choose right mutual fund, all catagories found in Groww APP

1. Debt Mutual Funds (Low Risk, Fixed Returns)

Debt funds invest in fixed-income securities like government bonds, corporate bonds, and treasury bills. These are ideal for investors seeking stability over growth.

Subcategories:

1. Corporate Bond Fund

   • Invests in high-rated corporate bonds, offering better returns than bank FDs.
   • Suitable for low-risk investors seeking stable returns over 3–5 years.
   • Example: HDFC Corporate Bond Fund.
   • Tax: Short-term (STCG) taxed as per slab; long-term (LTCG) at 20% with indexation.

2. Gilt Fund (10-year Duration)

   • Invests in government securities with no default risk.
   • Suitable for long-term investors wanting a safe investment.
   • Example: SBI Magnum Gilt Fund.
   • Tax: Treated as debt fund taxation.

3. Money Market Fund

   • Invests in short-term debt instruments like commercial papers and treasury bills.
   • Ideal for parking excess cash for short-term liquidity.
   • Example: ICICI Prudential Money Market Fund.
   • Tax: As per debt fund taxation.

4. Credit Risk Fund

   • Invests in lower-rated corporate bonds, offering higher returns but increased risk.
   • Suitable for investors with moderate risk appetite.
   • Example: Nippon India Credit Risk Fund.
   • Tax: Short-term gains taxed as per slab, long-term at 20% with indexation.

---

2. Equity Mutual Funds (High Risk, High Growth)

Equity funds invest primarily in stocks, making them volatile but rewarding over the long term.

Subcategories:

1. Large Cap Fund

   • Invests in top 100 companies with stable performance.
   • Lower risk compared to small or mid-cap funds.
   • Example: HDFC Top 100 Fund.
   • Tax: LTCG above ₹1 lakh taxed at 10%; STCG at 15%.

2. Mid Cap Fund

   • Invests in companies ranked 101-250 by market capitalization.
   • Offers high growth potential but is more volatile than large-cap funds.
   • Example: Kotak Emerging Equity Fund.
   • Tax: Similar to large-cap funds.

3. Small Cap Fund

   • Invests in emerging companies, providing high returns but with high volatility.
   • Suitable for aggressive investors with a long-term horizon.
   • Example: SBI Small Cap Fund.
   • Tax: LTCG above ₹1 lakh taxed at 10%; STCG at 15%.

4. Index Fund

   • Passively tracks indices like NIFTY 50 or Sensex.
   • Lower expense ratio, ideal for passive investors.
   • Example: UTI Nifty Index Fund.
   • Tax: Same as equity funds.

5. ELSS (Equity Linked Savings Scheme)

   • Tax-saving equity fund with a 3-year lock-in.
   • Example: Axis Long Term Equity Fund.
   • Tax: Eligible for deduction under Section 80C (up to ₹1.5 lakh).

6. Sectoral/Thematic Fund

   • Focuses on specific sectors like IT, Pharma, or Banking.
   • High risk due to sector dependency.
   • Example: ICICI Prudential Technology Fund.
   • Tax: Same as equity funds.

7. International Fund

   • Invests in foreign stocks or indices like S&P 500.
   • Good for global diversification.
   • Example: Motilal Oswal Nasdaq 100 ETF.
   • Tax: Treated as debt fund taxation.

---

3. Hybrid Mutual Funds (Balanced Risk & Return)

Hybrid funds invest in both equity and debt to balance risk and return.

Subcategories:

1. Aggressive Hybrid Fund

   • 65-80% in equities, remaining in debt.
   • Ideal for moderate-risk investors.
   • Example: Mirae Asset Hybrid Equity Fund.
   • Tax: Treated as an equity fund.

2. Conservative Hybrid Fund

   • 75-90% in debt, rest in equities.
   • Suitable for retirees or conservative investors.
   • Example: HDFC Hybrid Debt Fund.
   • Tax: Treated as debt fund taxation.

3. Dynamic Asset Allocation

   • Adjusts allocation between equity and debt based on market conditions.
   • Example: ICICI Prudential Balanced Advantage Fund.
   • Tax: Tax treatment varies based on equity allocation.

4. Arbitrage Fund

   • Low-risk fund that exploits price differences between cash and derivatives markets.
   • Taxed like equity but with lower risk.
   • Example: Kotak Equity Arbitrage Fund.
   • Tax: Treated as equity taxation.

5. Multi Asset Allocation Fund

   • Invests in three or more asset classes (equity, debt, gold, etc.).
   • Example: ICICI Multi Asset Fund.
   • Tax: Varies based on allocation.

6. Balanced Hybrid Fund

   • 40-60% in equity and rest in debt.
   • Example: SBI Balanced Advantage Fund.
   • Tax: If equity > 65%, treated as an equity fund.

7. Equity Savings Fund

   • Invests in equity, arbitrage, and debt.
   • Example: ICICI Prudential Equity Savings Fund.
   • Tax: Varies based on equity allocation.

---

4. Commodity Mutual Funds (Hedge Against Inflation)

Commodity funds invest in assets like gold and silver to provide inflation protection.

Subcategories:

1. Gold Fund

   • Invests in gold ETFs or mining companies.
   • Helps protect against inflation.
   • Example: Nippon India Gold Savings Fund.
   • Tax: LTCG at 20% with indexation.

2. Silver Fund

   • Invests in silver-related instruments.
   • Higher volatility than gold.
   • Example: ICICI Prudential Silver ETF Fund.
   • Tax: Same as gold funds.

---

Final Thoughts

• Debt Funds – Best for conservative investors.
• Equity Funds – High risk, high reward, suitable for long-term.
• Hybrid Funds – Best for balanced growth and stability.
• Commodity Funds – Hedge against inflation.