Today we will discuss the main classification of Mutual Funds
1. Equity
2. Debt
3. Hybrid
Equity mutual funds mean the entire investments will go into buying shares of different companies. These types of mutual funds are further divided into
1. index funds
2. large cap
3. mid cap
4. small cap
5. flexi cap
6. elss tax saver
7. sector funds
Debt funds mean — the amount you invest will be given to corporates as a loan and you will get an interest for it. It is similar to a fixed deposit. It is further classified into
1. liquid funds
2. overnight funds
3. money market funds
4. gilt funds (govt. securities)
5. Bond funds
6. credit risk fund (highest risk debt fund)
Hybrid funds mean a split of equity and debt. The fund manager will tell in advance what is going to be the % of equity vs debt
1. Aggressive (higher equity)
2. Balanced
3. Conservative (higher debt)