Did you know there are different types of equity mutual funds and each offers a different type of benefit? When mutual funds invest maximum part of their corpus in the stock market, they are broadly called an equity mutual fund schemes. Remember, the structure of the fund may vary for different schemes and also on fund manager’s view on different stocks. The structure depends on the objective of the scheme. Depending on their investment objectives, you can classify equity mutual funds into a number of types.
Equity mutual funds are also classified according to their market capitalization. Market capitalization simply means the company’s stake in the market. It is the value of the company on the stock market. Market capitalization can be divided into three categories i.e. Large cap, Mid cap and Small cap equity funds.
Let us see how this is done.
Now you know, Equity Mutual funds are also of many types and investor can use them as per his investment objectives, risk bearing capacity and the horizon.
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Interesting infographic
Had a question how to map risk profile to types of equity mutual funds
Thanks, Kirti… The risk can be assessed using Risk Tolerance Test. The results are then matched with the profile of investor and his current situation to arrive at an asset allocation mix. This is done by Financial Planners/Advisors as it needs expertise.