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Types of Mutual Funds
Amid the increasing popularity of investments, Mutual funds have become a popular choice for investors looking to grow their wealth with expert management and diversified portfolios. Mutual Funds are of various types that serve diverse and specific financial goals. Find out in the article below how these different types of mutual funds work.
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Mutual Fund
- Types of Mutual Funds
Best SIP Funds
Payment Mode
Invest
₹ 10,000
Invest for
Instant tax receipt
Large Cap Equity Fund
AUM (Cr)
₹2,780
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.95 %
Instant tax receipt
Instant tax receipt
Accelerator Mid-Cap Fund II
AUM (Cr)
₹5,888
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.68 %
Instant tax receipt
Opportunities Fund
AUM (Cr)
₹38,561
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 23.26 %
Instant tax receipt
Diversified Equity Fund
AUM (Cr)
₹3,683
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 18.12 %
Instant tax receipt
Frontline Equity Fund
AUM (Cr)
₹4,489
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.09 %
Instant tax receipt
Grow Money Plus Fund
AUM (Cr)
₹454
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 17.91 %
Instant tax receipt
Instant tax receipt
Instant tax receipt
Large Cap Equity Fund
AUM (Cr)
₹2,780
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.95 %
Diversified Equity Fund
AUM (Cr)
₹3,683
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 18.12 %
Frontline Equity Fund
AUM (Cr)
₹4,489
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.09 %
Grow Money Plus Fund
AUM (Cr)
₹454
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 17.91 %
Growth Super Fund
AUM (Cr)
₹13,662
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 17.5 %
Accelerator Mid-Cap Fund II
AUM (Cr)
₹5,888
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 21.68 %
Opportunities Fund
AUM (Cr)
₹38,561
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 23.26 %
Growth Opportunities Plus Fund
AUM (Cr)
₹1,025
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.46 %
Classic Opportunities Fund
AUM (Cr)
₹13,991
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 19.17 %
Opportunities Fund
AUM (Cr)
₹3,493
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.52 %
Whole Life Income Fund
AUM (Cr)
₹849
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 6.07 %
Individual Preserver Pension Fund
AUM (Cr)
₹140
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 5.53 %
Whole Life Aggressive Growth Fund
AUM (Cr)
₹912
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 20.62 %
Save N Grow Money Fund
AUM (Cr)
₹65
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 10.84 %
Asset Allocation Fund II
AUM (Cr)
₹297
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 12.45 %
Multi Cap Balanced Fund
AUM (Cr)
₹2,027
Estimated Value
₹
After 5 years
Returns (p.a.)
+ 13.01 %
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What Are Mutual Funds?
A mutual fund pools money from many investors to buy a mix of stocks, bonds, or other securities. Each investor owns units representing their share of the fund. Professional fund managers handle the buying and selling of assets to meet the fund’s goals. This makes mutual funds a convenient way for individuals to invest without having to pick and manage investments themselves.
- Insurance Companies
- Mutual Funds
| Returns | ||||
|---|---|---|---|---|
| Fund Name | 5 Years | 7 Years | 10 Years | |
| High Growth Fund Axis Max Life | 32.5% | 21.1% |
18.6%
View Plan
|
|
| Top 200 Fund Tata AIA Life | 30.5% | 21% |
18.2%
View Plan
|
|
| Accelerator Mid-Cap Fund II Bajaj Allianz | 21.68% | 12.49% |
13.62%
View Plan
|
|
| Opportunities Fund HDFC Life | 23.26% | 14.56% |
13.62%
View Plan
|
|
| Equity II Fund Canara HSBC Life | 17.12% | 9.88% |
9.64%
View Plan
|
|
| Growth Opportunities Plus Fund Bharti AXA | 20.46% | 14.44% |
13.67%
View Plan
|
|
| Multiplier Birla Sun Life | 23.49% | 14.17% |
14.55%
View Plan
|
|
| Equity Large Cap Fund Edelwiess Life | 16.79% | 10.5% |
9.71%
View Plan
|
|
| Opportunities Fund ICICI Prudential Life | 20.52% | 13.06% |
11.74%
View Plan
|
|
| Balanced Fund LIC India | 10.71% | - |
-
View Plan
|
|
Fund rating powered by
Last updated:
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| Returns | ||||
|---|---|---|---|---|
| Fund Name | 3 Years | 5 Years | 10 Years | |
| Active Fund QUANT | 23.92% | 31.48% |
21.87%
|
|
| Flexi Cap Fund PARAG PARIKH | 20.69% | 26.41% |
19.28%
|
|
| Large and Mid-Cap Fund EDELWEISS | 22.34% | 24.29% |
17.94%
|
|
| Equity Opportunities Fund KOTAK | 24.64% | 25.01% |
19.45%
|
|
| Large and Midcap Fund MIRAE ASSET | 19.74% | 24.32% |
22.50%
|
|
| Flexi Cap Fund PGIM INDIA | 14.75% | 23.39% |
-
|
|
| Flexi Cap Fund DSP | 18.41% | 22.33% |
16.91%
|
|
| Emerging Equities Fund CANARA ROBECO | 20.05% | 21.80% |
15.92%
|
|
| Focused fund SUNDARAM | 18.27% | 18.22% |
16.55%
|
|
Last updated: June 2025
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Types of Mutual Funds
Mutual funds are not a one-size-fits-all solution. They come in various types, each designed to cater to distinct investment objectives, risk appetites, and market structures. Understanding these classifications is important for you to make informed decisions and align your investments with your financial objectives.
Let's explore the various types of mutual funds that exist:
-
Based on Asset Class
This is perhaps the most fundamental way to categorize mutual funds, focusing on the primary type of securities they hold.
-
Equity Funds:
These funds primarily invest in stocks (stocks) of companies. They aim for capital growth and are generally considered higher-risk, higher-reward investments. They're ideal for long-term investors comfortable with market fluctuations.
Examples include:
-
Large-cap funds (invest in financially stable, large companies)
-
Mid-cap funds (focus on medium-sized companies with growth potential)
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Small-cap funds (target smaller, rapidly growing companies)
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Multi-cap funds (diversify across large, mid, and small caps)
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Sectoral/Thematic funds (concentrate on specific industries or themes)
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-
Debt Funds:
As the name suggests, these funds primarily invest in fixed-income securities like government bonds, corporate bonds, and other debt instruments. They aim to provide stable income and are generally less volatile than equity funds, making them suitable for investors seeking capital preservation and steady returns.
Examples include:
-
Liquid funds (for very short-term needs)
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Ultra-short duration funds
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Short duration funds
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Corporate bond funds
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Gilt funds (invest solely in government securities)
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Hybrid Funds:
These funds offer a balanced approach by investing in a mix of both equity and debt instruments. They aim to provide a blend of growth potential from equities and stability from debt, appealing to investors with a moderate risk appetite.
Examples include:
-
Aggressive hybrid funds (more equity exposure)
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Conservative hybrid funds (more debt exposure)
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Balanced Advantage Funds (dynamically adjust their asset allocation based on market conditions)
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Money Market Funds:
Money Market Funds invest in very short-term debt instruments such as Treasury bills, offering safety and liquidity with minimal risk.
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Based on Investment Goals
These categories align mutual funds with specific financial objectives investors might have.
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Growth Funds:
These funds prioritize capital appreciation over the long term. They typically invest in companies with high growth potential and may not distribute regular dividends, preferring to reinvest earnings.
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Income Funds:
The primary goal of income funds is to generate a steady stream of income for investors. They achieve this by investing in bonds, fixed-income securities, or dividend-paying stocks, suitable for those seeking regular payouts.
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Tax-Saving Funds (ELSS):
Equity Linked Saving Schemes (ELSS) offer tax benefits under Section 80C of the Income Tax Act in India, alongside the potential for capital appreciation through equity investments. They come with a mandatory lock-in period.
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Liquid Funds:
Designed for short-term parking of surplus funds, liquid funds prioritize liquidity and capital safety. They invest in very short-term debt instruments, offering easy access to your money with minimal risk.
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Capital Protection Funds:
Designed for conservative investors, these funds aim to protect the principal amount while offering modest returns.
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Pension Funds:
Created to build a retirement corpus, these funds invest in a mix of assets to provide income post-retirement.
-
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Based on Fund Structure
This classification dictates how investors can buy and sell units of the fund.
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Open-Ended Funds:
These funds are highly flexible. Investors can continuously buy and sell units directly with the mutual fund house at Net Asset Value (NAV)-related prices. They offer high liquidity, making them popular for long-term wealth creation.
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Close-Ended Funds:
These funds have a fixed maturity date and a limited number of units. Investors can only subscribe during the initial New Fund Offer (NFO) period. After the NFO, units are typically traded on stock exchanges, similar to stocks.
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Interval Funds:
A blend of open-ended and close-ended funds, interval funds allow transactions (buying or selling units) only during pre-determined, specific intervals. This offers a balance between liquidity and a structured investment approach.
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Based on Risk Level
While not a formal classification, understanding the inherent risk of a fund category is crucial for investors.
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Very Low Risk Funds:
Typically money market or ultra-short duration debt funds that prioritize capital preservation and minimal fluctuations. Ideal for conservative investors.
-
Low Risk Funds:
Include certain short-duration debt funds or government bond funds, aiming for income generation with slightly more risk than very low-risk options.
-
Medium Risk Funds:
Often hybrid funds that combine equity and debt, seeking a balance between growth and stability. Suitable for investors with a moderate risk appetite.
-
High Risk Funds:
Predominantly equity funds, especially sectoral, thematic, mid-cap, or small-cap funds. These aim for substantial capital appreciation but come with higher volatility.
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Why Choose Mutual Funds?
You can choose to invest in mutual funds due to the following reasons:
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Professional Management: Your money is managed by experienced professionals who research and monitor the markets for you.
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Diversification: Mutual funds spread investments across many securities, reducing the risk of loss from any single investment.
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Easy to Start: You can begin with a small amount and invest regularly through SIPs (Systematic Investment Plans).
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Liquidity: Most mutual funds allow you to redeem your investments easily when needed.
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Tax Benefits: Some funds, like ELSS, offer tax savings, making them attractive for tax planning.
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Flexibility: With so many types available, you can choose funds that match your financial goals and risk tolerance.
How to Invest in Mutual Funds
Invest in mutual funds keeping in mind the following points:
-
Identify your financial goal and risk appetite.
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Choose the right type of mutual fund that fits your needs.
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Complete your KYC (Know Your Customer) process by submitting ID and address proofs.
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Invest via online platforms, financial advisors, or directly through fund houses.
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Monitor your investments periodically and switch funds if needed.
Conclusion
Mutual funds offer a powerful and versatile tool for wealth creation and financial planning. Understanding their types is necessary to make informed investment decisions. Whether you want long-term growth, regular income, tax benefits, or capital protection, there is a mutual fund designed to meet your needs. You can invest through a SIP (Systematic Investment Plan) to build wealth gradually and enjoy the benefits of professional management, diversification, and flexibility with mutual funds.
FAQs
-
What are the common types of mutual funds?
Mutual funds are mainly categorized as equity, debt, hybrid, and money market funds. -
Which mutual fund is suitable for beginners?
Hybrid funds or large-cap equity funds are recommended for beginners due to balanced risk and returns. -
Can I invest in multiple types of mutual funds simultaneously?
Yes, investing in different types helps diversify your portfolio and manage risk better. -
How do I redeem or withdraw from mutual funds?
Open-ended funds allow easy redemption anytime at the current NAV, usually processed within a few business days. -
Is there an eligibility requirement to invest in mutual funds?
Anyone who completes the KYC process can invest in mutual funds, with no strict income or age limits.
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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