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Mutual Fund Classification

Mutual Fund can be classied into:

 

Ø       Functional Classification

Ø       Portfolio Classification

 

B) Functional Classification

 

Open Ended Scheme

Open ended schemes are those which do not have a fixed maturity period. You can enter into or exit from the scheme at any time. Buying and selling of units is related to the Net Asset Value (NAV). Thus, open ended schemes offer liquidity, and this is one of the key benefits.

 

Closed Ended Scheme

Close Ended Schemes are those that have stipulated maturity periods (ranging from 2 to 15 years). You can invest directly in the scheme at the time of the initial issue and thereafter you can buy or sell the units of the scheme on the stock exchanges where they are listed. The market price of the units could vary from the NAV of the scheme on account of demand and supply situations, investors expectations and other market factors. One of the characteristics of close ended mutual fund schemes is that they generally trade at discounts to the NAV; but closer to maturity the discount narrows

 

A) Portfolio Classification

 

Growth Fund

The Fund invest 85 % in stocks and 15% in Debts. The main objective is to provide long term capital appreciation.

 

Income Fund

The fund invest 85 % in Debt & 15% in stocks. The Main objective is to Provide Regular Income.

 

Balanced Fund

The fund invest 50-60 % in stocks & 40-50% in debt instruments. The Main Objective is to Provide long term growth of Capital & Regular Income.

 

Liquid Fund

The fund invest 100% in Government and Public sector bonds,Money marketinstruments & Corporate debt. The main objective is to provide an attractive rate of return whole emphasizing Capital preservation and liquidity.

 

Gilt Fund

The fund invest 100% in State/Central Government securities. The main objective is to provide risk free returns & liquidity.

 

Sector Fund

The fund invest 100% in individual sector stocks. The main objective is to provide growth of capital over a period of time

 

Tax Saving Schemes

The fund invest 100% in stocks. The main objective is to provide Capital Appreciation. Units at this scheme are subject to lock in period of 3 years from the date of allotment and also rebate of 20% is allowed under section 88 of IT act.

 

Index Funds

Index schemes are a type of mutual fund in which the portfolio weightage for each stock will be similar to the index, which they are mirroring, like BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitue the index. Index funds are expected to provide a rate of return over time that will approximate or match, but not exceed, that of the market, which they are mirroring.

 

 

 

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