Types of Mutual Funds in India (2025) – Explained Simply for Beginners
Mutual Funds are now a big part of investment planning in India. Earlier, only a few people knew about them. But now, many people use mutual funds to save money and grow wealth, especially for retirement and long-term goals.
When you invest in a mutual fund, you are buying units. Each unit represents a part of the fund. If the value of the fund goes up, your money grows too.
Let’s understand the different types of mutual funds available in India.
1. Based on Maturity Period
These are divided by how long you plan to invest.
a) Open-Ended Funds
- You can buy or sell anytime.
- No fixed maturity.
- High liquidity.
b) Close-Ended Funds
- You can invest only during the launch period (NFO).
- Fixed maturity.
- Traded on stock exchange.
c) Interval Funds
- Combination of open and close-ended.
- Buy/sell allowed during certain time periods.
2. Based on Investment Type
These are based on what the fund mainly invests in.
a) Equity Funds
These invest mainly in company shares.
- Multi Cap Funds – Invest in large, mid, and small cap stocks.
- Large Cap Funds – 80% in top 100 companies.
- Large & Mid Cap Funds – Mix of top 250 companies.
- Mid Cap Funds – Focus on 101st–250th companies.
- Small Cap Funds – Focus on 251st company onwards.
- Dividend Yield Funds – Invest in high-dividend stocks.
- Value Funds – Follow value investing strategy.
- Contra Funds – Invest against market trends.
- Focused Funds – Invest in max 30 selected stocks.
- Sectoral/Thematic Funds – Focus on one sector or theme.
- ELSS Funds – Tax-saving funds with 3-year lock-in.
b) Debt Funds
These invest in fixed income securities like bonds.
- Overnight Fund – Invest in 1-day securities.
- Liquid Fund – Up to 91 days maturity.
- Ultra Short Duration Fund – 3–6 months.
- Low Duration Fund – 6–12 months.
- Money Market Fund – Up to 1 year.
- Short Duration Fund – 1–3 years.
- Medium Duration Fund – 3–4 years.
- Medium to Long Duration Fund – 4–7 years.
- Long Duration Fund – More than 7 years.
- Dynamic Bond Fund – Flexible duration.
- Corporate Bond Fund – Invests in high-rated corporate bonds.
- Credit Risk Fund – Invests in lower-rated corporate bonds.
- Banking & PSU Fund – Invests in banks & public sector.
- Gilt Fund – Invests in government securities.
- Gilt Fund (10-Year) – Constant 10-year maturity.
- Floater Fund – Floating interest rate securities.
c) Hybrid Funds
These invest in both equity and debt.
- Conservative Hybrid Fund – More in debt.
- Balanced Hybrid Fund – 50% equity + 50% debt.
- Aggressive Hybrid Fund – More in equity.
- Dynamic Asset Allocation – Adjusts based on market.
- Multi-Asset Allocation Fund – Invests in 3+ asset types.
- Arbitrage Fund – Profit from price differences.
- Equity Savings Fund – Mix of equity, debt, and arbitrage.
3. Solution-Oriented Funds
a) Retirement Fund
- Lock-in for 5 years or till retirement.
b) Children’s Fund
- Lock-in for 5 years or till child turns 18.
4. Other Mutual Fund Types
a) Index Funds / ETFs
- Track a stock market index (like Nifty or Sensex).
b) Fund of Funds (FoF)
- Invests in other mutual funds.
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