Debt Funds:
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They invest in long term (More than 1 year) debt instruments like government bonds, corporate bonds etc.
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They can be considered as an alternative to bank fixed deposits.
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Investors in high tax bracket can consider these schemes as an alternative to bank fixed deposits to reduce the taxes.
Equity Funds:
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Equity MF schemes provide the best alternative to direct equity investment.
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Over a long period, equities have the potential to outperform all other asset classes.
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To meet long term life goals, equity schemes can be considered.
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Equity funds can be sub-categorized as largecap, midcap, smallcap and multicap
Hybrid Funds:
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Monthly Income Plans (MIP) and Balanced Schemes come under this category.
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These schemes have got the name hybrid as they invest in both equity and debt also.
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MIP is suitable to investors who want monthly cash flows.
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Balanced schemes are suitable to investors who want to take an exposure to equity without undue risk.
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There are also other sub categories such as asset allocation, arbitrage, FOFs and Capital Protection Funds.
Gold Funds:
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Gold funds can be categorized into:
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Funds which invest in gold mining companies.
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Gold Exchanged Traded Funds (ETF).
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Funds which invest in the units of Gold ETFs.
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