There are a lot of mutual fund schemes prevalent in the market. An investor should be aware of the scheme before investing his hard earned money in the scheme.
I have given hereunder a snapshot of the various schemes which will be of immense help to an investor and will help in choosing the scheme that suits him best.
|
Mutual Fund Type |
Objective |
Risk |
Investment Portfolio |
Who should Invest |
Investment Horizon |
|
Money Market |
Liquidity + Moderate Income + Reservation of Capital |
Negligible |
Treasury Bills, Certificate of Deposits, Commercial Papers, Call Money |
Those who park their funds in current accounts or short-term bank deposits |
2 days – 3 weeks |
|
Short-term Funds (Floating-short-term) |
Liquidity + Moderate Income |
Little Interest Rate |
Call Money, Commercial Papers, Treasury Bills, CDs, Short-term Government securities |
Those with surplus short-term funds |
3 weeks – 3 months |
|
Bond Funds (Floating-Long-Term) |
Regular Income |
Credit Risk & Interest Rate Risk |
Predominantly Debentures, Government Securities, Corporate Bonds |
Salaried & conservative investors |
More than 9 -12 months |
|
Gilt Funds |
Security & Income |
Interest Rate Risk |
Government Securities |
Salaried & conservative investors |
12 months & more |
|
Equity Funds |
Long – term Capital Appreciation |
High Risk |
Stocks |
Aggressive investors with long term outlook |
3 years plus |
|
Index Funds |
To generate returns that are commensurate with returns of respective indices |
NAV varies with index performance |
Portfolio indices like BSE, NIFTY etc |
Aggressive investors |
3 years plus |
|
Balanced Funds |
Growth & Regular Income |
Capital Market Risk and Interest Risk |
Balanced ratio of equity and debt funds to ensure higher returns at lower risk |
Moderate & aggressive investors |
2 years plus |
HAPPY INVESTING
The author is a MBA (Finance), M. Com (Finance) and working as internal auditor with a leading manufacturing concern.
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