Groww Digest

6 Day Course

Topic: mutual fund types

Aug 15 to Aug 21, 2022

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Day 1: Monday
6 Day Course | Theme: mutual funds types

All mutual funds (MF) are broadly divided into

4 categories.

Equity MF: invests in equity markets or share

markets.

Debt MF: invests in deposits, bonds, fixed

income securities.

Hybrid MF: hybrid of equity MF and debt MF

Others: these include less mainstream

categories like gold MF.

Each of these mutual fund categories is

further divided in many subcategories which
we’ll go into over the next few days.

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Day 2: Tuesday
6 Day Course | Theme: mutual funds types

Equity mutual funds invest in the share

markets. There are many types. Some of them
are:

Large-cap MF: invests mostly in the shares of

the 100 biggest companies in India.

Mid-cap MF: invests mostly in the shares of

the 101 to 250th biggest companies in India.

Small-cap MF: invests mostly in smaller

companies (not the top 250 biggest).

Flexi-cap MF: they invest in companies of all

sizes though they mostly stick to large-cap
stocks.

There are more subcategories. These are just

the most relevant ones.

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Day 3: Wednesday
6 Day Course | Theme: mutual funds types

Debt mutual funds invest in deposits, bonds,

and fixed income securities. Some of them
are:

Liquid MF: invests mostly in very low risk

securities and gives low returns. Many use
liquid funds to store money instead of
keeping money in the bank account.

Ultra short duration MF: they invest mostly in

higher risk securities (compared to liquid MF).
Their returns have been historically
comparable to FD returns.

Short duration MF: they invest mostly in even

higher risk securities (compared to ultra short
duration MF). Their returns have also been
historically comparable to FD returns.

There are many more subcategories. These

are just the main ones.

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Day 4: Thursday
6 Day Course | Theme: mutual funds types

Hybrid mutual funds invest in the share

markets as well as deposits, bonds, and fixed
income securities.

Basically, they’re a mix of equity and debt.

They’re also called balanced funds. Types:

Aggressive hybrid MF: they invest a greater

portion of their assets in share markets and a
smaller portion in debt securities.

Conservative hybrid MF: they invest a greater

portion of their assets in debt securities and a
smaller portion in share markets.

Dynamic asset allocation MF: they invest in

both debt and equity. They don’t have to
invest more in equity or debt. It completely
depends on the fund manager.

There are a few more but these are the main

ones.

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Day 5: Friday
6 Day Course | Theme: mutual funds types

The last category of mutual funds is a category

that includes various kinds of mutual funds.

Whatever doesn’t come under equity, debt, and

hybrid mutual fund categories is clubbed under
this category and called ‘others’.

For example, gold funds come under this

category. These funds invest in gold physically or
digitally.

Many index funds are also in the others

category.

Another peculiar kind of MF that comes under

the others category is called fund of funds (FoF).

FoF invests in other mutual funds - and those

could be any funds depending on what the FoF
aims to achieve.

Do explore all the different categories and

subcategories of MFs. There are many.

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Day 6: Sunday
6 Day Course | Theme: mutual funds types

We’ve reached the end of this week’s course that

started on Monday.

Here’s a test you should take. Get pen and

paper!

Question 1:
How many kinds of mutual fund categories
exist?

-2
-3
-4

Question 2:
Which mutual funds category does small-cap
fund fall under?

-Equity
-Debt

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Day 6: Sunday
6 Day Course | Theme: mutual funds types

Question 3:
Which kind of mutual fund is also used as an
alternative to a savings bank?

-Low duration funds

-Liquid funds
-Large-cap funds

Question 4:
Which invests in shares more?

-Aggressive balanced funds

-Conservative balanced funds

Question 5:
Fund of funds (FoF) invest in:

-Gold
-Other funds

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Day 6: Sunday
6 Day Course | Theme: mutual funds types

Answers:

Q1: 4;
Q2: Equity;
Q3: Liquid funds;
Q4: Aggressive balanced funds;
Q5: Other funds.

Page: 9
 That’s it for this week!

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See you next week!

—Groww Digest Team

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