Mutual funds are classified on the basis of their

• Structure
• Investment objective

Open-ended schemes

These funds do not have a fixed maturity and one can invest in such funds on any working day, during business hours. Investors can buy or sell units of open-ended schemes directly from the fund house at NAV related prices.

Close-ended schemes

Such funds have a fixed maturity period and are open for subscription only for a specified period. After the expiry of this period, investors can buy or sell the units on the stock exchanges where such funds are listed. Some funds also have the option of periodic repurchase, whereby investors can sell back their units to the fund at NAV related prices.

Interval schemes

Interval schemes are a combination of both open and close-ended schemes. Investors can purchase or redeem their shares from the fund house at pre-determined intervals at NAV related prices

Growth schemes

Such funds are aimed at capital appreciation over the medium to long term. Usually, such funds invest a major portion of the portfolio in equities.

Balanced schemes

Such funds have a balanced portfolio and invest in equity and preference shares in addition to fixed income securities. The aim of such funds is to provide both income and capital appreciation over a long-term.

Income schemes

These schemes invest primarily in fixed income instruments issued by the government, banks, financial institutions and private companies. The main objective of income schemes is preservation of capital and to provide fixed income over the medium to long term.

Money market schemes

Money market schemes invest in short-term debt instruments, which earn interest and have high liquidity. Though these are considered to be the safest investment option, such funds are subject to fluctuations in the rates of interest.

Tax saving schemes

Such schemes are aimed at offering tax rebates to investors under specific provisions of the Income Tax Act, 1961. For instance, investors of Equity Linked Savings Schemes (ELSS) and Pension Schemes are applicable for deduction u/s 88 of the Income Tax Act, 1961.

Index schemes

Such funds strive to mirror the performance of specific market indices, such as the BSE SENSEX, CNX Nifty, etc which are called the base index. Investments in such funds are made in the same stocks as the base index and in similar proportion.

Sector-specific schemes

Such funds invest in a specific industry or sector. The investments could be in a particular industry (Banking, Pharmaceuticals, Infrastructure, etc) or a group of industries, or various segments (like ‘A’ Group shares).

Exchange-traded funds

Such funds are listed and traded on the stock exchange in a similar manner as stocks. Such funds invest in a basket of stocks and aim at replicating an index (S&P CNX Nifty, BSE Sensex) or a particular industry (banking, information technology) or commodity (gold, crude oil, petroleum).

Capital protection funds

These funds are designed to safeguard the capital invested therein, by investing in suitable securities.