My 11th Blog: "Unlock the potential of mutual funds with a deeper understanding of their categorization."

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Mutual Fund categorization is a process of grouping mutual funds based on their investment objectives, asset allocation, and investment strategy. The Securities and Exchange Board of India (SEBI), the regulatory body for the mutual fund industry in India, introduced a new mutual fund categorization system in 2018, which aimed to standardize mutual fund categories and make it easier for investors to compare funds and make informed investment decisions.


Under the new system, mutual funds are classified into five broad categories: Equity, Debt, Hybrid, Solution-oriented, and Exchange-Traded Fund (ETF). Each category is further classified into sub-categories based on specific investment objectives and strategies.

Equity Fund: Equity mutual funds typically invest in a broad range of companies, from large, well-established corporations to small, emerging companies.

Debt Fund: Debt mutual funds are a type of investment fund that invests primarily in fixed-income securities such as bonds, debentures, and other debt securities issued by corporations, governments, and other entities.

Hybrid Fund: A hybrid mutual fund, also known as a balanced fund, is a type of mutual fund that invests in a combination of stocks and bonds, typically in a pre-determined allocation. The fund manager typically seeks to maintain a balance between the equity and debt portions of the portfolio, based on the fund's investment objective and risk profile.

Solution-oriented Fund: A solution-oriented mutual fund is a type of mutual fund that is designed to help investors achieve specific financial goals over a longer-term horizon, typically 5 years or more. These funds typically have a lock-in period, which means that investors cannot redeem their units before the specified period.

ETF: An exchange-traded fund (ETF) is a type of investment fund that is traded on stock exchanges like individual stocks. An ETF holds a basket of securities, such as stocks, bonds, or commodities, and its price is determined by the value of its underlying assets.

Later on, we will understand each fund in depth.

N.B: These funds are managed by professional fund managers who aim to generate returns for investors.

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