- Nature of underlying assets: Equity/ Debt funds
- End use of income: Growth/ Regular Income
- Type of fund management: Active/ Passive
- Liquidity: Liquid funds
- Exchange Traded Funds
Equity versus Debt funds:
- Invest funds 100% in equity shares of companies
- Invest funds 100% funds in debt instruments like government bonds, treasury bills, corporate bonds, etc.
- Hybrid funds where money is partly invested in shares and partly in debt instruments
Growth versus Regular Income Funds:
Active vs Passively Managed Funds:
Exchange Traded Funds:
- Convenience - unlike subscription to mutual funds, there is absolutely no paper work involve. One can simply buy and sell them on the stock trading platform.
- No special redemption process: If an investor wants to liquidate the investment with a regular mutual fund he or she has to submit an application to the mutual fund for redemption. This may take some time. However in the case of ETFs the investor simply sells on the on-line trading platform and the proceeds.
- Exchange Traded Funds mostly track popular indices like the S&P 500 and BSE Sensex, NIFTY 50 and so on and therefore are passively managed with consequent low fund management fees.
Suggested Related/ Further Reading:
- What Is The Difference Between Dividend and Growth Fund. Which Is Better?
- What is an Exchange Traded Fund?
- How Frequent Changes to Mutual Fund Portfolio Affect Investor Interest?
- How to Choose the Right Mutual Fund to Invest?
In conclusion there are many types of mutual funds based on the assets managed, whether income is accumulated or distributed, whether actively or passively managed, etc.