How many of you know the types of Mutual Funds in India? Many of us simply invest based on the returns or fancy star ratings. However, only a few know the complete list of mutual funds.
In this article, let us understand the complete list of mutual funds types as per the SEBI.
I am not going into the details of what is a mutual fund. In this post, I am just trying to share the types of mutual funds in India. This list is based on SEBI’s Categorization.
Types of Mutual Funds in India – A complete list
In this, at first you have to understand the types of mutual funds in India based on the structure and characteristic.
Types of Mutual Funds in India – Based on Structure
Open-Ended Funds:-These schemes are available for buying or selling on a continuous basis. There is no fixed maturity period. Investors have the option to buy and sell units at NAV which is declared on a daily basis. As you can buy and sell the units as per your wish, these schemes are liquid in nature.
Close-Ended Funds:-Units of a close-ended mutual fund are available for purchase during the NFO (New Fund Offer) period. In a close-ended mutual fund, a fixed number of units are issued. Redemption is allowed only after the maturity of the fund which varies from fund to fund.
Interval Funds:-These acts like Open-Ended Funds and also Close Ended Funds. These funds can be purchased or sold only at specific intervals as per the discretion of the mutual fund company. The fund remains closed for the rest of the time.
Types of Mutual Funds in India – Based on Characteristic
As per the SEBI, the types of Mutual Funds in India are broadly categorized as below.
a. Equity Schemes
b. Debt Schemes
c. Hybrid Schemes
d. Solution-Oriented Schemes
e. Other Schemes
Within these schemes again the various categories are specified. Let us see one by one. Let me share the same through this below image.
Now, let us understand the definition of these categories in detail like how SEBI defined them.
a. Equity Schemes
| 1 | Multi Cap Funds | Minimum investment in equity & equity related instruments–65% of total assets | Multi Cap Fund – An equity mutual fund investing across Large Cap, Mid Cap, Small Cap stocks |
| 2 | Large Cap Funds | Minimum investment in equity & equity related instruments of large cap companies – 80% of total assets | Large Cap Fund – An equitymutual fund predominantly investing in Large Cap stocks |
| 3 | Large & Mid Cap Funds | Minimum investment in equity & equity related instruments of large cap companies – 35% of total assetsMinimum investment in equity & equity related instruments of mid cap stocks – 35% of total assets | Large & Mid Cap Fund – An open ended equity mutualfund investing in both large cap and mid cap stocks |
| 4 | Mid Cap Funds | Minimum investment in equity & equity related instruments of mid cap companies – 65% of total assets | Mid Cap Fund – An equitymutual fund predominantly investing in Mid Cap stocks |
| 5 | Small Cap Funds | Minimum investment in equity & equity related instruments of small cap companies – 65% of total assets | Small Cap Fund – An equitymutual fund predominantly investing in Small Cap stocks |
| 6 | Dividend Yield Funds | Scheme should predominantly invest in dividend yielding stocks. Minimum investment in equity – 65% of total assets | An equitymutual fund predominantly investing in dividend yielding stocks |
| 7a | Value Funds* | Scheme should follow a value investment strategy. Minimum investment in equity & equity related instruments – 65% of total assets | An equitymutual fund following a value investment strategy |
| 7b | Contra Funds* | Scheme should follow a contrarian investment strategy. Minimum investment in equity & equity related instruments – 65% of total assets | An equitymutual fund following contrarian investment strategy |
| 8 | Focused Funds | A scheme focused on the number of stocks (maximum 30) Minimum investment in equity & equity related instruments – 65% of total assets | An equity scheme investing in maximum 30 stocks (mention where the scheme intends to focus, viz., multi cap, large cap, mid cap, small cap) |
| 9 | Sectoral Funds or Thematic | Minimum investment in equity & equity related instruments of a particular sector/particular theme – 80% of total assets | An open ended equity scheme following the theme as mentioned |
| 10 | ELSS Funds | Minimum investment in equity & equity related instruments – 80% of total assets (in accordance with Equity Linked Saving Scheme, 2005 notified by Ministry of Finance) | An open ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit |
b.Debt Schemes
| 1 | Overnight Funds | Investment in overnight securities having maturity of 1 day | A debt scheme investing in overnight securities |
| 2 | Liquid Funds | Investment in Debt and money market securities with maturity of upto 91 days only | A liquid scheme |
| 3 | Ultra Short Duration Funds | Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 3 months – 6 months | An ultra – short term debt scheme investing in instruments with Macaulay duration between 3 months and 6 months |
| 4 | Low Duration Funds | Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 6 months – 12 months | A low duration debt scheme investing in instruments with Macaulay duration between 6 months and 12 months |
| 5 | Money Market Funds | Investment in Money Market instruments having maturity up to 1 year | A debt scheme investing in money market instruments |
| 6 | Short Duration Fund | Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 1 year – 3 years | A short term debt scheme investing in instruments with Macaulay duration between 1 year and 3 years |
| 7 | Medium Duration Funds | Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 3 years – 4 years | A medium term debt scheme investing in instruments with Macaulay duration between 3 years and 4 years |
| 8 | Medium to Long Duration Fund | Investment in Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 4 – 7 years | A medium term debt scheme investing in instruments with Macaulay duration between 4 years and 7 years |
| 9 | Long Duration Fund | Investment in Debt & Money Market Instruments such that the Macaulay duration of the portfolio is greater than 7 years | A debt scheme investing in instruments with Macaulay duration greater than 7 years |
| 10 | Dynamic Bond Funds | Investment across duration | A dynamic debt scheme investing across duration |
| 11 | Corporate Bond Funds | Minimum investment in corporate bonds – 80% of total assets (only in highest rated instruments) | A debt scheme predominantly investing in highest rated corporate bonds |
| 12 | Credit Risk Funds | Minimum investment in corporate bonds – 65% of total assets ( investment in below highest rated instruments) | A debt scheme investing in below highest rated corporate bonds |
| 13 | Banking and PSU Fund | Minimum investment in Debt instruments of banks, Public Sector Undertakings, Public Financial Institutions – 80% of total assets | A debt scheme predominantly investing in Debt instruments of banks, Public Sector Undertakings, Public Financial Institutions |
| 14 | Gilt Fund | Minimum investment in Gsecs – 80% of total assets (across maturity) | A debt scheme investing in government securities across maturity |
| 15 | Gilt Fund with 10 year constant duration | Minimum investment in Gsecs – 80% of total assets such that the Macaulay duration of the portfolio is equal to 10 years | A debt scheme investing in government securities having a constant maturity of 10 years |
| 16 | Floater Fund | Minimum investment in floating rate instruments – 65% of total assets | A debt scheme predominantly investing in floating rate instruments |
c. Hybrid Schemes
| 1 | Conservative Hybrid Funds | Investment in equity & equity related instruments – between 10% and 25% of total assets; Investment in Debt instruments – between 75% and 90% of total assets | A hybrid mutual fund investing predominantly in debt instruments |
| 2A | Balanced Hybrid Funds@ | Equity & Equity related instruments – between 40% and 60% of total assets; Debt instruments – between 40% and 60% of total assets. No Arbitrage would be permitted in this scheme | 50-50 balanced scheme investing in equity and debt instruments |
| 2B | Aggressive Hybrid Funds | Equity & Equity related instruments – between 65% and 80% of total assets; Debt instruments – between 20% – 35% of total assets. Most of the balanced funds will fall into this category. | A hybrid scheme investing predominantly in equity and equity related instruments |
| 3 | Dynamic Asset Allocation Funds or Balanced Advantage | Investment in equity/ debt that is managed dynamically. All famous balanced advantage or dynamic funds will fall into this category. | A hybrid mutual fund which will change its equity exposure based on market conditions |
| 4 | Multi-Asset Allocation Funds | Invests in at least three asset classes with a minimum allocation of at least 10% each in all three asset classes. Foreign investment will be considered as a separate asset class. | A scheme investing in 3 different assetclasses. |
| 5 | Arbitrage Funds | Scheme following arbitrage strategy. Minimum investment in equity & equity related instruments – 65% of total assets | A scheme investing in arbitrage opportunities |
| 6 | Equity Savings | Minimum investment in equity & equity related instruments – 65% of total assets and minimum investment in debt – 10% of total assets. Minimum hedged & unhedged to be stated in the SID. Asset Allocation under defensive considerations may also be stated in the Offer Document | A scheme investing in equity, arbitrage, and debt |
d.Solution Oriented Schemes:–
| 1 | Retirement Fund | Scheme having a lock – in for at least 5 years or till retirement age whichever is earlier | A retirement solution oriented scheme having a lock-in of 5 years or till retirement age (whichever is earlier) |
| 2 | Children’s Fund | Scheme having a lock – in for at least 5 years or till the child attains age of majority whichever is earlier | A fund for investment for children having a lock – in for at least 5 years or till the child attains age of majority (whichever is earlier) |
e.Other Schemes:-
| 1 | Index Funds/ ETFs | Minimum investment in securities of a particular index (which is being replicated/ tracked) – 95% of total assets | A mutual fund replicating/ tracking any index |
| 2 | FoF’s (Overseas/Domestic) | Minimum investment in the underlying fund – 95% of total assets | A fund of fund is a mutual fund that invests in other mutual funds |
Conclusion –I hope you have now become aware of varies types of Mutual Funds in India. It may help you in choosing the funds suitable to you before blind jumping of investing in funds.
Note:-Don’t forget to read my earlier post “Top 10 Best SIP Mutual Funds to invest in India in 2020“.
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chandran
What is your take on Balanced Advantage fund for investment over a horizon of 5 years. Can you please suggest a few in case you recommend them ?
Basavaraj Tonagatti
Dear Chandran,
If your time horizon is 5 years, then better to stay away from equity.
Mahesh chandra
HI YOUR BLOG IS VERY INFORMATIVE, I have recently started investing in MF . My first one is ICICI pro balance advance fund-Growth with single primium of 1lack . Kindly advise which MF i should start investing to achieve my target with maximum profits in next 15 yrs .
Basavaraj Tonagatti
Dear Mahesh,
The problem in you is chasing the MAXIMUM profit. First define what you are expecting.
Pranshu
Hello Sir,
I am 37 years old and presently, I am running SIP in the following plans for a long-term period of at least 5-7 years:
1.ICICI Prudential Bluechip Growth – 50%
2.HDFC Mid-Cap – 30%
3.Nippon India Small-Cap – 20%
Considering the present circumstances, is it advisable to continue with the above plans?
Or should I switch some of these plans or make changes in ratios?
Basavaraj Tonagatti
Dear Pranshu,
What is the asset allocation you are following?
Bishaka Debbarma
Wonderfully explained in details.Thanks for sharing!
Anantha Padmanabhan
Very much informative. Thanks
VASANT KULKARNI
VERY LUCID AND INFORMATIVE DETAILS.
Basavaraj Tonagatti
Dear Vasant,
Pleasure 🙂
Dipak Jambusaria
Information compiled neatly and very helpful
Basavaraj Tonagatti
Dear Dipak,
Pleasure 🙂