk by adding a non-correlated asset (gold) to a portfolio mainly consisting of stocks or bonds.
Sliver ETF
Silver ETFs are funds that track the price of silver and are traded on stock exchanges just like stocks. Instead of holding physical silver, you invest in units of a fund that owns silver on your behalf
Like gold, silver often retains value during inflationary periods or when fiat currencies weaken. Silver has significant industrial use (electronics, solar panels, medical devices), so investing in silver gives exposure to economic growth and industrial demand.
International Funds
International funds are mutual funds or ETFs that invest in equities or debt instruments of companies located outside your home country. They offer a way to diversify beyond domestic markets. Investments are held in foreign currencies (like USD, EUR, JPY), offering a hedge if your local currency depreciates. Low correlation with domestic markets helps reduce overall portfolio volatility.
