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Types of Mutual Funds


Open Ended Funds:  In this type of funds, any time the investor can buy the fund. These funds have the subscription, on continuous basis they can repurchase; they can sell by the Net Asset Value according to the declaration by the fund house. The fund has growing asset value; don’t have the fixed maturity period and generally these funds are not listed on exchanges.

Closed Ended Funds: In this type of funds, investments have a fixed duration and these investments are collected by the fund manager. If new investors want to buy they can’t buy directly. Only they can buy from existing investors only. These funds are listed in exchanges and before maturity; they can sell by trade exchange.

Interval Funds: These Funds have a specific period where you can buy or sell the funds according to the fund manager. The period may monthly, quarterly and yearly.

Type of Mutual funds based on Asset:

Equity Funds: In equity funds, the funds are invested by stocks or shares or equities of Companies. These funds are also called as stock funds. Equity fund provides the high returns but has a high-risk tendency. These funds used to get ownership of companies by investing in shares but not directly. The aim of the fund is growth the ownership of a company over a time period.

Debt Funds: The Investment in the funds by company debentures, fixed income assets, and government bonds. This fund provides fixed returns and a more safe investment method.

Money Market Funds: Money markets are called as cash markets. These are the funds that invest treasury bills, CPs, CDs. i.e. Liquid Instruments. These funds have moderate returns and have risks like credit risks, reinvestment risks, and interest risks.

Balanced or Hybrid Funds: In these funds that invest by stocks, shares, debuts, bonds. These funds invest more in equity funds and low in debut funds to maintain the low risk. In equity funds invest 65% to 80% and in debut funds 20 to 30%.

Types of Mutual Funds Based on Investment Objective:

Growth Funds: The purpose of these funds providing Capital appreciation by investing mainly in equity stocks. The money is directly invested in stocks. These funds have high risk, ideal for investors with a long period of investment. These funds have high returns.

Income Funds: In this scheme, money is mainly invested in the form of fixed income instruments like bonds, debentures with the reason of providing regular investors income and capital protection.

Liquid Funds: The main purpose of providing liquidity by means of CT bills, Cps for very short term investments.

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