Mutual Fund Types
Understanding open-ended vs close-ended, active vs passive, and asset class-based fund categories.
Structural Classification
Open-Ended Funds
Perpetual schemes allowing subscription and redemption on any business day at prevailing NAV. Most common and flexible.
Close-Ended Funds
Fixed maturity duration with capital locked from NFO until maturity. Listed on exchanges for secondary market liquidity.
Management Style
Active Funds
Fund manager actively selects securities aiming to beat benchmark (generate alpha). Higher expense ratios due to research and management costs.
Passive Funds
Replicate index composition (Nifty 50, Sensex). Lower expense ratios. Returns mirror index performance.
Asset Class Categories
Equity Funds
Invest primarily in stocks. Categories include large-cap, mid-cap, small-cap, multi-cap, sectoral/thematic, and ELSS (tax saver).
Debt Funds
Invest in fixed-income instruments (bonds, treasury bills, corporate debt). Lower risk, steady income. Categories include liquid, ultra short-term, short-term, and gilt funds.
Hybrid Funds
Mix of equity and debt. Balanced advantage, aggressive hybrid (more equity), conservative hybrid (more debt).
Solution-Oriented Schemes
Retirement Funds
Lock-in until retirement age (58+). Long-term wealth creation for retirement corpus.
Children's Funds
Lock-in until child turns 18. Goal-based investing for education/marriage expenses.