Understanding Mutual Funds: What are the different types of MFs available for investment in India?
Mutual funds are broadly categorised into five main types based on their underlying assets and investment objectives. These funds primarily invest in company stocks or equities. They are further classified based on market capitalisation (large-cap, mid-cap, small-cap).
Debt funds invest primarily in fixed-income securities such as government or corporate bonds. These funds aim to provide regular income with lower risk. Liquid funds suit investors looking for short-term investment options with high liquidity and low risk.
Liquid funds offer quick and easy access to funds. Hybrid or balanced funds invest in a mix of equities and debt instruments. The allocation between equity and debt varies based on the fund's investment objective.
ELSS funds are an equity mutual fund with a specific tax-saving feature under Section 80C of the Income Tax Act in India. These funds primarily invest in equity and equity-related instruments and have a lock-in period of three years. Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.Milestone Alert!
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