Types of Mutual Fund

Mutual fund schemes may be classified on the basis of its structure and its investment objective. By Structure: Open-ended Funds An open-end fund is one that is available for subscription all throu h the year. These do not have a fi!ed maturity. "nvestors can conveniently buy and sell units at #et Asset $alue %&#A$&' related prices. The (ey feature of open-end schemes is li)uidity. *losed-ended Funds A closed-end fund has a stipulated maturity period +hich enerally ran in from , to -. years. The fund is open for subscription only durin a specified period. "nvestors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stoc( e!chan es +here they are listed. "n order to provide an e!it route to the investors/ some close-ended funds ive an option of sellin bac( the units to the Mutual Fund throu h periodic repurchase at #A$ related prices. S0B" 1e ulations stipulate that at least one of the t+o e!it routes is provided to the investor. "nterval Funds "nterval funds combine the features of open-ended and closeended schemes. They are open for sale or redemption durin pre-determined intervals at #A$ related prices. By "nvestment Objective: 2ro+th Funds The aim of ro+th funds is to provide capital appreciation over the medium to lon - term. Such schemes normally invest a majority of their corpus in e)uities. "t has been proven that returns from stoc(s/ have outperformed most other (ind of investments held over the lon term. 2ro+th schemes are

ideal for investors havin over a period of time.

a lon -term outloo( see(in

ro+th

"ncome Funds The aim of income funds is to provide re ular and steady income to investors. Such schemes enerally invest in fi!ed income securities such as bonds/ corporate debentures and 2overnment securities. "ncome Funds are ideal for capital stability and re ular income. Balanced Funds The aim of balanced funds is to provide both ro+th and re ular income. Such schemes periodically distribute a part of their earnin and invest both in e)uities and fi!ed income securities in the proportion indicated in their offer documents. "n a risin stoc( mar(et/ the #A$ of these schemes may not normally (eep pace/ or fall e)ually +hen the mar(et falls. These are ideal for investors loo(in for a combination of income and moderate ro+th. Money Mar(et Funds The aim of money mar(et funds is to provide easy li)uidity/ preservation of capital and moderate income. These schemes enerally invest in safer short-term instruments such as treasury bills/ certificates of deposit/ commercial paper and inter-ban( call money. 1eturns on these schemes may fluctuate dependin upon the interest rates prevailin in the mar(et. These are ideal for *orporate and individual investors as a means to par( their surplus funds for short periods. 3oad Funds A 3oad Fund is one that char es a commission for entry or e!it. That is/ each time you buy or sell units in the fund/ a commission +ill be payable. Typically entry and e!it loads ran e from -4 to 54. "t could be +orth payin the load/ if the fund has a ood performance history. #o-3oad Funds

A #o-3oad Fund is one that does not char e a commission for entry or e!it. That is/ no commission is payable on purchase or sale of units in the fund. The advanta e of a no load fund is that the entire corpus is put to +or(.

OT601 S*60M0S: Ta! Savin Schemes

These schemes offer ta! rebates to the investors under specific provisions of the "ndian "ncome Ta! la+s as the 2overnment offers ta! incentives for investment in specified avenues. "nvestments made in 0)uity 3in(ed Savin s Schemes %03SS' and 7ension Schemes are allo+ed as deduction u8s 99 of the "ncome Ta! Act/ -:;-. The Act also provides opportunities to investors to save capital ains u8s .<0A and .<0B by investin in Mutual Funds. Special Schemes

"ndustry Specific Schemes

"ndustry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries li(e "nfoTech/ FM*2/ 7harmaceuticals etc.

"nde! Schemes

"nde! Funds attempt to replicate the performance of a particular inde! such as the BS0 Sense! or the #S0 .=

Sectoral Schemes

Sectoral Funds are those/ +hich invest e!clusively in a specified industry or a roup of industries or various se ments such as >A> 2roup shares or initial public offerin s.