Know The Classifications Of Mutual Fund Schemes
July 15, 2018
The pooling money scheme of Mutual Funds can be categorized and subcategorized on the terms of investment objectives and their respective phase of maturity. This includes
- Open-ended money scheme: This is the one that stands for subscriptions and redemptions on a periodic basis where depositors or clients can easily do unit transactions at Net Asset Value prices.
- Close-ended money scheme: This is a scheme which introduces a maturing period range varying from months to years and remains open for a particular time like the initial introduction period of the scheme or better termed as New Fund Offer.
The clients are free to invest during this specific period and can conduct transactions of those listed units.
- Interval money scheme: These represent the hybrid nature of both open and close-ended composition and are open to trading on the basis of pre-defined timings at the prevailing NAV rates.
They show their means of closeness to close-ended ones but differ in the following nature:
- No mandatory stock listings are required as they work on the self-defined property
- They continuously force to issue new units during the pre-specified timings and at the predominant NAV rate.
- Even the maturity phase is undefined.
- Exchange Traded Funds or EFTs scheme structure: They are index listed funds transacted on exchange live stocks. They expose the clients to different indices of the different countries. They thus establish their properties of low cost, easiness and real-time form of investing.
- Fund of Funds or FoF: They entertain themselves to invest in other mutual fund structures. This is a tactical move provided to choose between different schemes and objectives.
- Equity money scheme: These are related to medium to long-term clients facing a risk appetite but provide a much appreciation of capital on investing in equity-based items.
- Index money structure: They focus on index-based companies securities expecting returns in time.
- Income/Debt oriented structure: They are the lower returning schemes like treasury bills, Bond Securities or so.
- Gilt Scheme: These are government securities oriented schemes that eventually fluctuate on the basis of interest rates and other financial factors.
- Liquid Market Structure: These schemes promise to provide liquidity, preserve money and moderate the income. They always fund in short-term things like deposits certificates or so.
- Hybrid variety scheme: This is a multi-oriented scheme that helps with providing regular income using monthly plans, ensures the capital protection and so on.
Individuals or clients are free to choose with more than one scheme structure with their sight of objectives.