TYPES OF FUNDS

There are different types of mutual funds taking into consideration the preferences and mentality of different investors. Broadly mutual funds are divided into three types,

(1) On the basis of objective
(2) On the basis of flexibility
(3) On the basis of geographical location.


(a) On the basis of Objective

Equity Funds/ Growth Funds
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.
Types of equity funds:
AGGRESSIVE GROWTH FUNDS: Investment in less researched or speculative/non-blue chip stocks
n GROWTH FUNDS: Investment in stocks with above average growth prospects over 3-5 years.example: Tech Stock
n SPECIALITY FUNDS: Sector, Offshore, Small-cap equity, Option income funds
n DIVERSIFIED EQUITY FUNDS: ELSS. Ex: ETSP
n EQUITY INDEX FUNDS
n VALUE FUNDS: Invest in fundamentally sound companies with low P/E ratio.
n EQUITY INCOME FUND: Invest in sectors where low fluctuation in stock price and high dividend is expected.