There are 3 main types of mutual funds according to their asset class. First, we have Equity Funds. These invest primarily in stocks and other equity-related instruments. Such funds include Equity Linked Saving Schemes (ELSS), multi-cap funds, sectoral & thematic funds, etc. Next, we have Debt Funds. These focus on fixed-income securities like bonds, government securities, etc. They have various types classified into duration of maturity, varying credit risk levels, etc. Finally, there are Hybrid Funds. These combine both equity and debt investments for a more balanced risk-reward approach. Hybrid funds vary based on the ratio of equity and debt assets.
Each type offers different returns and caters to various investment goals and risk appetites.