The large cap funds invest at least 80% of their corpus in the largest 100 companies in terms of market capitalisation. These schemes carry lower risk and offer modest returns.
Multi Cap Fund
These schemes invest across large-, mid- and small cap stocks. They are mandated to invest a minimum of 65% of their total assets in stocks. These schemes are ideal for investors with a moderate risk appetite.
Large & Mid Cap Fund
These schemes are mandated to invest a minimum of 35% in both large cap as well as mid cap stocks. Due to their exposure to mid cap stocks, these schemes are considered risky. They are suitable for investors with high risk appetite
Mid Cap Fund
These schemes predominantly invest in mid-sized companies. Mid cap funds invest at least 65% of their total assets in mid cap stocks. These schemes are risky and volatile. They are meant for aggressive investors
Small Cap Fund
These schemes invest mostly in smaller companies. The small cap funds invest a minimum of 65% of total assets in smaller companies. Small companies can be extremely risky, but also have the potential to offer higher returns
Dividend Yield Fund
This is a new category introduced by Sebi in the re-categorisation exercise in 2017. The schemes under this category invest in dividend yielding stocks or stocks that pay periodic dividends.
The schemes in this category follow the value style of investment. These schemes are mandated to maintain a 65% allocation in equities. Value investment style is where the fund manager bets on stocks that are undervalued.
These schemes follow the contrarian investment strategy and have a minimum 65% allocation to equities. In the contra style of investing, the fund manager takes a contrarian view.
These schemes invest in a maximum of 30 stocks. The scheme would mention which market cap it tends to focus. They can be extremely risky if the fund manager’s call of stock picking goes wrong. However, they can offer great returns if the stocks perform.
These schemes invest in a particular theme or a sector. These schemes invest a minimum 80% of their assets in equity. Sectoral or thematic funds are generally considered risky for retail investors because their fortunes depend on the performance of a particular sector.
ELSS (Equity Linked Saving Scheme)
ELSSs are tax-saving mutual fund schemes with a lock-in period of three years. Their minimum investment in equities should be 80% of the total assets.