1. Focused Equity Funds with Returns:
LARGE CAP FUND
LARGE & MID CAP FUND
MULTI CAP FUND
FLEXI CAP FUND
2. Focused Equity Funds with Returns:
FOCUSED FUND
MID CAP FUND
SMALL CAP FUND
ELSS FUNDS
3. Hybrid Mutual Funds: Combine both equity and debt instruments in a single portfolio to offer a balanced mix of growth and income. Categories include balanced funds and monthly income plans.
4. Money Market Mutual Funds: Invest in short-term, highly liquid instruments like Treasury bills and commercial paper, providing stability and low-risk options for short-term investments.
5. Index Mutual Funds: Track a specific market index, such as the S&P 500, replicating its performance. These funds aim to mirror the returns of the chosen index.
6. Sectoral or Thematic Mutual Funds: Concentrate investments in specific sectors (e.g., technology, healthcare) or themes, allowing investors to capitalize on trends or industries they believe will perform well.
7. Tax-Saving Mutual Funds (ELSS): Equity-Linked Savings Schemes (ELSS) offer tax benefits under Section 80C of the Income Tax Act while primarily investing in equities for potential capital appreciation.
8. Gilt Mutual Funds: Invest in government securities, typically free from credit risk, making them suitable for conservative investors seeking stability and regular income.
9. International or Global Mutual Funds: Allocate funds across global markets, providing diversification by investing in international equities, bonds, or a combination of both.
Understanding the various types of mutual funds allows investors to tailor their investment strategy to their financial goals, risk tolerance, and investment horizon.
Investor Planning: Investors assess their financial goals, risk tolerance, and investment horizon to determine the suitability of mutual funds for their specific needs.
Fund Selection: Based on their financial objectives, investors choose mutual funds with investment strategies aligned with their goals, considering factors such as fund type, risk level, and historical performance.
Account Setup: Investors establish accounts with mutual fund companies or through financial intermediaries, completing necessary documentation and complying with regulatory requirements.
Investment Allocation: Investors decide on the amount of money to invest in specific mutual funds, considering diversification and asset allocation strategies to spread risk across different sectors or asset classes.
Transaction Execution: Investors initiate transactions by purchasing mutual fund units or shares, either through lump-sum investments or systematic investment plans (SIPs), facilitated by the fund management company.
Professional Management: Mutual funds are managed by professional fund managers who make investment decisions on behalf of investors, actively buying and selling securities to achieve the fund's objectives.
Portfolio Diversification: Fund managers diversify the mutual fund portfolio across various securities, industries, or asset classes to mitigate risk and optimize returns.
Distribution of Income: Mutual funds distribute income generated from the underlying securities, such as dividends and interest, to investors in the form of regular payouts or reinvestment.
Net Asset Value (NAV) Monitoring: Investors monitor the Net Asset Value of their mutual fund holdings, which represents the per-unit value of the fund and is calculated based on the market value of its underlying assets..
Periodic Review: Investors periodically review the performance of their mutual fund investments, considering changes in market conditions, fund strategy, and their own financial goals.
Understanding and following this process allows investors to effectively utilize mutual funds as investment vehicles, leveraging professional management and diversification to achieve their financial objectives.
