Theme: Organizational aspects and procedure of mutual funds

Geographical classification
(1) Domestic funds: Funds that attract funds from a specific geographical location such as a country or region are called domestic funds. The market is limited and limited by the borders of the country in which the fund operates. They can only invest in instruments issued and traded in domestic financial markets. An Indian mutual fund is a domestic fund that invests in Indian stocks.
(2) Offshore funds: Offshore funds are funds that facilitate cross-border investment. Such mutual funds may invest in instruments of foreign companies and thus provide investors with the benefit of international diversification.
(1) Sector Funds: These funds invest in key sectors such as energy, telecom, IT, banking, construction, transport, steel, FMCG and financial services, etc.
(2) Tax Saving Schemes: Tax Saving Schemes provide special tax benefits to investors. Mutual funds have launched various tax saving schemes. These are closed-end funds, and the investments have a closed-end period of at least 3 years. These schemes have different options like dividend, growth or capital appreciation.
(3) ELSS: In order to encourage investors to invest in the stock market, the government has allowed tax incentives through special funds. Investment in these funds enables the investor to claim income tax deductions under section 80C, but these funds carry a lock-in period of 3 years.
(4) Gilt Funds: Mutual funds that deal exclusively in gold or government securities are called gilt funds. In order to create a larger investor base for government securities, the RBI is encouraging the creation of jewelery schemes.
(5) Index Funds: An index fund is a mutual fund that invests in a portfolio that holds the same proportion of securities in the underlying index, e.g. S&P BSE Sensex or Nifty. It invests only in the same proportion as the weightage in the index which is a part of the market index so that the value of such index schemes is fully converted to the market index. An index fund adopts a passive investment strategy as the fund manager does not need to analyze stocks to invest or buy in these schemes.
(6) Exchange Traded Funds (ETFs): Exchange Traded Funds (ETFs) are hybrids of open-end mutual funds and stocks traded on stock exchanges. These funds can be bought and sold at a fluctuating NAV on the exchange just like stocks on the stock exchanges. They are open-end mutual funds listed on stock exchanges.