What are mutual funds & its types? | Lic Mf
                     LIC MF
What are mutual funds & its types?
Mutual funds are investment vehicles that pool 
money from a large number of individual investors 
to purchase a diversified portfolio of securities, 
such as stocks, bonds, and money market 
instruments. The goal of a mutual fund is to 
provide a way for individual investors to access a 
professionally managed, diversified portfolio with a 
relatively small amount of money.
There are different types of funds-
Equity Funds, Debt Funds, Hybrid Funds, Index 
Funds & Money Market Funds.
EQUITY FUNDS
An equity fund is a type of mutual fund that 
invests primarily in stocks or equities. The 
objective of an equity fund is to provide long-term 
capital growth to investors by investing in a 
diversified portfolio of stocks. Equity funds are 
generally considered to be higher risk investments 
compared to fixed income securities, as the value 
of the stocks in the fund can fluctuate widely in 
response to changes in the stock market or 
individual company performance. However, they 
have historically provided higher returns over the 
long-term and can be an attractive investment 
option for those with a long investment horizon.
DEBT FUNDS
A debt fund is a type of mutual fund that invests 
primarily in fixed income securities, such as bonds, 
Treasuries, and other debt instruments. The 
objective of a debt fund is to provide regular 
income to investors through interest payments 
from the bonds in its portfolio. Debt funds are 
generally considered to be less risky investments 
compared to equity funds, as the returns from the 
bonds in the portfolio are generally more 
predictable and stable. However, the value of the 
bonds can still be affected by changes in interest 
rates and the creditworthiness of the issuer.
HYBRID FUNDS
Hybrid funds are a type of mutual fund that invests in a mix of both 
equities (stocks) and fixed income securities (bonds and other debt 
instruments). 
• The objective of a hybrid fund is to provide a balance between 
income and growth by diversifying the portfolio across different asset 
classes.
• Hybrid funds can offer a more balanced investment option compared 
to pure equity or pure debt funds, as they seek to provide both 
income and growth to investors. The allocation between equities and 
fixed income securities can vary depending on the fund's investment 
objective, but typically ranges from 40-60% in equities and 60-40% in 
fixed income securities.
• The risk and return profile of a hybrid fund depends on the specific 
allocation of assets and the types of equities and fixed income 
securities in the portfolio. It's important to consider the fund's 
investment objectives, portfolio composition, and fees before 
investing in a hybrid fund.
INDEX FUNDS
Index funds are a type of mutual fund that aims to replicate the 
performance of a specific market index, such as the S&P 500, the 
NASDAQ, or the Dow Jones Industrial Average. The portfolio of an 
index fund is designed to closely match the composition and 
weighting of the underlying index.
• The objective of an index fund is to provide investors with 
returns that are similar to the market, with relatively low 
management fees. By investing in an index fund, investors can 
gain exposure to a broad market or specific sector, without 
having to actively pick and choose individual stocks.
• Index funds are considered to be low-cost and passive 
investment options, as they typically have lower management 
fees compared to actively managed funds. They can be a good 
choice for investors seeking a low-risk investment that 
provides exposure to a specific market or sector.
MONEY MARKET FUNDS
Money market funds are a type of mutual fund that invests in low-risk, 
short-term debt securities such as Treasury bills, commercial paper, and 
certificates of deposit. 
• The objective of a money market fund is to provide a stable source of 
income and preservation of capital, while maintaining liquidity and 
ease of access to the invested funds. 
• Money market funds are considered to be low-risk investments and are 
often used by individuals and institutions as a temporary holding place 
for cash. The returns from money market funds are generally lower 
than those from equity or bond funds, but they are also less volatile 
and have a lower risk of loss of capital.
• It's important to note that money market funds are not guaranteed by 
the Federal Deposit Insurance Corporation (FDIC) and there is still a 
small risk of loss of capital. 
• Additionally, the returns from money market funds can be affected by 
changes in interest rates and the creditworthiness of the issuers of the 
securities in the fund's portfolio.
THANK YOU
https://www.licmf.com/