Classification of Mutual Fund Schemes. Types

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Classification of Mutual Fund Schemes. Types
Oscar Pyngrope, Premium Member
Mutual fund schemes can be classified into the following categories:
  1. CLOSE ENDED FUNDS: Under such scheme, the number of units and duration of the fund are predetermined. Once the subscription reaches the predetermined amount, the entry for investor is closed.
  2. OPEN ENDED FUNDS: Under such scheme, the size and duration of the fund is not predetermined. The investors are free to buy and sell any number of units at any point of time.
Alternately, mutual fund schemes can be categorized into the following types:
  • Income Funds: An income fund is used to generate and distribute regular income to members on a periodic basis. It also ensures that the average return is higher than that of income from bank deposits.
  • Growth Oriented Funds: A growth oriented fund concentratea mainly on capital appreciation or long term gains.
  • Balanced Funds: A balanced fund is a combination of income and growth oriented funds and typically aims at distributing a regular income as well as capital appreciation.
  • Money Market Mutual Funds: A money market mutual fund invests in money market instruments like treasury bills, certificate of deposits and commercial papers since they are highly liquid and safe securities.
  • Fund of Funds: A mutual fund scheme that invests in other mutual fund schemes.
  • Index Funds: An index fund where the portfolio is designed in such a way it replicates the performance of some broad based market index.



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