Functional classification
These are the funds classified on the basis of their functionality, i.e. how do they function?
Open ended scheme
Open-ended schemes are permitted to buy/sell their own units any time the investor feels like. Investors under this scheme are free to join the fund or withdraw from the fund at any time after an initial lock-in period. Such funds announce sale and repurchase prices from time to time. In an open-ended scheme, investors can resell units in the fund to the issuing mutual fund at the net asset value (NAV) of the units.
Close-ended scheme
In close ended schemes, the period of the scheme is specified at the outset. They have a definite target amount for the funds and cannot sell more after initial offering. Close-ended schemes do not issue units for repurchase redemption on a periodic basis. Its units can be redeemed only on termination of the scheme, or through dealings in the secondary market.
Domestic funds
Domestic fund houses launch funds, which mobilise savings of the nationals within the country. These schemes could fall under any of the categories mentioned under portfolio classification and functional classification. Schemes launched by Indian MFs like GIC MF, UTI LIC MF, SBI MF, Canbank MF, Bank of Baroda MF, Bank of India MF, Morgan Stanley, Templeton, Alliance.
Offshore Funds
Offshore funds can invest in securities of foreign companies, after requisite permission from RBI. The objective behind launching offshore funds is to attract foreign capital for investment in the country of the issuing company. These funds facilitate cross border fund flow, which is a direct route for getting foreign currency. From the investment point of view, offshore funds open up domestic capital markets to the international investors and global portfolio investments.
Godmind Advisors will review the investor profile and suggest them the best mixture of these fund classification so that they get the maximum returns.
Classification of Mutual Fund
Investments
Functional classification
