I am sure many have heard about the terms like Open Ended, Close Ended funds and I have explained them in Mutual Funds Terms but today I will do the complete classification of all type of funds.
So let us begin.
Time Based Funds
- Close Ended
- Close ended funds are funds where investors can subscribe only during the New Fund Offer (NFO) period only.
- Open Ended
- Investors can purchase and sell units even after the New Fund Offer (NFO) period.
Asset Based Funds
- As the Name suggest these type of funds invest mainly into the equity market.
- Debt / Income
- These types of funds mainly invest in bonds and money market instruments.
- These are type of funds which invest some percentage into equity and some percentage into debt. Generally speaking these types of funds invest at least 65% in equities and roughly 35% in debt.
- Real Asset Based
- These funds invest in physical assets such as gold, platinum, silver, oil, commodities and real estate. The famous one is Gold Exchange Traded Funds (ETFs)
- Equity Diversified Funds
- These type funds diversify the equity component of their Asset across various sectors like oil & gas, technology, construction, metals etc. They diversify investment to reduce their overall portfolio risk.
- Sector Funds
- Sector funds are those type of funds which are expected to invest predominantly (Generally, 65%) in a specific sector.
- Index Funds
- These funds take position which replicates the index, say BSE Sensex, NSE Nifty, BSE top 200.
- Exchange Traded Funds (ETFs)
- An exchange-traded fund (or ETF) is an investment fund traded on stock exchanges, like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day.
- Fund of Funds (FOF)
- Funds investing in other funds. They may invest in the same fund house or other fund houses.
- Fixed Maturity Plans (FMPs)
- These funds are debt/income funds which invest in Bonds, Debentures and Money market instruments. They give a fixed return over a period of time and are mainly close ended funds.
Geographic Region Funds
- Country / Regions
- These types of funds invest in securities (equity and/or debt) of a specific country or region. The returns for regional funds are affected not only by the performance of the market but also by changes in the currency exchange rates. In India we hardly see any such fund which interests Indian investors but in the more developed countries such funds are more popular because they invest in developing countries to generate much better returns for investors.
Over to you
Which type of fund do you prefer to invest into?