Types of Mutual Fund

Schemes based on
Investment Objective
By Samridhi Joshi
Table of contents

01 DEBT FUNDS 03 HYBRID FUNDS

02 EQUITY FUNDS
Types of Investment Objectives

Mutual funds offer products that cater to the different investment

objectives of the investors such as:

1. Capital Appreciation (Growth)

2. Capital Preservation
3. Regular Income
4. Liquidity
5. Tax-Saving
01
DEBT FUNDS
A debt fund is a mutual fund scheme that
invests in fixed income instruments, such as
Corporate and Government Bonds, corporate
debt securities, and money market instruments
etc. that offer capital appreciation. Debt funds
are also referred to as Income Funds or Bond
Funds.
 How debt funds work?
● Debt funds invest in debt instruments, such as Corporate
and Government Bonds at a certain price and later sell
them at a margin
● The difference between the cost and sale price accounts
for the appreciation or depreciation in the fund’s net
asset value (NAV)
● Debt funds also receive periodic interest from the
underlying debt instruments in which they invest
Who should invest in a debt fund?
● Investors having regular income, but are
risk-averse
● Funds are less volatile and, hence, are less risky
than equity funds
● Investors looking for steady returns with low
volatility
● Help you achieve your financial goals in a more
tax efficient manner and therefore earn better
returns
 Average Maturity and Investment Horizon
Average maturity basically indicates the average maturity of all the
securities in a portfolio, giving you the freedom to compare.

Funds with higher average maturities tend to be more volatile in the short
term since their objective is to deliver higher returns over the long term.

Simply put, a fund with an average maturity of 5 years is definitely more

volatile in the short term than a fund with an average maturity of say 9
months.

So matching your investment horizon with the average maturity is

always a good idea.
02
EQUITY FUNDS
An equity fund is a mutual fund scheme that
invests predominantly in equity stocks. In
the Indian context, as per current SEBI
Mutual Fund Regulations, an equity mutual
fund scheme must invest at least 65% of the
scheme's assets in equities and equity
related instruments.
Different categories of Equity Funds
Large Cap: Large-cap mutual funds allocate a minimum of 80% of the pool for
investment in equity & equity related instruments of large-cap companies
Mid-Cap: Mid-cap mutual funds have a minimum investment of 65% of the total
assets in equities & equity related instruments of the mid-cap companies
Small Cap: The fund invests a minimum of 65% of the total assets of the small-cap
mutual fund in equity & equity-related instruments of small-cap companies
Multi Cap Equity or Diversified Equity: A multi-cap fund allocates a minimum of
65% of the total assets for equity & equity related instrument
03
HYBRID FUNDS
Hybrid funds are a combination of equity and
debt investments which are designed to meet
the investment objective of the scheme.
 Hybrid instruments

Conservative Balanced Aggressive

10-25% in equity 40-60% in equity 65-80% in equity

instruments instruments instruments
75-90% in debt 40-60% in debt 20-35% in debt
instruments instruments instruments
Thanks!