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.

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

8. Thank You
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