The Indian financial markets have evolved quite a lot in the last few years. From being a specialised market with a handful of investment products for seasoned traders to more dynamic options for the general public. Today, not only there are stocks, but also commodity products, derivatives, bonds and mutual funds. Furthermore, even within mutual funds, there is an exhaustive list of variations and custom investment opportunities. While it is interesting to have such options, it is also overwhelming to choose the right investment opportunities.
For someone with access to specialised tools and trading experience, making an informed decision is easier. However, if you are new to trading and investments, understanding the complexities can be tricky and daunting. Let’s take a look at some of the popular mutual schemes you can consider for your next investment.
1. Equity mutual fund
Among the most commonly invested mutual funds are the equity mutual funds, which give you the chance to invest in stocks. These funds are great as the investors can reap the returns of the stock market without having to buy the stocks individually. Instead, they can choose a blanket fund that caters to the companies and segments they prefer. Funds like Nippon India small cap fund, or Kotak Sensex mutual fund focus on equity assets.
2. Sector-specific fund
A more furnished version of the equity funds are the sector-specific mutual funds that are curated for a certain market or industry. Fund managers often pick the top assets from a specific market segment, like banking, telecom, technology etc. to create these funds. For investors looking to hold positions in a particular industry can opt for these
3. Hybrid mutual funds
Often investors find that investing only in equity can expose them to a greater market risk. On the other hand, debt funds are safer but have lower returns, which may not seem lucrative. Hybrid mutual funds are a blend of the two, where managers combine a mix of equity, debt and other investments. This provides the investors with better returns while minimising their risk positions in the market. These are balanced funds with a diverse rank of underlying asset classes providing comprehensive coverage. Flexi cap funds and hybrids like parag parikh flexi cap fund are becoming equally popular among investors in the current market situation
4. Index funds and ETFs
There are a good number of investors who prefer following the market index instead of building their own custom portfolio. But, actively trading and managing investments to trace an index like Sensex or Nifty can be a daunting task, particularly for new investors. Investing in index funds and ETFs gives investors the opportunity to replicate the performance of the market indices. These funds provide the benefit of low expense ratios and enable investors to actively track and manage their investment strategies.
There are a wide variety of mutual funds available from various fund houses in India that offer diverse investment opportunities. You can also choose to opt for lump sum or SIP-based investment strategies to formulate your investments. Do your research and look at the details of each mutual fund before investing in any product to maximise your returns