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Types of Mutual Funds in India based on the objective of Investors

Mutual Funds is the amount of investment that is often collectively made by a Non Banking Financial Institution from individuals, firms and companies willing to invest in the shares and securities of different companies. The types of Mutual Funds are most commonly classified on the basis of the objective of the investor. Types of Mutual Funds in India are, thus, as follows:

Growth Funds: The Mutual Fund where the money is invested in equity stocks with high risks and is usually a long term investment with higher returns expected by the investors.

Income Funds: Money invested in fixed income instruments like bonds, debentures, provide capital protection and regular secure income to investors

Pension Funds: It is the most common and widely used type of Mutual Funds in India. The investment here is split between equity risk and debt securities balancing the steady returns on a regular basis. The return can be taken as monthly pension, lump sum amount or a bit of both as already mentioned by the retired investor. It is the long term investment with the least possible risk and steady returns.

ELSS Funds: These are mainly equity share investment, which is deduction under Income Tax Act. These capital investments are high on risk as well as returns.

Fixed Maturity Funds: Here, assets are invested in debts and the money market for a specific time. The maturity date is same or earlier than fund’s fixed returns date.

Liquid Funds: These are invested in short term instruments with low risks to the investors and moderate returns. These can be termed as very short term Investments.

Capital protection Funds: These mutual funds are made on a split scheme basis. A part of the investment is spend on equity shares that are risky in nature while the other part is spent on securities like bonds and debentures that give a steady income and protect the principle amount invested.

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