Mutual funds are an investment tool that pools money from various investors and invests it on their behalf. Mutual funds invest in equity (the stock market), debt and money market instruments.
Mutual fund companies have different schemes in each of these categories.
These schemes are portfolios, or collections of stocks, bonds and other securities, put together after a lot of analysis by each AMC's (asset management company's) team of expert analysts. The portfolios are designed to minimise risk and maximise returns.
There are different types of schemes:
- Equity-oriented funds
- Balanced funds, mostly equity with some debt
- Equity-oriented tax-saving funds
- Debt-oriented funds
- Liquid and money market funds