Types of funds

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Once you know what you want, what’s left is to just pick and choose! Here’s a presentation that guides you through the different types of funds.

Once you know what you want, what’s left is to just pick and choose! Here’s a presentation that guides you through the different types of funds.



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  • Once you know what you want, what’s left is to just pick and choose! Here’s a presentation that guides you through the different types of funds. href="http://www.investmentz.com/default">types of funds </a>.

Types of funds Presentation Transcript

  • 1. Types of Funds
  • 2. Equity Funds Equity funds are created with the objective of generating long-term growth and capital appreciation Given that equity as an asset class may be volatile in the short term, therefore its recommended that an investment in equity should always be with long term horizon Equity funds differ predominately in the manner in which they select the market segments and stocks that would form the portfolio
  • 3. Diversified Equity Funds Diversified Equity Funds tend to invest across a broad range of equity shares, with the objective of generating returns better than its respective benchmark Diversified equity funds are not biased in terms of the sectors they choose, the size of the stock they select, or the investment style they may pursue Investors, who like to hold a fund that invests in equity shares without any specific bias, tend to choose diversified equity funds
  • 4. Midcap, Small Cap and Micro Cap Equity Funds  Midcap, Small Cap, and Micro Cap Equity Funds feature a bias determined by the size of the companies in which they invest Large companies tend to be well established in their businesses with stable growth and earnings The smaller companies tend to exhibit higher growth on earnings depending on the business opportunity, ability to grow, management style, and profit margins  However, smaller companies tend to also feature a higher risk of inability to withstand downturns, inability to scale up risk of business failures, and lower liquidity in the stock market.
  • 5. Thematic Equity Funds Thematic Equity funds tend to choose their stocks based on a particular theme, which the fund managers believe will do well during a given period of time, based on their understandings of macro trends and developments Infrastructure funds, commodity-stocks based funds focusing on companies in the public sector, funds focusing on business driven by consumption patterns, and service sector funds are all examples of thematic equity funds These funds run a higher concentration risk compared with a diversified equity fund, but may also offer a higher return if the themes they focus on tend to do better than the overall market
  • 6. Index funds  Index funds are passively managed funds where the fund manager does not take a call on stocks or the weights of the stocks in the portfolio, but simply replicates a chosen index Replicating an index means holding all the same stocks in exactly the same weightage as in the index Investors who do not like to take a risk on the fund manager, but accept a return that is associated with an index, choose index funds Index funds are also popular since they cost less. The expense ratio of an index fund is about 0.75% while a normal equity fund could be as expensive as 2.5%
  • 7. Sector Funds Sector Funds are equity funds that focus on a particular sector They feature concentrated risks and are suitable for investors willing to take a view on the performance of the given factor Sector funds are available for sectors such as industry sectors, information technology, banking, pharmacy, and FMCG If the sector is expected to do well, given a confluence of favorable policy and macro environment, funds tend to launch such sectors funds Sector funds have a high level of concentration risks
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