Detailed List of the Types of Mutual Fund Schemes in India in 2021

Detailed List of the Types of Mutual Funds

The assets under management of the Indian mutual fund industry stands at a staggering Rs 23.23 Trillion. With more than 9.37 Crore folios across all types of mutual funds in India, mutual funds are slowly but surely becoming the preferred investment option for retail Investors. 

But before you invest in mutual funds, you need to know about the various types of mutual funds in India, their investment objective and risk appetite.

The types of mutual fund schemes in India can be categorised based on:  

  • Management
  • Structure
  • Asset class
  • Risk Level 
  • Investment philosophy
  • Speciality. 

Types of Mutual Fund Schemes in India Based on Management

1. Actively managed mutual funds

These types of mutual funds in India are actively managed by fund managers who constantly buy and sell shares as per their research and expertise. The primarily goal of an actively managed mutual fund is to generate alpha over the benchmark. 

Equity mutual funds (except index funds) are mostly actively managed mutual funds. Actively managed mutual funds are suitable for long term investors.

2. Passively managed mutual funds

The main objective of passively managed mutual funds is to mirror the returns of its benchmark index. The fund manager does not take active interest in managing the portfolio of such funds. 

Example of passively managed mutual funds: HDFC Index – Sensex Plan, ICICI Prudential Nifty Index Fund etc. 

Types of Mutual Fund Schemes in India Based on Structure 

1. Open ended mutual funds

Open ended type of mutual fund in India is where an investor can buy and sell units anytime throughout the year. There is no restriction on entry and exit. These funds offer highest liquidity as they can be redeemed as per daily NAV. 

Examples of open-ended mutual funds: Axis Bluechip Fund, Mirae Asset large-cap fund, SBI Midcap fund etc.

2. Close ended mutual funds

Close ended type of mutual funds in India have a fixed maturity date and cannot be redeemed before the maturity period. They can be sold on the stock exchange, but there is very little liquidity for close ended mutual funds. ELSS funds are an example of close ended mutual funds as they carry a compulsory 3-year lock-in period.

Examples of close ended mutual funds: Aditya Birla Sun Life Emerging Leaders Fund – Series – 3, DSP 3 Years Close Ended Equity Mutual Fund – (Maturity Date 4-Jan-2021) etc. 

3. Interval mutual funds

Interval mutual funds are a combination of open ended and close ended mutual funds as they allow investors to buy and sell units at predefined intervals. 

Examples of interval mutual funds: UTI Fixed Interval Income Fund – Annual Interval Fund – IV, Reliance Interval Fund – Annual Interval Fund – Series – I etc. 

Types of Mutual Fund Schemes in India Based on Asset Class

The 4 types of mutual fund schemes in India based on asset class are: 

  • Equity mutual funds
  • Debt mutual funds
  • Hybrid mutual funds 
  • Gold mutual funds

Let us understand these categories in further detail,

1. Equity mutual funds

Equity mutual funds predominantly invest in equity/stocks of companies and carry the highest risk. Historically, equity mutual funds have generated the highest returns over a long time period.

The types of equity mutual fund schemes as per market capitalisation are:

    • Large-cap equity mutual funds: Invest in the top 100 companies in the stock market as per market capitalisation. 
    • Mid-cap equity mutual funds: Invest in 101st – 250th company in the stock market as per market capitalisation. 
    • Small-cap equity mutual funds: Invest in 251st company onwards as per market capitalisation. 

The below table highlights the various types of equity mutual funds based on their investment style and mandate: 

Category of Equity Mutual FundInvestment Mandate
Large-cap FundsMinimum 80% of the corpus needs to be invested in shares of large-cap companies. 
Large & Midcap FundMinimum 35% in large-cap and 35% in midcap company shares
Multi-cap FundMandate to invest across large-mid-small cap companies
Mid-cap FundMinimum 65% of the corpus needs to be invested in shares of mid-cap companies. 
Small-cap FundMinimum 65% of the corpus needs to be invested in shares of mid-cap companies. 
Dividend Yield Mutual FundsMinimum 65% of the corpus needs to be invested in shares of dividend yielding companies. 
Focused FundsMinimum 65% of the corpus in equity shares but not more than 30 unique stocks. 
Sectoral & Thematic funds80% of the corpus should be invested in sector or theme specific shares only. 
ELSS FundsActively managed equity fund with a 3-year statutory lock-in period and tax benefit of upto Rs 1.5 Lakh under section 80C of the Income Tax Act, 1961. 
Value/Contrarian The scheme has to mandatorily follow value investing or contrarian strategy approach and maintain 65% of corpus in equity. 
Index FundsA type of passive equity mutual fund which mirrors the benchmark index. 
Fund of FundsA type of mutual fund which invests its corpus in a basket of other mutual funds. Minimum 95% of corpus should be invested in underlying funds. 
Overseas FundsEquity mutual funds investing in overseas companies like Apple, Google, Microsoft etc. 

2. Debt/ fixed income mutual funds

A debt mutual fund invests in debt instruments of companies and governments like debentures, bonds, treasury bills, commercial papers, etc.  Debt mutual funds are considerably less risky than equity mutual funds but carry credit risk. 

Types of Debt Mutual Funds in India

Category of Debt Mutual FundInvest in Debt instruments with maturity period of
Overnight Funds1 Day
Liquid FundsUpto 91 days
Ultra Short Term Funds3 months – 6 months
Low Duration Funds6 months – 12 months
Money Market FundsUpto 1 Year
Short Duration Funds1 year – 3 years
Medium Duration Funds3 years – 4 years 
Medium to Long Duration4 years – 7 years
Long Duration7+ years
Dynamic Bond FundInvest across all durations
Corporate Bond FundMinimum 80% corpus in AAA rated papers only. 
Credit Risk Debt FundMinimum 65% corpus in AAA rated papers only. 
Banking & PSU Debt FundMinimum 80% corpus in public undertaking and banks
Gilt FundsMinimum 80% corpus in Government securities 
Gilt Fund with 10 year constant durationMinimum 80% corpus in Government securities but macaulay duration should be equal to 10 years. 
Floating Rate FundsMinimum 65% corpus in Floating rate instruments

3. Hybrid/balanced mutual funds

 Hybrid mutual funds are a combination of equity and debt mutual funds and carry a moderate – high risk profile. 

Types of Hybrid Mutual Funds in India

Category of Hybrid Mutual FundInvestment Mandate
Aggressive Hybrid FundEquity – 65% – 80% 

Debt – 35% – 20% 

Balanced Hybrid FundEquity – 40% – 60% 

Debt – 60% – 40% 

No arbitrage is allowed. 

Conservative Hybrid FundEquity – 10% – 25% 

Debt – 90% – 75% 

Dynamic Asset Allocation FundCan change equity-debt percentage dynamically
Arbitrage Hybrid FundThe fund will follow an arbitrage strategy with minimum 65% in equity. 
Equity Savings Hybrid FundMinimum 65% in Equity and 10% in Debt

4. Gold mutual funds

Gold mutual funds are a type of fund of funds as they invest in gold ETFs which track the performance of physical gold, gold producing and mining companies. Gold mutual funds help investors in participating in the growth of gold without actually holding physical gold. As gold is considered to be a hedge against inflation, gold mutual funds help investors hedge their equity portfolio.

Types of Mutual Funds Based on Risk Level

Risk and Return are directly proportional in mutual funds i.e. 

High Risk = High Returns.  

Low Risk = Low Returns.  

On the basis of risk, Mutual funds in India can be categorised as: 

Type of mutual fund as per risk Category of fund
Very low risk mutual funds Liquid and ultra short term debt funds
Low risk mutual fundsLow duration, money market, conservative hybrid funds 
Medium risk mutual fundsBalanced fund, large-cap fund, corporate bond funds 
Medium – High risk mutual fundsMulti-cap funds, aggressive hybrid funds 
High risk mutual fundsMid-cap, small-cap, credit risk funds

Types of Mutual Fund Schemes in India Based on Investment Philosophy

Following are the types of mutual fund schemes in India based on investment philosophy: 

Investment PhilosophyInvestment StyleSuitable For
Growth FundsInvest in predominantly equity sharesHigh risk profile ; long-term.
Income FundsInvest in predominantly debt instrumentsMedium risk profile ; medium-term
Liquid FundsInvest in instruments with less than 91 days maturityLow risk profile ; short-term
Tax Saving FundsInvest in predominantly equity sharesInvestors who want to save tax and will not need the money for 3 years. 
Aggressive Growth FundsInvests in aggressive companies to generate alpha High risk profile ; long-term 
Capital Protection FundsInvest in a mix of bonds, debentures and equity. Investors who want guaranteed capital protection 
Fixed Maturity FundInvest in predominantly debt instrumentsInvestors with low-medium risk profiles and who will not need the money till funds maturity.  

Types of Mutual Fund Schemes in India Based on Speciality

The types of mutual fund schemes in India based on special investment objective are: 

  • Solution oriented Funds: These funds are categorised as pension funds, retirement funds, child education funds etc and have high exit load period.
    For example, in retirement funds, a 2% exit load is applicable if redeemed before the unitholder completes 60 years of age.
  • International Funds: These funds invest solely in overseas companies using a direct or feeder approach.  
  • Global Funds: Global funds invest in both domestic and foreign markets. 
  • Real Estate Funds: A type of sectoral funds, these funds invest majority corpus in real estate companies instead of direct real estate projects. 
  • Commodity focused funds: Gold is the only commodity based mutual fund option available in India. 
  • Exchange Traded Funds: ETFs are a type of index funds but these are listed on the stock exchanges and you can trade them on a real time basis. 
  • Market neutral Funds: These funds indirectly invest in treasury bills, ETFs with a target to achieve steady growth without over exposing investors to market risks.
  • Asset Allocation Funds: These funds follow a fixed or tactical asset allocation approach between equity, debt and gold asset classes. 
  • Inverse/Leveraged Funds: These funds have an inverse relationship with the market. When the markets go up, these funds incur loss and when the markets fall, these funds make profits. These are extremely risky funds. 

While we have discussed the various types of mutual fund schemes in India, to find out which mutual fund scheme is the best for you, you need to look at various investment parameters like fund manager, fund house track record, exit load, historical performance etc. 

This might seem a lot of hard work for a novice investor and hence Samco’s RankMF platform is a unique mutual fund platform which ranks all types of mutual fund schemes in India based on 2 million parameters! 

Apart from telling you which is the best mutual fund in India, RankMF also tells you what is the best time to invest in the fund! To access RankMF open a Samco Demat and Trading account today and get access to the best mutual fund research and investing platform in India for absolutely free!

Share this article

Experience the new-gen fast trading app

Get the link to download the app.

Google Play Store App Store
Samco Fast Trading App

About The Author

Leave A Comment?