Types of Mutual Fund

Types Of Mutual Funds

Equity funds Equity funds primarily invest in stocks of different companies. Here, factors like revenue forecasts, company policies, earnings, management changes, and economic policies impact overall returns and price movements. They can further be categorised into the following:

Debt funds You invest in fixed-income securities like corporate bonds, treasury bills, government securities, commercial papers, and other money market instruments through debt funds.

Market fluctuations do not usually impact the returns on debt securities. These low-risk investment avenues have a pre-defined interest rate and maturity period.

Balanced funds Balanced funds allocate the assets in both debt and equity instruments. These funds are considered to deliver an excellent risk-reward balance since they allow good capital gains at the lowest possible risks.

Typically, fund managers fill 40%-60% of the fund’s portfolio with equity securities and the rest with debt vehicles.

Therefore, the NAV is comparatively less volatile. Thus, if you want to leverage market movements with a low-risk potential, these equity-oriented funds serve the purpose.

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