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Home / Mutual Funds

Mutual Funds

Classification of Mutual Funds

Mutual Funds can be segregated based on their functions. They are classified as.

• Equity Funds.
  
  
• Bond Funds.
  
  
• Balanced Funds.
  
  
• Gilt Funds.
  
  
• Money-Market Funds.
  
  
• Tax Saving funds.
  
  
• Equity Linked Savings Schemes (ELSS), etc.

The implication is that these schemes will operate based on their specific classification. A pure equity fund will invest a majority of their funds in the equity market. Similarly a pure Bond Fund will invest the majority of their funds in the Bond Market. Hence it is important for the investor to identify his requirements and then select a mutual fund that best suits their preferences.

For instance, an individual with a reasonably high net worth will be more interested in investments which will help reduce his tax burden. Hence he may opt for the tax-saving schemes. However these schemes may generate comparatively lesser returns. If the person is a risk-taker and at the same time he wants to save on taxes, in such a situation he can invest in ELSS schemes.

Click here to understand why should you invest in Mutual Funds.

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