SCHEMES ACCORDING TO INVESTMENT OBJECTIVE :
Besides these, there are other types of mutual funds also to meet the investment needs of several groups of investors. Some of them include the following:
(a) Income Oriented Schemes: The fund primarily offer fixed income to investors. Naturally enough, the main securities in which investments are made by such funds are the fixed income yielding ones like bonds, corporate debentures, Government securities and money market instruments, etc.
(b) Growth Oriented Schemes: These funds offer growth potentialities associated with investment in capital market namely: (i) high source of income by way of dividend and (ii) rapid capital appreciation, both from holding of good quality scrips. These funds, with a view to satisfying the growth needs of investors, primarily concentrate on the low risk and high yielding spectrum of equity scrips of the corporate sector.
c) Hybrid Schemes: These funds cater to both the investment needs of the prospective investors – namely
fixed income as well as growth orientation. Therefore, investment targets of these mutual funds are judicious mix of both the fixed income securities like bonds and debentures and also sound equity scrips. In fact, these funds utilise the concept of balanced investment management. These funds are, thus, also known as “balanced funds”.
(d) High Growth Schemes: As the nomenclature depicts, these funds primarily invest in high risk and high return volatile securities in the market and induce the investors with a high degree of capital appreciation. Aggressive investors willing to take excessive risks are the normal target group of such funds.
(e) Capital Protection Oriented Scheme: It is a scheme which protects the capial invested in the mutual fund through suitable orientation of is portfolio structure.
(f) Tax Saving Schemes: These schemes offer tax rebates to the investors under tax laws as prescribed from time to time. This is made possible because the Government offers tax incentive for investment in specified avenues. For example, Equity Linked Saving Schemes (ELSS) and pensions schemes.
(g) Special Schemes: This category includes index schemes that attempt to replicate the performance of particular index such as the BSE, Sensex or the NSE-50 or industry specific schemes (which invest in specific industries) or sectoral schemes (which invest exclusively in segment such as ‘A’ Group or initial public offering). Index fund schemes are ideal for investors who are satisfied with a return approximately equal to that of an index. Sectoral fund schemes are ideal for investors who have already decided to invest in particular sector or segment.
(h) Real Estate Funds: These are close ended mutual funds which invest predominantly in real estate and properties.
(i) Off-shore Funds: Such funds invest in securities of foreign companies with RBI permission.
(j) Leverage Funds: Such funds, also known as borrowed funds, increase the size and value of portfolio and offer benefits to members from out of the excess of gains over cost of borrowed funds. They tend to indulge in speculative trading and risky investments.
(k) Hedge Funds: They employ their funds for speculative trading, i.e. for buying shares whose prices are likely to rise and for selling shares whose prices are likely to fall.
(l) Fund of Funds: They invest only in units of other mutual funds. Such funds do not operate at present in India.
(m) New Direction Funds: They invest in companies engaged in scientific and technological research such as birth control, anti-pollution, oceanography etc.
(n) Exchange Trade Funds (ETFs) are a new variety of mutual funds that first introduced in 1993. ETFs are sometimes described as mere “tax efficient” than traditional equity mutual funds, since in recent years, some large ETFs have made smaller distribution of realized and taxable capital gains than most mutual funds.
(o) Money Market Mutual Funds: These funds invest in short- term debt securities in the money market like certificates of deposits, commercial papers, government treasury bills etc. Owing to their large size, the funds normally get a higher yield on such short term investments than an individual investor.
(p) Infrastructure Debt Fund : They invest primarily in the debt securities or securitized debt investment of infrastructure companies.