Types
Of Mutual Funds
By
Structure
- Open Ended
These are schemes that do
not have a fixed maturity. The mutual fund ensures liquidity by announcing sale
and repurchase price for the unit of an open-ended fund.
- Closed Ended
These are schemes that have
a fixed maturity. The money of the investor is locked in for the period.
Occasionally, closed-end schemes provide a re-purchase option to the investors,
either for a specified period or after a specified period. Liquidity in these
schemes is provided through listing in a stock market; however this option is
not yet available in India.
- Interval Schemes
By Investment Objective
- Growth Schemes
Aim to provide capital appreciation over the medium to long term.
These schemes normally invest a majority of their funds in equities and
are willing to bear short term decline in value for possible future
appreciation.
These schemes are not for investors seeking regular income or needing
their money back in the short term.
- Income Schemes
Income Schemes Aim to provide regular and steady income to investors.
These schemes generally invest in
fixed income securities such as bonds and corporate
debentures. Capital appreciation in such schemes may be limited.
- Balanced Schemes
Aim to provide both growth
and income by periodically distributing a part of the income
and capital gains they earn. They invest in both shares and fixed
income securities in the proportion indicated in their offer documents.
In a rising stock market, the NAV of these schemes may not
normally keep pace or fall equally when the market falls.
- Money Market / Liquid Schemes
Aim to provide easy
liquidity, preservation of capital and moderate income. These
schemes generally invest in safer, short term instruments such as
treasury bills, certificates of deposit, commercial paper and inter bank
call money. Returns on these schemes may fluctuate, depending upon
the interest rates prevailing in the market.
Other Schemes
- Tax Saving Schemes (Equity Linked Saving Scheme - ELSS)
These schemes offer tax incentives to the investors under tax laws as
prescribed from time to time and promote long term investments
in equities through Mutual Funds.Eligible for deduction under section 80C
.Lock in period three years
- Index fund
Index fund schemes are ideal for investors who are satisfied with a
return approximately equal to that of an index.
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