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Mutual Fund Categories

Mutual Funds in India are classified as per SEBI's Categorization and Rationalization of Mutual Fund Schemes circular dated October 2017.

These categories are:

Equity Scheme funds Hybrid Scheme funds Debt Scheme funds Solution Oriented Schemes – Funds for Retirement and Children Other Schemes – Index Funds, ETFs and Fund of Funds Commodity Schemes – Funds Investing in Gold, Silver or Both

Now we will go through each category below:

Equity Scheme funds

These funds mainly invest in equity i.e. shares and equity-related instruments. They are suitable for investors seeking long-term capital appreciation and willing to tolerate short-term market volatility. Equity funds may focus on specific sectors, investment styles, or market capitalizations. Investors with a high risk appetite and long investment horizon may consider investing in equity funds.

All
Large Mid Cap ELSS Small Cap Large Cap Value Mid Cap Multi Cap Contra Dividend Yield Focused Sectoral or Thematic Equity Index Flexi Cap

Hybrid Scheme funds

Hybrid funds invest in a mix of equity and debt instruments to balance risk and return. The proportion of each asset class determines the fund’s risk level—aggressive hybrid funds hold more equity, while conservative hybrid funds hold more debt. These funds offer potential capital appreciation from equity exposure along with income stability from debt. Suitable for investors seeking moderate risk with balanced growth potential.

Dynamic Asset Allocation Or Balanced Advantage
Multi Asset Allocation
All
Conservative Income Equity Savings Balanced Arbitrage Aggressive

Debt Scheme funds

Debt funds invest primarily in fixed-income securities such as government bonds, corporate bonds, debentures, treasury bills, and money market instruments. They aim to provide steady income and capital preservation with lower volatility compared to equity funds. Depending on portfolio maturity and credit quality, debt funds range from liquid and short-duration funds to gilt and dynamic bond funds. Suitable for investors with moderate to low risk appetite seeking regular income.

All
Long Duration Dynamic Bond Low Duration Corporate Bond Medium To Long Duration Ultra Short Duration Banking And PSU Overnight Gilt Fund With 10 Year Constant Duration Liquid Floater Short Duration Credit Risk Gilt Debt Index Medium Duration Money Market

Solution Oriented Schemes – Funds for Retirement and Children

Solution-oriented schemes are designed to meet specific financial goals such as retirement planning and children’s education. These funds typically have lock-in periods to encourage long-term investing discipline. Asset allocation is managed to align with the investor’s life stage or goal horizon. Suitable for investors with defined objectives and a long-term investment commitment.

Retirement Child

Other Schemes – Index Funds, ETFs and Fund of Funds

Other schemes include Index Funds, Exchange Traded Funds (ETFs), and Fund of Funds (FoFs). Index Funds and ETFs are passively managed, tracking market indices to replicate their performance at low cost. Fund of Funds invest in other mutual funds to provide diversification across asset classes and fund houses. These schemes suit investors seeking broad market exposure, diversification, and cost efficiency with minimal active management.

FoF Domestic FoF Overseas FoF Income Plus Arbitrage Silver ETF Gold ETF ETFs

Commodity Schemes – Funds Investing in Gold, Silver or Both

Commodity schemes invest primarily in commodities such as gold and silver, either through physical holdings or commodity-related instruments. Gold Exchange Traded Funds (Gold ETFs) and Silver ETFs provide a convenient way to gain exposure to precious metals without physical ownership. These funds can help diversify a portfolio and serve as a hedge against inflation or market volatility. Suitable for investors seeking diversification through non-equity, non-debt assets.

Gold Silver Gold With Silver Gold Or Silver

Disclaimer: Mutual fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme.