{"id":30846,"date":"2024-06-27T11:55:59","date_gmt":"2024-06-27T06:25:59","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=30846"},"modified":"2024-07-01T07:13:50","modified_gmt":"2024-07-01T01:43:50","slug":"a-comprehensive-guide-to-different-types-of-mutual-funds","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/a-comprehensive-guide-to-different-types-of-mutual-funds\/","title":{"rendered":"A Comprehensive Guide To Different Types Of Mutual Funds"},"content":{"rendered":"

Even if you are new to investing, you must have heard about <\/span>mutual funds<\/span><\/a>. It helps companies raise capital by investing in their shares. By collecting savings from the public in smaller units, companies turn them into productive investments by forming a huge capital investment. In mutual fund investments, diversification involves spreading investments across different asset classes, industries, and geographic regions. This helps mutual fund investors minimise the risk associated with any single asset or market they can diversify risk better than an individual investor might.\u00a0<\/span><\/p>\n

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If you are new to investing, the most important thing is to pick the right mutual fund for you. You must consider your risk tolerance and future financial goals.\u00a0<\/span><\/p>\n

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Don\u2019t know how to start saving? First, <\/span>set a financial goal<\/span><\/a>.<\/span><\/p><\/blockquote>\n

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After you have defined your risk capacity and set your financial goals, it\u2019s time to understand the different types of mutual funds that you can start investing in.<\/span><\/p>\n

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\"Start<\/a><\/b><\/h4>\n

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What Is A Mutual Fund?<\/strong><\/h4>\n

A mutual fund pools money from you to invest in a number of securities. This collective investment structure allows you to participate in a diversified portfolio of <\/span>stocks<\/span><\/a>, bonds and other assets, all at once.<\/span><\/p>\n

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What Are The Different Types Of Mutual Funds?<\/b><\/h4>\n

There are many types of mutual funds, each catering to specific objectives and risk tolerance. Each type offers a unique investment strategy, allowing you to diversify your portfolio. Here are some of the major types of mutual funds that are offered by fund houses:<\/span><\/p>\n

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1\/ Equity Funds<\/b><\/p>\n

Equity funds<\/span><\/a> invest primarily in stocks and are aimed at wealth generation over the longer term. They are suitable for you, if you are looking for capital growth and can tolerate higher levels of risk.<\/span><\/p>\n

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Here are the top 5 equity funds based on their 3-year returns as of 26 June 2024:<\/span><\/p>\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
\u00a0Equity Funds<\/strong><\/td>\n\u00a0 AUM*<\/strong><\/td>\n\u00a01Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a03Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a0TER^<\/strong><\/td>\n<\/tr>\n
Aditya Birla Sun Life PSU Equity Growth Direct Plan<\/a><\/td>\n\u00a0\u20b94711 cr<\/td>\n\u00a097.59%<\/td>\n\u00a041.48%<\/td>\n\u00a00.45%<\/td>\n<\/tr>\n
Invesco India PSU Equity Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91138 cr<\/td>\n\u00a099.31%<\/td>\n\u00a041.25%<\/td>\n\u00a00.93%<\/td>\n<\/tr>\n
Nippon India Power & Infra Bonus Bonus Growth Direct Plan<\/a><\/td>\n\u00a0\u20b95697 cr<\/td>\n\u00a085.16%<\/td>\n\u00a040.68%<\/td>\n\u00a01.14%<\/td>\n<\/tr>\n
Nippon India Power & Infra Growth Direct Plan<\/a><\/td>\n\u00a0\u20b95697 cr<\/td>\n\u00a085.16%<\/td>\n\u00a040.68%<\/td>\n\u00a01.14%<\/td>\n<\/tr>\n
ICICI Prudential Infrastructure Growth Direct Plan<\/a><\/td>\n\u00a0\u20b95034 cr<\/td>\n\u00a071.17%<\/td>\n\u00a040.36%<\/td>\n\u00a01.13%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

*Assets Under Management
\n^Total Expense Ratio<\/p>\n

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2\/ Debt Funds<\/b><\/p>\n

Debt funds<\/span><\/a> invest in bonds and other debt instruments, offering lower risk compared to equity funds. They aim to provide a more stable income to investors and are suitable for those who seek stability and preservation of capital.<\/span><\/p>\n

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Here are the top 5 debt funds based on their 3-year returns as of 26 June 2024:<\/span><\/p>\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
\u00a0Debt Funds<\/strong><\/td>\n\u00a0AUM<\/strong><\/td>\n\u00a01Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a03Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a0TER<\/strong><\/td>\n<\/tr>\n
Bank Of India Credit Risk Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9128 cr<\/td>\n\u00a06.75%<\/td>\n\u00a039.90%<\/td>\n\u00a01.19%<\/td>\n<\/tr>\n
Aditya Birla Sun Life Medium Term Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91864 cr<\/td>\n\u00a08.00%<\/td>\n\u00a013.37%<\/td>\n\u00a00.85%<\/td>\n<\/tr>\n
Bank Of India Short Term Income Growth Direct Plan<\/a><\/td>\n\u00a0\u20b978 cr<\/td>\n\u00a06.68%<\/td>\n\u00a012.51%<\/td>\n\u00a00.50%<\/td>\n<\/tr>\n
UTI Credit Risk Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9389 cr<\/td>\n\u00a07.46%<\/td>\n\u00a011.71%<\/td>\n\u00a00.89%<\/td>\n<\/tr>\n
UTI Dynamic Bond Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9514 cr<\/td>\n\u00a07.94%<\/td>\n\u00a011.18%<\/td>\n\u00a00.69%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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3\/ Hybrid Funds<\/b><\/p>\n

Hybrid funds<\/span><\/a>, also known as balanced funds, invest in a mix of equity and debt. They aim to balance the risk by diversifying investments across both asset classes, making them suitable for investors looking for moderate growth with lower volatility.<\/span><\/p>\n

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Here are the top 5 hybrid funds based on their 3-year returns as of 26 June 2024:<\/span><\/p>\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
\u00a0Hybrid Funds<\/strong><\/td>\n\u00a0AUM<\/strong><\/td>\n\u00a01Y Returns<\/strong><\/td>\n\u00a03Y Returns<\/strong><\/td>\n\u00a0TER<\/strong><\/td>\n<\/tr>\n
\u00a0JM Aggressive Hybrid Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9306 cr<\/td>\n\u00a060.01%<\/td>\n\u00a025.82%<\/td>\n\u00a00.60%<\/td>\n<\/tr>\n
\u00a0ICICI Prudential Equity & Debt Fund – Direct Plan – Growth<\/a><\/td>\n\u00a0\u20b935122 cr<\/td>\n\u00a041.00%<\/td>\n\u00a024.80%<\/td>\n\u00a01.00%<\/td>\n<\/tr>\n
\u00a0Bank of India Mid & Small Cap Equity & Debt Fund – Direct Plan – Growth<\/a><\/td>\n\u00a0\u20b9754 cr<\/td>\n\u00a054.00%<\/td>\n\u00a023.90%<\/td>\n\u00a01.20%<\/td>\n<\/tr>\n
\u00a0Quant Absolute Fund – Direct Plan – Growth<\/a><\/td>\n\u00a0\u20b92114 cr<\/td>\n\u00a041.30%<\/td>\n\u00a021.50%<\/td>\n\u00a00.80%<\/td>\n<\/tr>\n
\u00a0Edelweiss Aggressive Hybrid Fund – Direct Plan – Growth<\/a><\/td>\n\u00a0\u20b91661 cr<\/td>\n\u00a037.30%<\/td>\n\u00a021.40%<\/td>\n\u00a00.40%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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4\/ Index Funds<\/b><\/p>\n

Index funds<\/span><\/a> replicate the performance of a specific index, such as BSE Sensex, NIFTY 50 or the S&P 500, by investing in the stocks of companies that make up that index. They offer transparency and lower costs due to their passive management style.<\/span><\/p>\n

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Here are the top 5 index funds based on their 3-year returns as of 26 June 2024:<\/span><\/p>\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
\u00a0Index Funds<\/strong><\/td>\n\u00a0AUM<\/strong><\/td>\n\u00a01Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a03Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a0TER<\/strong><\/td>\n<\/tr>\n
Aditya Birla Sun Life Nifty Midcap 150 Index Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9196 cr<\/td>\n\u00a057.72%<\/td>\n\u00a027.50%<\/td>\n\u00a00.44%<\/td>\n<\/tr>\n
Motilal Oswal Nifty Midcap 150 Index Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91591 cr<\/td>\n\u00a057.45%<\/td>\n\u00a027.46%<\/td>\n\u00a00.30%<\/td>\n<\/tr>\n
Nippon India Nifty Midcap 150 Index Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91313 cr<\/td>\n\u00a057.11%<\/td>\n\u00a027.22%<\/td>\n\u00a00.30%<\/td>\n<\/tr>\n
Motilal Oswal Nifty Smallcap 250 Index Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9688 cr<\/td>\n\u00a064.40%<\/td>\n\u00a027.07%<\/td>\n\u00a00.36%<\/td>\n<\/tr>\n
Nippon India Nifty Smallcap 250 Index Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91319 cr<\/td>\n\u00a063.74%<\/td>\n\u00a026.96%<\/td>\n\u00a00.35%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Start investing<\/a> in Index Funds.<\/span><\/p><\/blockquote>\n

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5\/ Fund of Funds (FoFs)<\/b><\/p>\n

Funds of funds<\/span><\/a> invest in other mutual funds. The idea is to achieve broad diversification by holding a variety of fund types under one umbrella.<\/span><\/p>\n

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In simple terms, FOF is an investment strategy where a fund invests in a portfolio of other investment funds rather than investing directly in stocks, bonds, or other securities. So, they diversify risk.<\/span><\/p>\n

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Here are the top 5 FoFs based on their 3-year returns as of 26 June 2024:<\/span><\/p>\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
\u00a0Funds of Funds<\/strong><\/td>\n\u00a0AUM<\/strong><\/td>\n\u00a01Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a03Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a0TER<\/strong><\/td>\n<\/tr>\n
ICICI Prudential Bharat 22 FoF Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91362 cr<\/td>\n\u00a069.42%<\/td>\n\u00a040.09%<\/td>\n\u00a00.19%<\/td>\n<\/tr>\n
ICICI Prudential India Equity FoF Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9113 cr<\/td>\n\u00a050.80%<\/td>\n\u00a024.95%<\/td>\n\u00a01.26%<\/td>\n<\/tr>\n
Nippon India Nifty Next 50 Junior Bees FoF Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9403 cr<\/td>\n\u00a066.56%<\/td>\n\u00a023.28%<\/td>\n\u00a00.26%<\/td>\n<\/tr>\n
Kotak Multi Asset Allocator FoF Dynamic Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91454 cr<\/td>\n\u00a034.75%<\/td>\n\u00a021.09%<\/td>\n\u00a00.30%<\/td>\n<\/tr>\n
Mirae Asset NYSE FANG ETF FoF Growth Direct Plan<\/a><\/td>\n\u00a0\u20b91541 cr<\/td>\n\u00a051.24%<\/td>\n\u00a020.59%<\/td>\n\u00a00.71%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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6\/Solution-Oriented Funds<\/b><\/p>\n

Mutual funds that are designed to help you achieve specific financial goals, such as retirement planning or your child’s education are called as <\/span>solution-oriented mutual funds<\/span><\/a>. They have a defined investment horizon and a predetermined asset allocation strategy to meet your targeted objective. They are often passively managed, which means they aim to match the performance of a benchmark index.<\/span><\/p>\n

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Here are the top 5 solution-oriented funds based on their 3-year returns as of 26 June 2024:<\/span><\/p>\n\n\n\n\n\n\n<\/colgroup>\n\n\n\n\n\n\n\n
\u00a0Goal Oriented Funds<\/strong><\/td>\n\u00a0AUM<\/strong><\/td>\n\u00a01Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a03Y\u00a0 \u00a0Returns<\/strong><\/td>\n\u00a0TER<\/strong><\/td>\n<\/tr>\n
ICICI Prudential Retirement Pure Equity Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9796 cr<\/td>\n\u00a059.08%<\/td>\n\u00a031.62%<\/td>\n\u00a00.76%<\/td>\n<\/tr>\n
HDFC Retirement Saving Equity Growth Direct Plan<\/a><\/td>\n\u00a0\u20b95159 cr<\/td>\n\u00a041.67%<\/td>\n\u00a024.76%<\/td>\n\u00a00.67%<\/td>\n<\/tr>\n
ICICI Prudential Retirement Hybrid Aggressive Growth Direct Plan<\/a><\/td>\n\u00a0\u20b9477 cr<\/td>\n\u00a052.02%<\/td>\n\u00a023.38%<\/td>\n\u00a00.85%<\/td>\n<\/tr>\n
SBI Retirement Benefit Aggressive Growth Direct Plan<\/a><\/td>\n\u00a0\u20b92414 cr<\/td>\n\u00a036.65%<\/td>\n\u00a022.93%<\/td>\n\u00a00.82%<\/td>\n<\/tr>\n
Nippon India Retirement Wealth Creation Scheme Growth Direct Plan<\/a><\/td>\n\u00a0\u20b93102 cr<\/td>\n\u00a047.46%<\/td>\n\u00a022.28%<\/td>\n\u00a00.96%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Note: Only growth mutual funds are taken into consideration.<\/span><\/p>\n

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How Does SEBI Regulate Mutual Funds?<\/b><\/h4>\n

The Securities and Exchange Board of India (SEBI) regulates mutual funds to ensure transparency and protect the interests of investors. SEBI sets guidelines that fund managers must follow, ensuring a stable and trustworthy investment environment.<\/span><\/p>\n

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What Is a SIP Investment?<\/b><\/h4>\n

You can contribute small, regular amounts towards a mutual fund, rather than a lump sum in a Systematic Investment Plan (SIP). It is a method of investing a fixed sum, regularly, in a mutual fund scheme. Instead of investing a large amount in one go, you invest smaller amounts at regular intervals (say monthly). Investing in an SIP helps you reduce the risk in the investment world also known as “timing the market.”<\/span><\/p>\n

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Start your first SIP<\/a> in minutes.<\/p><\/blockquote>\n

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Each investment buys more units when the prices are low and fewer when the prices are high, averaging out the investment cost over time. This concept is also known as \u201crupee cost averaging\u201d. Over a long period, this can potentially lead to a significant amount of wealth. With the power of compounding, your investment returns start earning their own returns.<\/span><\/p>\n

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How Do Index Funds Work?<\/b><\/h4>\n

An index fund aims to replicate the performance of a specific stock market index, such as the Sensex, NIFTY 50, S&P 500 or some other market index. These funds buy the stocks that are part of an index in the same proportions in which they appear in that index.<\/span><\/p>\n

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Them working for you, while you Netflix and chill.#Memes<\/a> pic.twitter.com\/Sm0ZVWbQHV<\/a><\/p>\n

— Kuvera (@Kuvera_In) June 27, 2024<\/a><\/p><\/blockquote>\n