Mutual fund schemes are classified on their structure and objectives:

Structure:

• Open-ended Funds

The open ended fund is one which is available to subscribe throughout the year. They don’t have fixed maturity. An investor can suitably trade units at NAV prices.

• Close-ended Funds

A close ended scheme has predefined maturity, which range between 3-15 years. You can subscribe the fund only during a specific period. Investors can put in his savings in this scheme at the time of IPO issue and then can buy/sell units on exchange, only if they are listed. The market price at stock exchanges could fluctuate from fund’s NAV on the back of demand & supply, unit holder’s outlook and various market factors.

• Interval Funds

Interval funds are the combined version of Open-ended as well as close-ended funds. These funds are available for trading in stock exchange at predetermined intervals.

 

By Investment Objective:

• Growth Funds

The objective of these growth funds is to offer better returns from small to long term. These schemes generally invest their capital in equities. This type of scheme is perfect for investors who have long term plans and are looking for growth in long term.

• Income Funds

The objective of this scheme is to offer timely and stable income to investors. These schemes usually invest in fixed returning securities like corporate debentures, bonds and government securities.

Income fund schemes are perfect for stability of returns and constant returns. Appreciation of capital in income funds may be restricted, however risk is usually lower than it is in growth fund.

• Balanced Funds

The objective of balanced funds scheme is to offer both growth and timely income. These schemes timely distribute some part of earnings and put the funds in equities as well as fixed income securities in the proportions mentioned in offer documents. This part impacts the risks and the profits related with balanced fund. If equities are offered higher proportion, investor will be open to risk which is same as that of equity market.

Balanced funds have same distribution to equity stocks and fixed income securities which is perfect for investors seeking for mixture of income and modest growth.

• Money Market Funds

The objective of money market is to give liquidity, capital preservation and modest income. Such schemes usually put funds in safe short term investment like Commercial paper, Treasury Bills, CoD and Inter-bank call money. The returns on such schemes vary on the basis of interest rates in the market. This is perfect for corp or individual clients to park their funds for short term.

• Gilt Funds

Interval funds are the combined version of Open-ended as well as close-ended funds. These funds are available for trading in stock exchange at predetermined intervals.

 

Other Equity Related Schemes:

• Tax Saving Schemes

These schemes give rebate on tax to investors under particular provisions of Income Tax Act, as government gives tax incentives for investing some specific segments. Investors are recommended to discuss with their advisors for more info.

• Index Schemes

Index scheme try to repeat the performance of specific index like BSE Sensex or NSE S&P CNX 50.

• Sectoral Schemes

Sectoral Funds is that scheme which invests wholly in some sectors like FMCG, Pharma, IT etc. These schemes have higher risks in comparison to equity schemes because portfolio is not much diversified and is restricted to some sectors or industries.