Mutual funds

Mutual funds are a popular investment option for individuals looking to invest their money in the stock market. In simple terms, a mutual fund is a pool of money collected from multiple investors, which is then invested in stocks, bonds, or other securities by a professional fund manager. Mutual funds offer several advantages over direct stock market investments, such as diversification, professional management, and ease of investment.

Benefits of investing in Mutual funds

Mutual funds offer investors exposure to a wide range of stocks, bonds, and other securities, which helps reduce the risk of investing in a single company or sector. By diversifying your investments, you can spread your risk and potentially earn higher returns.

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  • Managed by professional fund managers who have years of experience and expertise in investing in the stock market
  • Relatively inexpensive compared to other investment options.
  • Highly liquid, which means that you can easily buy or sell your shares at any time.
  • Investing in mutual funds is easy and convenient. You can invest online, through a financial advisor

Mutual fund Categories

Each mutual fund scheme must be classified into one of these categories based on its investment objective, investment strategy, and asset allocation pattern. The SEBI categorization framework has brought more clarity and transparency to mutual fund investing, making it easier for investors to understand the nature and risk profile of different mutual fund schemes.

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Equity Funds

Equity Funds invest at least 65% of their assets in equity and equity-related instruments. These funds are further classified as large-cap, mid-cap, small-cap, multi-cap, and sectoral/thematic funds.

Debt Funds

Debt funds invest primarily in fixed-income securities such as bonds, debentures, and other debt instruments. They are further classified based on the duration of the underlying debt instruments, such as overnight funds, liquid funds, ultra-short duration funds, low duration funds, medium duration funds, and long duration funds.

Hybrid Funds

Vivamus at ultricies tortor vel volutpat neque. In justo turpis, aliquam id suscipit velsuscipit eget nisl.Hybrid funds invest in both equity and debt instruments in a pre-defined proportion. These funds are further classified as aggressive hybrid funds, conservative hybrid funds, balanced hybrid funds, dynamic asset allocation funds, and multi-asset allocation funds.

Solution Oriented Funds

Solution Oriented Funds invest for a specific financial goal or a financial planning objective, such as retirement, child education, or marriage. These funds are further classified as retirement funds and children’s funds.

Other Funds

Other Funds include Index Funds, Fund of Funds, and Exchange-Traded Funds (ETFs). Index Funds invest in securities that replicate the performance of a specific index, while Fund of Funds invest in other mutual fund schemes. ETFs are passive investment products that track the performance of a specific index or commodity.

To open a Borrow Life account, you must:

  • Individual investors
  • Corporates
  • Hindu Undivided Families (HUFs)
  • Non-Resident Indians (NRIs)

Open-ended mutual fund

An open-ended mutual fund is a type of mutual fund where the units can be bought or sold at any time, and there is no fixed maturity date for the fund. These funds are open for subscription and redemption throughout the year, and investors can buy or sell units at the prevailing Net Asset Value (NAV) of the fund.

Close-ended mutual fund

A closed-end mutual fund is a type of mutual fund where the fund has a fixed number of units, which are issued through an initial public offering (IPO) at the time of the launch of the fund. After the IPO, the units are traded on the stock exchange like shares of a company.

Interval Fund

An interval fund is a type of mutual fund that combines the features of open-end and closed-end funds. It is a closed-end fund that periodically offers to buy back shares from its investors at specific intervals, typically quarterly or semi-annually.


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