What are the different types of Mutual Fund Schemes?

What triggered the new categorization and rationalization of Mutual Fund Schemes?

In October 2017, SEBI issued the rules for categorization and rationalization of Mutual Fund Schemes (MFS). The objective is to make it easier for investors to evaluate options before taking an informed decision. It hopes to do this by having clear distinction between Funds (their asset allocation and investment strategy etc.) and better uniformity. Further, each AMC can have only one Fund per category. Simply put, you can expect more discipline in Fund Managers sticking to the category rules and better comparisons.

What are different types of Mutual Funds?

Choosing a type of Mutual Fund, that is right for you, primarily depends on following parameters:

• Investment horizon, or how long you intend to hold it
• Risk Appetite
• Investment Goal

SEBI has classified Funds into 4 broad types — Equity, Debt, Balanced/Hybrid and Solution Oriented.

In the rest of the blog-post, we will cover the different types of Equity and Solution-Oriented MFs

Equity Funds

These MFs invest majority (>70%) of their corpus (investor’s money pooled together) in stocks, with an objective of capital growth. Different Fund Managers invest in different stocks based on their outlook on those companies’ future. These are suited for investors with a long-term horizon (usually more than 5 years). These MFs include

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