1.Liquid Funds

Liquid funds are debt funds that lend to companies for a period of up to 91 days. These are the safest funds amongst all the mutual fund categories, owing to their extremely low lending duration.

• Suitable for putting money aside for emergencies
• Near zero risk of loss if someone invests for at least one month
• Have given up to 50% to even at times 100% higher returns than the savings bank account

2. Debt Funds

• Ideal for an investment horizon of at least 12-24 months
• Low chances of loss if someone stays invested for 6+ months
• These schemes tend to give better returns than Bank Fixed Deposits of similar duration

3. Arbitrage Funds

Arbitrage funds are hybrid mutual funds that generate returns by using the strategy of simultaneously buying and selling of securities in different markets to take advantage of different prices.

• No stock market risk as the buying and selling price of a stock is known to fund manager
• Suitable for an investment horizon of 1-3 years
• Equity taxation means more tax-efficient returns when compared to Fixed Deposits

4. Dynamic Asset Allocation Funds

Dynamic Asset Allocation Funds invest in a mix of stocks and FD-like instruments. However, they keep changing this allocation based on the market conditions to provide you optimal returns with minimal risk

• Model-based triggers which tell the fund manager adjustments needed to deliver consistent and stable returns
• Books profit when markets rise and invest more when markets correct
• Suitable for an investment horizon of 3+ years

5. Balanced Fund / Balance Fund

Balanced funds invest an equal amount in stocks and FD-like instruments. These funds provide you a truly balanced portfolio that combines growth and stability.

• 50% allocation to stocks gives your money a chance to grow
• 50% allocation to FD-like instruments brings stability to returns
• Ideal for 3+ years investment horizon

6. Hybrid Funds

Hybrid Funds are balanced funds invest primarily in stocks with some allocation to FD-like instruments. Spreading out of investments means these funds are less risky than pure equity funds with almost similar returns in the long run.

• Up to 75% allocation to stocks gives your money a chance to grow
• At least 25% allocation to FD-like instruments provides a cushion if stocks go down
• Ideal for 4+ years investment horizon 

7. Diversified Equity Funds

A diversified equity fund invests in companies regardless of size and sector. It diversifies investments across the stock market in a bid to maximize gains for investors. They are offered by unit-linked insurance plans / ULIPs, mutual funds and other investment firms.

• Ideal for 5+ years investment horizon

8. Multi Cap

Multi cap equity funds invest in companies of all sizes and across sectors. Unlike large or mid cap funds, they can decide how money gets allocated between big, mid-sized, and small companies. This flexibility also allows them to make changes in the portfolio as market conditions change.

• Exposure to all key sectors driving the Indian economy forward
• Ideal for an investment horizon of 5+ years
• Eliminates the need for buying different funds for comprehensive market coverage

9. Large Cap Funds

Large cap mutual funds are equity funds that invest primarily in the top 100 companies of India. These companies are some of the biggest brands in our country, and most Indians use their products daily.

• Invest and get exposure to companies which are household names
• Customer loyalty and sustainable business means these companies generate profit consistently
• Ideal for goals which are at least 5 years away

10. Large & Mid Cap Funds

Large and Mid Cap Mutual Funds are equity funds that invest in India's top 200 companies. These funds bring together India's biggest companies, and mid-sized companies that are challenging those big companies for the top slot.

• Ideal for an investment horizon of 8+ years
• Get the perfect combination 'stability of large caps and aggression of mid-sized companies
• A smart way to invest in mid caps as you take lesser risk than pure mid cap funds

11. Mid Cap Funds

Mid Cap Mutual Funds are equity funds that invest in the mid-sized companies of India. The companies are some of the fastest-growing companies in India and are at a stage today's leaders were a few years back.

• Access to high-growth stocks that can give market-beating returns
• The smaller size makes them more likely to falter during tough market conditions
• Suitable for aggressive investors with 10+ years investment horizon

12. Small Cap Funds

Small Cap equity funds invest in the smallest companies in India. These companies are beyond the top 250 companies and are mostly unheard in our daily lives. While they can deliver fantastic returns, small cap companies are incredibly volatile, and you can see losses in short to medium term

• Benefit from investing early in companies that can be top businesses of future
• Exposure to high risk due to lack of financial strength to withstand tough market conditions
• Ideal for very aggressive investors with a 12+ years investment horizon.

13. Sectorial Funds

Sectoral mutual funds are equity funds that put the entire money in one sector. For instance, an IT sector fund invests only in IT companies, a banking sector fund only in banks and so on. This one sector only exposure make them one of the riskiest mutual funds.

• Lack of diversification means if the sector faces challenging times, so will your investments
• Not more than 10% of your portfolio should be allocated to this fund category
• If you invest, be prepared to stay invested for at least 10+ years

14. Thematic Funds

Thematic funds are equity mutual funds that invest in stocks tied to a theme. These funds are more broad-based then sectoral fund, as they pick companies and sectors united by an idea. For instance, an infrastructure theme fund will invest in cement, power, steel, among other sectors

• High-risk category as returns are tied to a theme playing out
• Suitable for aggressive investors, even then exposure should not be more than 10% of the portfolio
• High conviction portfolios where fund managers take big bets on select stocks
• If you invest, be prepared to stay invested for at least 10+ years

15. International / Global Funds

International funds or Global Funds are equity funds that invest in stocks of companies listed outside of India. These funds help you invest in some of the biggest companies in the world. Like Amazon, Microsoft.

• Get exposure to global leaders like Facebook and Google
• Good way to reduce portfolio risk as markets around the world rarely go down together
• Suitable for goals which are at least 5 years away 

16. ELSS ( Equity Linked Saving Scheme)

ELSS funds are equity funds that allow you to save tax while you invest for your long term goals. Investment in these funds can are eligible for deduction under Section 80c. ELSS is a kind of mutual fund which provides deduction of upto 1.5lakhs from total income under section 80C

• Lock-in period of 3 years. Shortest among all tax saving options
• Their diversified portfolio reduces risk while ensuring you don't miss out on any opportunity
• Invest and get better return potential than traditional options like PPF