Depending on the time of closure, Mutual Funds are divided into 2 major
categories—Open Ended or Close Ended.
do not have a specific date when the scheme will be closed.
Types of Open Ended Schemes
In a debt/income scheme, a major part of the funds are invested in debentures, gilt
funds, government securities and other debt instruments. This is a low-risk return
investment option which is ideal for investors with a steady income..
Investors looking to utilise their surplus funds can invest in these short-term
investment options, which provide reasonable returns to investors..
Equity investments are popular forms of Mutual Funds among retail investors. These
investments are subject to high-risks in the short term, but investors can expect a
high capital appreciation in the long run. If you are looking for long-term benefits and
are open to taking risks, growth schemes are ideal investment options for you..
These investments replicate the movement of benchmark indices like Nifty, Sensex,
etc. So these investments are made as per the market conditions and movements..
These funds are invested in a specific sector like IT, infrastructure, pharmaceuticals,
mining, etc. or segments of the capital market like large-cap, mid-cap, etc..
Tax Saving Schemes
As the name clearly suggests, this Mutual Fund scheme offers tax benefits to
investors. The funds are generally invested in equities offering long-term growth
opportunities. Tax saving Mutual Fund schemes typically have a 3-year lock-in period.
Close Ended Schemes
These have a specific tenureand income at regular intervals as the funds are invested
in equities and fixed income securities. This is ideal for the cautiously aggressive
investor, as they can
Types of Close-Ended Schemes..
You can invest in a close-ended scheme only when it is initially launched. This is
known as the New Fund Offer (NFO) period. These Mutual Funds have a fixed period
Capital Protection: These schemes are mainly aimed at protecting the principal
amount while trying to deliver reasonable return to the investors..
Funds are invested in high-quality fixed income securities with marginal exposure to
equities which have a fixed maturity period..
Fixed Maturity Plans: As the name suggests, these are Mutual Fund schemes with a
defined maturity period. These schemes do not have any kind of active trading
involved and hence the returns are little less when compared to actively managed
Apart from these open-ended and close-ended schemes, there are Interval Mutual
Funds, which operate as a combination of open and close-ended schemes. These
schemes allow investors to trade units at pre - defined intervals..