What Are the Types of Different Mutual Fund Schemes?

A mutual fund, as the name suggests, is a pool of assets, created by a fund manager, where an investor can get proportionate ownership by purchasing its units. The investor is free to choose if he/she wants to invest in only equity or, debt assets or a mix of both.

Mutual Fund schemes, as we dissect the concept further, offer the advantage of diversification to investors as they can spread their investments across varied asset classes, and thus create a balanced portfolio.  In a diversified portfolio, the risk associated with any one asset class is mitigated by another asset class, which helps investors to not lose out on the entire value, in case one of the assets goes through a turbulent period. Another benefit of mutual Funds is that the funds are managed by expert fund managers who can make choose right type of stocks and other securities and conduct timely research.

Speaking of mutual fund schemes, they can be broadly divided into the following categories –

  1. Equity schemes – These mutual fund schemes invest primarily in equities thus aiming at capital appreciation. It is advisable to invest in these for the long term, ideally 5 years+. There are many variants of equity schemes, such as mid cap, large cap and small cap funds, etc.
  1. Debt funds – These type of mutual fund schemes invest in fixed income securities such as treasury bills, corporate bonds, certificate of deposit, government deposit, etc. The aim here is to generate income for investors. Some of the debt fund types are liquid, overnight, low duration and money market funds, etc.
  1. Hybrid funds – As the name suggests, these funds invest both in equities as well as fixed income. This helps in growth as well as income generation. Some of the fund examples in this category is dynamic asset allocation funds, arbitrage fund, etc.

We have made an in depth analysis on mutual fund schemes. Now, the way to invest in these schemes is through lumpsum or SIP. For a better decision making in terms of SIP investment, a tool called SIP return calculator is widely used. This is an easily accessible tool for investors to better understand the concept of a SIPs as well as know what return they can expect from SIPs.

For example, if Sanjyot invests an amount of Rs. 10,000 in monthly SIP in a scheme for a period of 10 years, he can accumulate a corpus of over Rs 23 Lakhs, assuming the rate of return as 12%. In this case, the invested amount over 10 years is Rs. 12 Lakhs. If he invests in the chosen fund in a disciplined way, the SIP return calculator helps him understand the corpus he can potentially accumulate. This helps him in planning his monthly finances and understanding how much he should keep aside from his monthly salary, to invest for his financial goals.

SIP return Calculator gives one the advantage of planning without the hassle of manual calculation. It is fast, easy & accurate and can be accessed online and used as per convenience.

Mutual fund schemes are available in a wide range of categories for investors to invest. Based on their custom needs, one can choose a suitable scheme and start with the investment to head towards their financial goals. And, tools like the SIP Return calculator aids this process.

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