Types of Mutual Funds in India: A Comprehensive Guide

There are various types of mutual funds in India depending on different parameters. In this piece, we will delve into these different mutual fund types that are accessible in India, and explore their advantages with the help of relatable illustrations. To give you an overview, here’s the different types of mutual funds available in India.

  1. Equity Funds
  2. Debt Funds
  3. Money Market Funds
  4. Hybrid Funds
  5. Growth Funds
  6. Income Funds
  7. Liquid Funds
  8. Tax-Saving Funds
  9. Aggressive Growth Funds
  10. Capital Protection Funds
  11. Fixed Maturity Funds
  12. Pension Funds
  13. Other Extra Funds

Now let’s look at these different types of mutual funds with an example for each one of these.

Different Types Of Mutual Funds In India With Examples

Now let’s look at each of these 12 funds based on different parameters.

Different Types Of Mutual Funds Based on Asset Class

  1. Equity Funds

Equity funds, also known as stock funds, invest in company shares. These funds aim for substantial returns over time, offering growth potential. While they come with higher risk, they can yield impressive gains. Benefits include the chance to profit from the stock market’s growth. For instance, investing in the “WealthGrow Equity Fund” could lead to significant returns if the underlying company shares perform well.

  1. Debt Funds

Debt funds invest in fixed-income securities, providing stable income and lower risk. They suit investors looking for regular returns. Benefits include steady interest payments and safety of invested capital. Consider the “SteadyIncome Debt Fund” – it generates income through bonds, ensuring reliable earnings while minimizing risk.

  1. Money Market Funds

Similar to stock trading, money market funds invest in secure money market securities. These funds offer low-risk options for short-term goals, ensuring liquidity. Benefits include easy access to funds and regular dividends. Opt for the “QuickCash Money Fund” for short-term savings, allowing quick withdrawals and better returns than savings accounts.

  1. Hybrid Funds

Hybrid funds combine stocks and bonds, providing balanced growth and stability. They’re suitable for those seeking a mix of returns. Benefits include potential for both growth and steady income. Consider the “BalancedHarvest Hybrid Fund” for a balanced approach, offering growth potential through stocks and stability from bonds.

Different Types Of Mutual Funds Based on Investment Goals

  1. Growth Funds

Growth funds allocate to growth sectors, appealing to investors seeking high returns. Benefits include exposure to high-potential sectors. For example, the “FutureGrowth Fund” targets technology and innovation, potentially offering substantial profits if these sectors perform well.

  1. Income Funds

Income funds invest in bonds, delivering regular income. They suit risk-averse investors seeking consistent returns. Benefits include steady interest payments and capital preservation. The “SteadyReturns Income Fund” is ideal for those looking for reliable earnings over a 2-3 year horizon.

  1. Tax-Saving Funds

Tax-saving funds offer wealth growth and tax benefits. They’re suited for long-term investors seeking reduced tax liability. Benefits include tax savings along with investment growth. The “SmartSaver Tax Fund” provides a 3-year lock-in period for tax-saving benefits while aiming for returns.

  1. Liquid Funds

Liquid funds invest in short-term debt, offering liquidity and better returns than savings accounts. Benefits include quick access to funds and competitive returns. Choose the “EasyAccess Liquid Fund” for emergency funds, providing better returns than traditional savings.

Different Types Of Mutual Funds Based on Risk

  1. Low-Risk Funds

Low-risk funds like the “SecureSave Liquid Fund” offer stability and around 6% returns. Benefits include capital preservation and regular dividends. This fund is ideal for short-term goals with minimal risk.

  1. Medium-Risk Funds

BalancedRisk Funds provide moderate returns of 9-12% by balancing debt and equity. Benefits include steady growth potential. The “BalancedWealth Fund” offers a mix of safety and returns, suitable for those comfortable with moderate risk.

  1. High-Risk Funds

High-risk funds like the “BoldGains Fund” target returns of 15-20%. Benefits include the potential for significant profits, but careful monitoring is essential. This fund is for investors willing to tolerate higher risk for the chance of impressive returns.

Different Types Of Mutual Funds Based on Structure

  1. Open-Ended Funds

Open-ended funds such as the “FlexibleFreedom Fund” offer flexibility in buying and selling. Benefits include convenience and liquidity. This fund allows you to enter or exit at any time based on the prevailing NAV.

  1. Closed-Ended Funds

Closed-ended funds like the “DefinedReturns Fund” have a fixed maturity period and predefined units. Benefits include disciplined investing and fixed-term commitment. This fund is suited for those seeking stability over a predetermined period.

  1. Interval Funds

Interval funds like the “SmartSaver Interval Fund” allow investments at specific intervals. Benefits include planned savings for short-term goals. This fund is perfect for individuals with specific investment time frames.

10 Benefits Of Mutual Funds In India

Mutual funds are like a smart way to invest your money without needing to be a finance expert. They’re like a bunch of different investments bundled up together. Here’s why they’re a good idea:

1. Less Risk, More Gain: When you invest in a mutual fund, your money gets spread out across lots of different things, like stocks or bonds. This is great because if one thing doesn’t do well, it doesn’t hurt your money too much. And if something does really well, you get some nice profit.

2. Expert Help: There are smart people who manage these funds. They know all about the money world and try to make good choices for you. You don’t have to stress about which things to pick – they handle that part.

3. Different Choices: There are many types of mutual funds. Some are about growing your money a lot (like if you want to take a little risk for more reward). Others are more about steady income (like if you want to be sure you get money regularly).

4. Easy Start: You don’t need a ton of money to start with mutual funds. You can begin with a small amount and add more whenever you want.

5. Tax Benefits: Some mutual funds even help you save on taxes. So, you can grow your money and keep more of it in your pocket.

6. No Guesswork: You don’t need to guess which companies or things to invest in. The experts who manage the mutual fund take care of that, so you can relax.

7. Flexibility: If you ever need your money, you can usually get it pretty quickly. It’s not locked away like some investments.

8. No Need to Watch Every Day: You don’t have to keep an eye on the market every single day. The fund managers do that for you.

9. Mix It Up: Some mutual funds mix different things, like stocks and bonds. This can help you balance things out and not put all your eggs in one basket.

10. Friendly for Beginners: Even if you’re just starting with investing, mutual funds can be a good way to go. You don’t need to know a ton to get started.

So, these are some of the cool things about mutual funds. They’re like a team effort to grow your money without a bunch of stress. Remember though, it’s always good to chat with a money expert before you make big choices about your money.

In Conclusion

Understanding the different types of mutual funds in India is essential for successful investing. Each type offers unique benefits to match your financial goals and risk tolerance. Whether you’re aiming for growth, income, tax savings, or capital preservation, there’s a mutual fund type that suits your needs. Remember to consult with a financial advisor before making investment decisions.


What makes up a mutual fund portfolio?

A mutual fund portfolio is a collection of different things a fund owns. This includes things like short-term debt, stocks, bonds, and more.

How do people buy and sell mutual funds?

People can buy mutual fund shares directly from the company that manages the funds or from a broker who specializes in those funds.

When can someone start investing in mutual funds?

You can start investing in mutual funds in India when you are 18 years old. So, as soon as you begin earning and saving, you can start with mutual fund plans.

Is having a PAN card a must for mutual fund investing?

Yes, having a PAN card is necessary if you want to invest in mutual funds.

What does “NAV” mean when we talk about mutual funds?

“NAV” stands for Net Asset Value. It tells us how much all the things in a mutual fund, like stocks and bonds, are worth right now.

Are debt funds completely safe?

Debt funds have some risk, but they are safer than equity funds. This is because debt funds don’t invest in stocks, which can be more unpredictable.


Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.