Mutual Funds
A mutual fund is a professionally managed investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. With a predefined investment objective, mutual funds help individual investors participate in markets that might otherwise be out of reach due to limited time, knowledge, or capital.
Over the past two decades, mutual funds in India have grown in popularity as a reliable route to long-term wealth creation. Today, they are widely recognized as a smarter alternative to traditional savings options like bank fixed deposits or savings accounts.
If you’re looking to grow your money steadily over time, especially through Systematic Investment Plans (SIPs), mutual funds offer a convenient, transparent, and well-regulated solution.
In simple terms, a mutual fund is a basket of securities—such as stocks and bonds—managed by expert fund managers. You, as an investor, can earn returns through:
Your go-to resource for mutual fund research and analysis to optimize your financial growth.
Mutual funds are an excellent choice for both new and experienced investors. Here’s why:
Your money is managed by qualified and experienced fund managers who make investment decisions based on deep research and market insights. This gives even small investors access to expert-level portfolio management.
Mutual funds invest in a wide range of securities, which spreads your risk across sectors and asset classes. Even if one investment underperforms, the impact on the overall fund is minimized.
Due to large-scale transactions, mutual funds benefit from lower brokerage and transaction fees—savings that are passed on to investors.
Mutual fund units can typically be bought or sold on any business day at the fund’s prevailing NAV. This means you can access your money relatively quickly when needed.
Getting started with mutual fund investing is easy. With low minimum investment requirements and seamless digital onboarding, you can begin your wealth-building journey from the comfort of your home.
Whether you’re a first-time investor, a young professional starting with SIPs, or a seasoned investor looking to balance your portfolio, mutual funds offer options tailored to your risk appetite and financial goals.
| Category | Type of Mutual Fund | Description | Ideal For | |
|---|---|---|---|---|
| 1. Based on Structure | Open-Ended Funds | Units can be bought or sold anytime; no fixed maturity. | Investors seeking flexibility. | |
| Close-Ended Funds | Fixed maturity; units can be bought during the NFO period only. | Long-term planners; limited liquidity. | ||
| Interval Funds | Hybrid structure—open only during specific intervals. | Investors with semi-liquid needs. | ||
| 2. Based on Asset Class | Equity Mutual Funds | Invest primarily in stocks; higher return potential with higher risk. | Long-term capital growth seekers. | |
| Debt Mutual Funds | Invest in bonds, treasury bills, and money market instruments. | Conservative investors seeking stability. | ||
| Hybrid Mutual Funds | Invest in a mix of equity and debt instruments. | Balanced risk-return profile. | ||
| Solution-Oriented Funds | Designed for long-term goals like retirement or child’s education. | Goal-based investors. | ||
| Commodity Funds | Invest in commodities like gold, silver, etc. | Diversifiers and inflation hedgers. | ||
| Real Estate Funds (REITs) | Invest in commercial or residential real estate assets. | Investors seeking real estate exposure. | ||
| 3. Based on Investment Goal | Growth Funds | Reinvest profits to generate capital appreciation over time. | Long-term investors. | |
| Income Funds | Focus on generating regular income through interest and dividends. | Retirees or those seeking steady income. | ||
| Liquid Funds | Invest in short-term instruments with high liquidity and low risk. | Emergency fund parking. | ||
| Tax-Saving Funds (ELSS) | Equity-linked savings scheme offering tax deduction under Section 80C. | Tax-saving and wealth-building combo. | ||
| 4. Based on Specialty | Index Funds | Track a specific market index like Nifty 50 or Sensex. | Passive investors. | |
| Sectoral/Thematic Funds | Invest in specific sectors (e.g., IT, Pharma) or themes (e.g., ESG). | High-risk, high-reward seekers. | ||
| Fund of Funds (FoFs) | Invest in other mutual fund schemes. | Diversified portfolio builders. | ||
| International Funds | Invest in global markets and international companies. | Investors seeking global exposure. |
| Type | Description | Investment Horizon | Risk Level | Best Suited For |
|---|---|---|---|---|
| Liquid Funds | Invest in very short-term instruments (up to 91 days) for high liquidity. | 1 day to 3 months | Low | Emergency fund, short-term parking |
| Ultra Short Duration Funds | Duration of 3–6 months; slightly higher returns than liquid funds. | 3 to 6 months | Low to Moderate | Conservative short-term investors |
| Short Duration Funds | Invest in instruments with 1–3 year maturity. | 1 to 3 years | Moderate | Investors seeking better returns than FDs |
| Corporate Bond Funds | Minimum 80% in high-rated corporate bonds. | 2 to 4 years | Moderate | Income-seeking investors |
| Gilt Funds | Invest in government securities only (no credit risk). | 3 to 5 years | Moderate to High | Risk-averse with long-term horizon |
| Dynamic Bond Funds | Fund manager actively changes duration based on interest rate outlook. | Medium to Long Term | Varies | Interest rate speculators |
| Credit Risk Funds | Invest in lower-rated corporate bonds for higher yields. | 3+ years | High | Aggressive debt investors |
| Banking & PSU Funds | Invest in debt instruments of banks, PSUs, and financial institutions. | 2 to 5 years | Low to Moderate | Safe, consistent returns |
| Money Market Funds | Invest in money market instruments with up to 1-year maturity. | 6 to 12 months | Low | Capital preservation, short-term |
| Type | Description | Equity Allocation | Risk Level | Best Suited For |
|---|---|---|---|---|
| Aggressive Hybrid Fund | Predominantly equity (65–80%) + some debt. | High | Moderate to High | Growth with some stability |
| Conservative Hybrid Fund | Primarily debt (75–90%) + limited equity exposure. | Low | Low to Moderate | Income seekers with some growth |
| Balanced Hybrid Fund | Equal investment in equity and debt (40–60%). | Medium | Moderate | Balanced risk-return expectations |
| Dynamic Asset Allocation / BAF | Asset mix changes dynamically based on market valuation. | Varies | Moderate | Those who prefer auto-balancing |
| Multi Asset Allocation Fund | Invests in at least 3 asset classes (equity, debt, gold, etc.). | Diversified | Moderate to High | Diversification seekers |
| Equity Savings Fund | Combines equity, arbitrage, and debt to reduce volatility. | Low to Medium | Low to Moderate | Conservative equity exposure |
| Type | Description | Market Cap Focus | Risk Level | Best Suited For |
|---|---|---|---|---|
| Large Cap Funds | Invest in top 100 companies by market capitalization. | Large Cap | Moderate | Stable, long-term investors |
| Mid Cap Funds | Invest in 101st to 250th ranked companies. | Mid Cap | Moderately High | Aggressive growth seekers |
| Small Cap Funds | Invest in companies ranked beyond 250 in market cap. | Small Cap | High | High-risk, high-return investors |
| Multi Cap Funds | Invest across large, mid, and small cap stocks. | All Caps | Moderate to High | Diversified equity exposure |
| Flexi Cap Funds | Dynamic allocation across any market cap without restrictions. | All Caps | Moderate to High | Fund manager-driven strategy seekers |
| ELSS (Tax Saving Funds) | Eligible for 80C tax benefit, 3-year lock-in. | Mostly Equity | Moderate to High | Tax savers + long-term investors |
| Sectoral/Thematic Funds | Focused on specific sectors like Pharma, Tech, Banking. | Sector Specific | Very High | Experts or thematic belief investors |
| Contra Funds | Invest against market trends expecting long-term reversal. | Contrarian | High | Contrarian, long-term investors |
| Value Funds | Follow value investing approach—undervalued stocks. | Undervalued Stocks | Moderate to High | Value investing believers |
| Focused Funds | Invest in a concentrated portfolio (max 30 stocks). | Any | High | High conviction, high risk investors |
At Avidity Services, our goal is to make mutual fund investing in India simple, transparent, and rewarding.
Whether you’re saving for your child’s education, your dream home, or planning for retirement, we’re here to help you invest confidently.
Ready to start your SIP?
Need help choosing the right mutual fund?
We’ve got your back. Let’s grow your wealth—one smart decision at a time.
