Investing can often feel like walking into a supermarket with thousands of options on the shelf. You know you need to buy something healthy for your financial future, but the labels are confusing. Some say “Equity,” others say “Debt,” and some promise a “Hybrid” mix.
If you have ever felt overwhelmed by the jargon, you are not alone. Understanding the types of mutual funds in India is the very first step toward building a portfolio that actually works for you.
In this comprehensive guide, we will explain the types of mutual funds available to you, break down how they work, and help you navigate the landscape so you can invest with confidence.
What is Mutual Fund: A Basic Understanding
A mutual fund is an investment product that pools money from many investors and invests it in a diversified portfolio—such as stocks, bonds, or a mix of both. A professional fund manager handles these investments on behalf of investors.
Mutual funds are popular because they offer:
- Diversification
- Professional management
- Low investment entry
- Flexibility (depending on the type of fund)
Now that you understand what a mutual fund is, the next step is to explore the different types of mutual funds. These types are primarily classified based on where your money is invested, known as Principal Investments or Asset Class.
Types of Mutual Funds Based on Principal Investments (Asset Class)
The most common way to categorize them is by asset class—meaning, where does the fund manager put your money? This is where we see the different types of mutual funds like Equity, Debt, and Hybrid. Let’s break these down in detail, as they form the foundation of your investment journey.
1. Equity Mutual Funds: For Long-Term Growth
If your goal is wealth creation over a long period (say, 5 years or more), equity funds are often the go-to choice. These funds invest primarily in the stock market. When you buy a unit of an equity fund, you are essentially owning a tiny slice of many different companies. While they carry higher risk compared to other categories, they also offer the potential for inflation-beating returns.
When exploring the types of equity mutual funds, you will find they are further divided based on the size of the companies they invest in:
(i) Large-Cap Funds
These invest in the top 100 companies in India. These are established businesses with stable track records (think Reliance, TCS, or HDFC Bank). They are considered less volatile than smaller companies. Many conservative equity investors look for the top performing large cap mutual funds in India to ensure stability while participating in market growth.
| Schme Name | AUM | 1W | 1M | 3M | 6M | YTD | 1Y | 2Y | 3Y | 5Y | 10Y |
| Sundaram Large Cap Fund – Direct Plan – Growth | 3,358.25 | 0.28% | 2.02% | 4.91% | 5.09% | 6.78% | 3.52% | 11.94% | 12.63% | 16.27% | – |
| DSP Large Cap Fund – Direct Plan – Growth | 6,933.59 | 0.22% | 2.15% | 5.45% | 4.77% | 9.82% | 6.45% | 16.98% | 18.27% | 17.09% | 13.31% |
| Mahindra Manulife Large Cap Fund – Direct Plan – Growth | 737.93 | 0.10% | 2.18% | 4.98% | 5.37% | 10.87% | 5.90% | 15.42% | 15.06% | 17.79% | – |
| ICICI Prudential Large Cap Fund – Direct Plan – Growth | 75,863.08 | 0.05% | 2.82% | 5.84% | 7.22% | 12.54% | 8.24% | 17.23% | 18.14% | 19.91% | 16.00% |
| WhiteOak Capital Large Cap Fund – Direct Plan – Growth | 1,103.81 | 0.04% | 1.90% | 5.22% | 6.82% | 10.01% | 5.83% | 18.90% | 17.77% | – | – |
(ii) Mid-Cap Funds
These invest in medium-sized companies (ranked 101st to 250th). They have higher growth potential than large caps but come with slightly more risk. Investors often track the top performing mid cap mutual funds in India to identify companies that are in their high-growth phase. Notable funds that have performed well in this category over the last 5 years include Motilal Oswal Midcap Fund, Quant Mid Cap Fund, and Edelweiss Mid Cap Fund.
| Scheme Name | AUM | 1W | 1M | 3M | 6M | YTD | 1Y | 2Y | 3Y | 5Y | 10Y |
| Edelweiss Mid Cap Fund – Direct Plan – Growth | 12,646.93 | -0.44% | 0.47% | 4.24% | 5.01% | 4.52% | 3.27% | 23.73% | 25.67% | 27.50% | 19.89% |
| Aditya Birla Sun Life Midcap Fund – Direct Plan – Growth | 6,271.07 | -0.55% | -0.53% | 3.08% | 3.29% | 4.33% | 1.48% | 16.18% | 20.12% | 22.30% | 14.81% |
| HDFC Mid Cap Fund – Direct Plan – Growth | 89,383.23 | -0.61% | 0.53% | 6.16% | 7.38% | 7.46% | 6.60% | 20.17% | 25.39% | 26.93% | 19.34% |
| ITI Mid Cap Fund – Direct Plan – Growth | 1,290.01 | -0.68% | 0.46% | 5.79% | 3.95% | 4.24% | 1.34% | 20.93% | 24.34% | – | – |
| Canara Robeco Mid Cap Fund – Direct Plan – Growth | 3,848.99 | -1.04% | -0.98% | 0.67% | 3.66% | 6.20% | 3.13% | 18.31% | 21.89% | – | – |
(iii) Small-Cap Funds
These invest in smaller, emerging companies. They can be volatile but can offer massive returns if the companies succeed. Aggressive investors frequently search for the top performing small cap mutual funds in India to maximize their wealth creation potential. Schemes that have delivered strong returns over the last 5 years in this segment include Quant Small Cap Fund, Nippon India Small Cap Fund, and Tata Small Cap Fund.
| Scheme Name | AUM | 1W | 1M | 3M | 6M | YTD | 1Y | 2Y | 3Y | 5Y | 10Y |
| ICICI Prudential Smallcap Fund – Direct Plan – Growth | 8,621.53 | -0.19% | -1.66% | -2.17% | 0.53% | 0.78% | -2.86% | 10.27% | 17.08% | 24.65% | 16.90% |
| SBI Small Cap Fund – Direct Plan – Growth | 36,945.09 | -0.94% | -3.65% | -2.25% | -0.16% | -4.40% | -6.68% | 10.03% | 13.79% | 20.72% | 19.06% |
| Kotak Small Cap Fund – Direct Plan – Growth | 18,023.96 | -1.12% | -4.73% | -4.25% | -4.04% | -8.23% | -10.41% | 9.51% | 15.59% | 22.78% | 18.41% |
| Bandhan Small Cap Fund – Direct Plan – Growth | 17,380.29 | -1.23% | -3.29% | 1.39% | 1.51% | 0.23% | -2.22% | 23.75% | 30.32% | 29.03% | – |
| Edelweiss Small Cap Fund – Direct Plan – Growth | 5,296.70 | -1.24% | -2.78% | -0.66% | 0.92% | -2.62% | -4.72% | 12.96% | 20.00% | 26.69% | – |
(iv) Flexi-Cap and Multi-Cap Funds
These give the fund manager the freedom to invest across large, mid, and small-cap companies depending on where they see the best opportunity. Some of the best-performing flexi-cap funds over the last 5 years are Parag Parikh Flexi Cap Fund, Quant Flexi Cap Fund, and JM Flexicap Fund.
| Scheme Name | AUM | 1W | 1M | 3M | 6M | YTD | 1Y | 2Y | 3Y | 5Y | 10Y |
| NJ Flexi Cap Fund – Direct Plan – Growth | 2,438.74 | 0.79% | 2.05% | -0.99% | 3.56% | -0.71% | -3.46% | 11.17% | – | – | – |
| HDFC Flexi Cap Fund – Direct Plan – Growth | 91,041.00 | 0.25% | 1.09% | 4.61% | 7.60% | 12.72% | 9.45% | 20.60% | 21.49% | 25.71% | 17.52% |
| DSP Flexi Cap Fund – Direct Plan – Growth | 12,197.68 | 0.03% | 0.86% | 4.51% | 4.01% | 6.15% | 2.11% | 14.80% | 17.97% | 17.99% | 15.68% |
| Aditya Birla Sun Life Flexi Cap Fund – Direct Plan – Growth | 24,443.27 | 0.01% | 1.20% | 6.54% | 6.79% | 11.47% | 7.77% | 17.99% | 17.47% | 18.20% | 15.96% |
| The Wealth Company Flexi Cap Fund – Direct Plan – Growth | 228.36 | 0.01% | 1.71% | – | – | – | – | – | – | – | – |
For a new investor, understanding these types of mutual fund schemes is crucial because it helps you align your risk appetite with your investment. You can explore these options directly on the Indipe Mutual Funds page to see which ones align with your goals.
2. Debt Mutual Funds: Stability and Regular Income
Not everyone likes the roller-coaster ride of the stock market. Some investors prefer stability, safety, and regular returns. This is where debt funds come in. These funds invest in fixed-income instruments like government bonds, corporate debentures, and money market instruments.
When we look at the types of debt mutual funds, the focus is usually on the lending duration and the credit quality of the borrower:
- Liquid Funds: These invest in very short-term instruments (up to 91 days). They are great alternatives to savings bank accounts as they offer high liquidity and potentially better returns.
- Overnight Funds: These invest in securities maturing in one day. They are considered the safest among various types of mutual funds.
- Gilt Funds: These invest in government securities. Since they are backed by the government, they carry zero default risk, though they can still be affected by interest rate changes.
- Corporate Bond Funds: These invest in companies that need to borrow money. They offer slightly higher interest rates than government bonds but carry a bit more risk.
If you are looking to park your emergency fund or save for a short-term goal like a vacation next year, debt funds are often a smarter choice than keeping cash idle.
3. Hybrid Mutual Funds: The Best of Both Worlds
If you are confused between equity and debt, why not choose both? Hybrid funds invest in a mix of stocks and bonds. They aim to provide the growth potential of equity while using debt to cushion the fall during market downturns.
Among the different types of mutual funds in India, Hybrid funds are excellent for beginners.
- Aggressive Hybrid Funds: These invest mostly in equity (65-80%) and the rest in debt.
- Conservative Hybrid Funds: These invest mostly in debt (75-90%) and a small portion in equity to boost returns.
- Balanced Advantage Funds: These dynamically manage the allocation between equity and debt based on market conditions.
4. Solution-Oriented and Other Schemes
Beyond the standard categories, SEBI has defined specific types of mutual funds in india geared towards clear life goals.
- Retirement Funds: These usually have a lock-in period of 5 years or until retirement age, ensuring you stay invested for your golden years.
- Children’s Funds: Geared towards funding education or marriage, these also come with a lock-in period to prevent premature withdrawals.
- Index Funds: These are passive funds that simply copy a market index like the Nifty 50 or Sensex. They are low-cost and are gaining immense popularity among those who want simple market returns.
While principal investments explain where your money goes, mutual funds can also be classified by their flexibility or structure—that is, when you can invest or redeem. Understanding these structures helps you choose funds that match your liquidity needs and investment horizon. Let’s explore the types of mutual funds based on flexibility.
Different Types of Mutual Funds Based on Flexibility
This classification tells you how easily you can invest or withdraw your money.
There are 3 major structures:
1. Open-Ended Funds (High Liquidity & Flexibility)
Open-ended mutual funds let you invest or redeem units on any business day, making them the most flexible category. They do not have a maturity date, so you can hold them for a few days or several years based on your financial goals. NAV changes daily as the fund continues to accept inflows and outflows. Open-ended funds are commonly used for SIPs because they support long-term wealth building with easy entry and exit.
Example: A typical Equity Flexi-Cap Fund where you can start a SIP anytime, add more units whenever you choose, or redeem whenever you need funds—no lock-in involved.
Open-Ended – Choose If You Want:
- Anytime liquidity
- SIP flexibility
- Long-term compounding
Great for someone doing a monthly SIP for retirement or children’s education.
2. Close-Ended Funds (Fixed Tenure Investing)
Close-ended funds come with a fixed maturity period—typically 3 to 5 years. You can invest only during the New Fund Offer (NFO) window; once it closes, no fresh purchases are allowed. Redemption is also restricted until maturity, which helps fund managers maintain a stable investment corpus. Although some close-ended funds get listed on stock exchanges, trading activity is often low, limiting liquidity.
Example: A close-ended fund with a fixed maturity of 3–7 years (or longer), where investors can buy units only during the NFO and must either trade on the exchange for liquidity or wait until the fund fully matures for redemption.
Close-Ended – Choose If You Want:
- Fixed investment tenure
- Goal-based planning
- No temptation to withdraw early
Useful when you have a lump-sum amount and a 3–5 year goal such as a home renovation or vacation.
3. Interval Funds (Limited-Window Access)
Interval funds are a hybrid of open-ended and close-ended structures. They allow investment and redemption only during specific intervals—such as every 3 months, 6 months, or yearly. Outside these defined windows, the fund remains closed. This structure helps fund managers maintain stability while still offering investors periodic liquidity. Interval funds are mostly found in the debt category.
Example: A 6-month Interval Debt Fund that lets investors buy or redeem units only for a few days every six months, while staying closed for the rest of the period.
Interval – Choose If You Want:
- Predictable liquidity windows
- Debt exposure
- Corpus stability
Suitable for businesses or individuals who need planned liquidity—for example, every six months.
While fund structures explain when you can invest or redeem, it’s also useful to know about special categories that offer added benefits—such as tax-saving options. One such category within equity funds is Tax-Saving Mutual Funds (ELSS).
Tax-Saving Mutual Funds (ELSS): A Special Equity Category
Equity Linked Savings Schemes (ELSS) are a unique type of equity mutual fund that offer tax benefits under Section 80C of the Income Tax Act. Investors can claim deductions of up to ₹1.5 lakh per year on their taxable income by investing in ELSS.
Unlike regular equity funds, ELSS comes with a mandatory lock-in period of 3 years, which is the shortest among all tax-saving instruments under Section 80C. This lock-in encourages long-term investing while giving investors the potential for higher returns due to equity exposure.
Who should consider ELSS?
- Salaried individuals or taxpayers looking to reduce their taxable income
- Investors willing to stay invested for at least 3 years to benefit from tax savings and market-linked growth
- Those looking for a disciplined approach to long-term wealth creation with the added benefit of tax relief
Example: If you invest ₹1,50,000 in an ELSS fund, you can reduce your taxable income by the same amount, potentially saving thousands in taxes. Meanwhile, your investment stays invested in equities for 3 years, giving it a chance to grow with the market.
Because of their dual benefit—tax savings plus wealth creation—ELSS funds are popular among investors aiming to optimize tax planning alongside their financial goals.
How to Choose the Right Fund?
With so many types of mutual fund schemes available, the million-rupee question remains: which type of mutual fund is best for you? The honest answer is: it depends.
There is no single “best” fund. The right fund is the one that matches your:
- Goal Horizon: Are you investing for 3 months (Liquid Fund) or 20 years (Equity Fund)?
- Risk Appetite: Can you handle seeing your portfolio value drop temporarily (Equity), or do you want steady growth (Debt)?
- Financial Need: Do you need tax saving (ELSS) or regular income (SWP from Debt funds)?
1. Start With Your Financial Goal
Choose a reliable partner to invest in mutual funds, like Indipe—offering access to all major asset management companies, giving you the option to invest in high-return funds. Using tools like the Indipe Calculators can help you project your potential returns based on different categories, helping you make a data-backed decision rather than a guess.
2. Know Your Risk Appetite
- Comfortable with volatility → Equity
- Moderate risk → Hybrid
- Prefer stability → Debt or Liquid
With IndiPe: Each fund includes clear risk indicators to help you invest with confidence.
3. Match the Fund With Your Investment Horizon
- Less than 1 year → Liquid Funds
- 1–3 years → Short Duration Debt Funds
- 3–5 years → Hybrid Funds
- 5+ years → Equity Funds
4. Check Performance Consistency
Rather than chasing the latest high returns, look for:
- 3-year and 5-year performance
- Benchmark comparison
- Category-average comparison
With IndiPe: All these insights are presented visually for easier evaluation.
5. Review Fund Manager & AMC Reputation
A consistent track record from the fund manager and AMC can build long-term trust.
6. Watch the Costs
Lower expense ratios can boost long-term returns. Also check for any exit load.
7. Understand the Portfolio Mix
Ensure the fund’s sectors, market-cap allocation, or debt quality align with your comfort level.
With IndiPe: You can view simplified portfolio breakdowns before investing.
8. Consider Tax Factors
Equity, debt, and hybrid funds have different tax treatments.
If tax-saving is part of your plan, ELSS funds may be a suitable choice.
Moving Beyond the PDF
In the past, investors would download a long, complicated document on types of mutual funds and try to decipher the technical language. Today, you don’t need to do that. The new age of investing is digital, interactive, and simple.
You can browse through various types of mutual funds, check their past performance, look at their portfolio holdings, and invest instantly using the Indipe App. We have simplified the data so you can focus on your goals, not the glossary.
Why Mutual Fund Distributors Matter
While understanding the different types of mutual funds is empowering, sometimes you need a human touch to guide you through the nuances. This is where a Mutual Fund Distributor (MFD) comes in. An MFD can explain the risks associated with different types of mutual funds in india and tailor a portfolio specifically for you.
If you are passionate about finance and want to help others navigate these options, you might even consider becoming a distributor yourself. Indipe provides a robust platform for partners to grow their business. You can learn more about this on our Partner with Us page.
Top Performing Mutual Funds in India 2026
As we look ahead, identifying the top performing mutual funds in India 2026 will involve analyzing consistency, fund manager expertise, and market adaptability.Based on the most recent data available (as of early December 2025), here are the top funds across the Precious Metals and Equity categories, ranked by their 1-year return.
| Fund Name | Last 1Y p.a. Return (%) | Rating | Min SIP (₹) |
| Nippon India Silver ETF FOF – Growth | +89.36% | – | 100 |
| ICICI Prudential Silver ETF Fund of Fund Growth | +88.73% | – | 100 |
| ICICI Prudential Silver ETF Fund of Fund IDCW Reinvestment | +88.73% | – | 100 |
| SBI Gold Fund – Growth | +65.53% | 4 | 500 |
| SBI Gold Fund -IDCW Payout | +65.53% | 4 | 500 |
| DSP Gold ETF Fund of Fund – Regular Plan-Growth | +64.35% | 2 | 100 |
| DSP Gold ETF Fund of Fund – Regular Plan-IDCW Reinvestment | +64.35% | 2 | 100 |
| AXIS Gold Fund – Growth | +63.75% | 4 | 10 |
| AXIS Gold Fund – IDCW Payout | +63.75% | 4 | 10 |
| AXIS Gold Fund – IDCW Reinvestment | +63.75% | 4 | 10 |
| Invesco India Gold ETF Fund of Fund – IDCW Payout | +62.29% | 3 | 500 |
| Kotak Global Emerging Market Fund IDCW Reinvestment | +32.92% | – | 100 |
| Kotak Global Emerging Market Fund Growth | +32.92% | – | 100 |
| Growth (Unspecified Fund) | +32.92% | – | 100 |
Conclusion: Your Wealth, Your Choice
The landscape of types of mutual funds in India is vast, but it is structured to help you. From the safety of Liquid funds to the high-growth potential of Small-cap funds, there is a place for every rupee you earn.
The most important thing is not to be paralyzed by the question of what are the types of mutual funds, but to start with the one that feels right for your immediate goal. Start small, perhaps with a simple Index Fund or a Large-Cap fund.
At Indipe, we are committed to being your partner in this journey. Whether you are looking to invest in Digital Gold for stability, use UPI for daily transactions, or build a robust mutual fund portfolio, we have brought it all under one roof.Don’t let the jargon stop you. Explore the different types of mutual funds, use our tools to plan, and take that first step toward financial freedom today. For more details on our mission to simplify finance for Bharat, visit About Us. Happy investing!
FAQs
Q1. What are the main types of mutual funds available in India?
The main types of mutual funds in India are broadly categorized into Equity, Debt, and Hybrid funds. There are also different types of mutual funds based on investment goals, such as Solution-Oriented funds (for retirement or education) and Index funds.
Q2. How do I decide which type of mutual fund is best for me?
Determining which type of mutual fund is best depends entirely on your financial goals, risk appetite, and investment horizon. For long-term growth, equity is preferred, while debt funds are better for short-term stability.
Q3. Can you explain the types of mutual funds that focus on the stock market?
Certainly. The types of equity mutual funds invest primarily in stocks. These are further divided into Large-Cap, Mid-Cap, Small-Cap, and Flexi-Cap funds depending on the size of the companies they invest in.
Q4. What are the safer investment options among the various categories?
If you want lower risk, you should look at types of debt mutual funds. These invest in fixed-income instruments like government bonds and corporate deposits, offering more stability than equity.
Q5. Where can I find a list or document explaining all these schemes?
You don’t necessarily need to download a technical document on types of mutual funds. You can easily explore various types of mutual funds and detailed types of mutual fund schemes directly on investment apps which explain the types of mutual funds in simple language.
Q6. How many categories of funds are there in total?
If you are wondering how many types of mutual funds exist, SEBI has defined five broad categories: Equity, Debt, Hybrid, Solution-Oriented, and Other Schemes. Within these, there are different types of mutual funds in india designed to cater to every specific investor need.
Q7. What are the types of mutual funds for tax saving?
When asking what are the types of mutual funds that save tax, the answer is ELSS (Equity Linked Savings Scheme). It is the only category among the different types of mutual funds that qualifies for tax deductions under Section 80C.
