TYPES OF

MUTUAL FUNDS
Based on investment objective and maturity period
 NET ASSET VALUE[NAV]
Net asset value," or "NAV," of an investment company is the company's total assets minus its total
liabilities. For example, if an investment company has securities and other assets worth $100 million and has
liabilities of $10 million, the investment company's NAV will be $90 million.
 MATURITY PERIOD
 Open-ended funds/scheme;  Close-ended funds/scheme

A close-ended fund or scheme has a stipulated

An open-ended fund or scheme is one maturity period e.g. 5-7 years. The fund is open for
that is available for subscription and subscription only during a specified period at the time
repurchase on a continuous basis. These of launch of the scheme. Investors can invest in the
scheme at the time of the initial public issue and
schemes do not have a fixed maturity thereafter they can buy or sell the units of the
period. Investors can conveniently buy scheme on the stock exchanges where the units are
and sell units at Net Asset Value (NAV) listed. In order to provide an exit route to the
investors, some close-ended funds give an option of
related prices which are declared on a selling back the units to the mutual fund through
daily basis. The key feature of open-end periodic repurchase at NAV related prices. SEBI
schemes is liquidity. Regulations stipulate that at least one of the two exit
routes is provided to the investor i.e. either
repurchase facility or through listing on stock
exchanges. These mutual funds schemes disclose
NAV generally on weekly basis.
 INVESTMENT OBJECTIVE
A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment
objective. Such schemes may be open-ended or close-ended schemes as described earlier

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally
invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide
different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an
option depending on their preferences. The investors must indicate the option in the application form. The mutual
funds also allow the investors to change the options at a later date. Growth schemes are good for investors having
a long-term outlook seeking appreciation over a period of time.
Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in
fixed income securities such as bonds, corporate debentures, Government securities and money market
instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of
fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds.
The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall,
NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not
bother about these fluctuations.

 Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in
equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate
for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These
funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.
 Money Market or Liquid
Fund

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderat
income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of
deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes
fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors
as a means to park their surplus funds for short periods.
  Gilt Fund
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of
these schemes also fluctuate due to change in interest rates and other economic factors as is the case with
income or debt oriented schemes.
 Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty),
etc these schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes
would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to
some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer
document of the mutual fund scheme.

There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.
 DIRECT INVESTMENTS
Direct investment refers to the purchase of a significant stake in a company, with the intention of influencing its management
and operations. Direct investment can take the form of acquiring shares in a publicly traded company, or investing directly in a
privately held company. This type of investment differs from indirect investments, such as purchasing stock through a mutual
fund or exchange-traded fund (ETF), which provide exposure to a broad portfolio of companies rather than a single company.
The objective of a direct investment is to generate a long-term return on investment by participating in the growth and success
of the invested company. Direct investors may also seek to influence the company's strategy, operations, and management, with
the goal of improving its performance and maximizing their return on investment.
Direct investment can be a high-risk, high-reward strategy, as the success of the investment depends largely on the performance
of the invested company. However, it can also provide investors with a higher level of control over their investment and a
greater potential for returns compared to indirect investments.
 INDIRECT INVESTMENTS

Indirect investments refer to a type of investment where an individual invests in a financial product or vehicle, rather than
investing directly in individual stocks, bonds, or other securities. Indirect investments allow individual investors to gain
exposure to a diverse range of assets and can offer several benefits, including diversification, professional management, and
convenience.
Examples of indirect investments include mutual funds, exchange-traded funds (ETFs), and index funds. In these investment
vehicles, a professional fund manager selects and manages a portfolio of assets on behalf of the fund's investors. The fund's
investors own shares in the investment vehicle, which represent a fractional ownership of the underlying assets. The value of an
individual's investment in the fund will rise or fall based on the performance of the underlying assets.
Another example of indirect investment is real estate investment trusts (REITs), which allow individuals to invest in a portfolio
of real estate properties
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