Watch the second part of our Types of Mutual Funds mini-series which differentiates funds based on how they are managed. Learn what is an index fund, actively managed fund, gold etf, fund of funds, and more! Know more about the types of mutual funds.
Mutual fund schemes can be classified by the way they are managed.
Based on the manner in which the schemes are managed, there are two types of mutual funds. Actively managed funds give the fund manager the ability to actively build the scheme’s portfolio based on the scheme’s investment objective, and endeavors to outperform the benchmark index. A Passively managed fund endeavors to build a portfolio in more static manner based on some pre-defined criteria. Index funds are the most common types of passive managed funds. What is index fund though? For e.g. there are index schemes, where the fund manager plays a passive role in managing the fund mostly limited to rebalancing the portfolio in line with the benchmark!
The industry has just kept growing over the last few years, with mutual fund companies launching schemes that are different from the regular equity, debt and hybrid funds. Like Gold Funds, Gold Exchange Traded Funds or Gold Sector Funds. What is gold ETF? Gold ETF’s are like an index fund that invests in gold, with an NAV that moves in line with gold prices in the market. And Gold Sector Funds invest in shares of companies that are engaged in gold mining and processing. The prices of these shares are closely linked to the profitability and gold reserves of the company.
Then there are also Commodity Funds. As the name suggests, these funds invests in commodity assets like food crop, fibers, industrial metals, energy products and precious metals. However mutual fund schemes in India are not yet permitted to invest in commodities, therefore these funds are usually structured as Commodity Sector Funds, investing instead in shares of companies that are into commodity businesses.
You could also opt for International Funds, which invest your money outside the country. Because a mutual fund could offer a scheme to investors like you in India, so you can invest your money abroad.
Find out the various types of funds using our fund explorer:
https://www.franklintempletonindia.com/investor/funds-and-solutions/funds-explorer/funds-explorer?secondFilter-2
We hope you enjoyed watching this video! Watch more, and we’ll help you learn about different investing concepts. You can also write to us with your feedback (editor@templeton.com)
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