What are the different types of Mutual Funds

Mutual funds can be classified into several types based on their investment objectives, structure, and asset classes. Here are the main types:

• Hybrid Mutual Funds:
• Invest in a mix of both equities and debt instruments.
• Offer a balance of risk and return.
• Suitable for investors who want moderate growth with lower risk than pure equity funds.
• Index Funds:
• Aim to replicate the performance of a specific market index like the Nifty 50 or Sensex.
• Passively managed, with lower fees compared to actively managed funds.
• Suitable for investors seeking long-term, market-average returns.
• Money Market Funds:
• Invest in short-term, low-risk instruments like commercial papers, certificates of deposit, and government securities.
• Provide liquidity and are low-risk, low-return investments.
• Suitable for conservative investors seeking safety and liquidity.
• ELSS (Equity Linked Savings Scheme):
• A type of equity mutual fund with tax benefits under Section 80C of the Income Tax Act.
• Has a mandatory 3-year lock-in period.
• Suitable for investors looking for tax-saving options with potential for high returns.