Equity funds
These invest primarily in company shares and are meant for goals five years or more away.
- Large cap — top 100 companies, relatively steadier
- Mid and small cap — higher growth potential with sharper falls
- Flexi cap — the fund manager moves across market sizes
- ELSS — tax-saving equity funds with a 3-year lock-in
- Index funds — track an index at a very low cost
Debt funds
These hold bonds and money-market instruments and suit short to medium-term needs.
- Liquid and overnight — parking money for days or weeks
- Ultra short and low duration — 6 months to 2 years
- Corporate bond and banking & PSU — 3 years and above
Hybrid funds
Hybrid funds mix equity and debt in one scheme. Aggressive hybrids lean toward equity, balanced advantage funds shift the mix automatically based on valuations, and conservative hybrids stay largely in debt. They're a comfortable starting point for first-time investors.