What are the types of mutual funds?
Mutual Funds come in different sizes and shapes – that’s the beauty of mutual funds!
If you have a precise investment requirement there is a mutual fund category just for that!
Let’s have a look at the broader categories of mutual funds –
Equity mutual funds:
Equity mutual funds is probably the most popular category of mutual funds.
Why? Because high returns!
In equity mutual fund, the fund manager (the guy who is managing your money) finds investment opportunities primarily in the share market.
The fund (and hence the fund manager) will operate within a mandate. What does this mean?
Ever heard of large cap funds? Yes, so large cap funds have a mandate to invest at least 80% of the money in the fund in equity and equity instruments of large cap companies! Investing in large cap companies is considered to be safe because large cap companies are subject to least volatility.
Similarly, we have thematic funds! These funds invest in companies associated with a specific theme. For example – an IT fund will invest primarily in the shares of IT sector and companies, an Infrastructure fund will invest primarily in the shares of infrastructure sector and related companies! While large cap funds are the safest equity mutual funds, thematic funds are considered to be the most volatile equity mutual funds.
Best Equity Mutual Funds to invest in 2019
Debt mutual funds:
Debt refers to loans! If you invest in equity, you are part owner of a venture; but if you invest in debt, you are a lender to a venture!