There are several types of mutual funds, including:
- Equity Funds: These funds invest in stocks or equity shares of companies and are suitable for investors with a long-term investment horizon.
- Debt Funds: These funds invest in fixed-income securities like bonds, debentures, and government securities.
- Balanced Funds: These funds invest in both equity and debt instruments and aim to provide a balance between risk and return.
- Money Market Funds: These funds invest in short-term, low-risk debt securities like Treasury bills, commercial papers, and certificates of deposit.
- Index Funds: These funds invest in a portfolio of stocks that mirrors a particular stock market index like the S&P 500.
- Sectoral Funds: These funds invest in a specific sector of the economy like healthcare, technology, or infrastructure.
- Tax-saving Funds: These funds offer tax benefits under Section 80C of the Income Tax Act, 1961.
- Exchange Traded Funds (ETFs): These funds are similar to mutual funds but are traded on stock exchanges like a stock.