<!DOCTYPE HTML PUBLIC '-//W3C//DTD HTML 4.01 Transitional//EN' 'http://www.w3.org/TR/html4/loose.dtd'>; <html><head><title>Article Directory Online : Free Online Article Submission - Articleonlinedirectory | How Many Kinds Of Mutual Funds Are There?</title></head><body><h3>How Many Kinds Of Mutual Funds Are There?</h3><br /><br />By: <br /><br /><p>To Invest in Mutual Fund one should know the types of Mutual Fund Available in the market. These are: Equity funds, Debt funds, Balanced schemes, Sector funds, Gilt funds, Index funds, MIPs(Monthly Income Plans), MMFs(Money Market Funds) ETFs etc. Each one of these schemes follows a different investment strategy. Most of the schemes have "growth oriented" or "dividend oriented" plans, which either re-invest or pay out the dividend collected from underlying stocks.<br /> <br /> A type of fund characterized by high risk but high returns are called Equity Schemes. Overall, equities has been the foremost performing asset class, thus forecasting high returns. According to market requirements, there are several types of equity schemes on offer. Mid and small cap funds, though risky given the smaller size of the company, are capable of high returns if the company grows manifold. Large cap or blue chip funds invest in large companies resulting in reasonable returns given the relatively low risk. Yet another type of equity scheme is the index fund, where investments are made only in stocks that form the market index of any given index. The riskiest of all equity schemes is the sector fund. As the name suggests, they invest only in specific sectors. Typically, the strategy is to ride the stuck while it grows and manage to exit before it falls. Obviously, timing is the key, hence the risk.<br /> <br /> Debt Schemes: Debt Schemes invest mainly in income bearing instruments such as bonds, debentures, government securities and commercial paper. This type of fund basically invests in FD like instruments that pay interest based on various market factors. Its volatility depends on the economy reflected by factors such as the rupee depreciation, fiscal deficit and inflationary pressures. Broadly speaking, the returns from pure debt schemes will be in line with bank FDs. There are short term, medium term and long term debt funds based on the time horizon they cater to.1. Gilt Funds: This is a sub-type of debt funds, which invests only in government securities and treasury bills. They are generally considered safer than corporate bonds and are more tuned towards long term investments.2.Monthly Income Plans (MIPs): This is basically a debt scheme which invests a marginal amount of money (10%- 25%) in equity to boost the scheme's return. This fund will give slightly higher return than traditional long term debt scheme.3.Money Market Funds (MMFs): These are also known as Liquid Funds. These funds are debt schemes that invest in certificate of deposit (CDs), Interbank call money market, commercial papers and short term securities with a maturity horizon of less than 1 year. The funds objective is to preserve principal while yielding a moderate return. It is a low risk- low return investment which offers instant liquidity.<br /> <br /> In a more balanced approach fall hybrid schemes. these schemes are invested in both equity shares and income bearing instruments, thus reducing the risk of the stock market by backing it up with the debt market. Various combinations of weightage can be given to either equity or debt.<br /> <br /> Funds of funds, as their name suggests, are funds that invest in other funds depending on market factors.<br /> <br /> ETF's or exchange traded funds as they are more commonly known: This kind of a fund is trade on the markets as a general fund. The investor does not need to worry about an exit load or a penalty to stop paying for the fund and cash out. You just pay the regular brokerage charges with this kind of a fund as an investor. ETF's extend to the gold index as well. This type of an investment is suitable to short term traders who are more positional in nature of investing or advising.</p> <br /><br /><b>Author Resource:-></b> Chaitanya is from India, and he is part of Moneyvidya.com, where you can find <a href=http://www.moneyvidya.com>Indian share trading tips</a> by proven experts with a transparent track record. Moneyvidya has been integrated to both BSE and NSE, so you can find NSE tips as well as <a href=http://www.moneyvidya.com>BSE tips</a> here.<br /><br /><b>Article From</b> <a href='http://www.articleonlinedirectory.com/'>Article Directory Online : Free Online Article Submission - Articleonlinedirectory</a><br /></body></html>
