Like a restaurant menu
Just as a restaurant has sections (starters, mains, desserts) with specific dishes in each, SEBI organizes all mutual funds into 5 categories with strict sub-categories. Every fund fits into exactly one slot.
Types of Mutual Funds
SEBI classifies all Indian mutual funds into 5 main categories with strict sub-category definitions.1. Equity Funds (Invest in Stocks)
| Sub-Category | What It Means |
|---|---|
| Large Cap | Top 100 companies by market cap |
| Mid Cap | Companies ranked 101-250 |
| Small Cap | Companies ranked 251+ |
| Flexi Cap | Can invest across all sizes |
| Multi Cap | Must invest min 25% each in large/mid/small |
| ELSS | Tax-saving with 3-year lock-in |
| Sectoral/Thematic | Specific sector (IT, pharma, banking) |
| Index Fund | Passively tracks an index (Nifty 50, etc.) |
2. Debt Funds (Invest in Bonds/Fixed Income)
| Sub-Category | Duration |
|---|---|
| Liquid Fund | Up to 91 days |
| Ultra Short | 3-6 months |
| Short Duration | 1-3 years |
| Corporate Bond | Highest-rated corporate bonds |
| Gilt Fund | Government securities only |
3. Hybrid Funds (Mix of Equity + Debt)
- Aggressive Hybrid: 65-80% equity, rest in debt
- Balanced Advantage (BAF): Dynamic allocation based on market conditions
- Conservative Hybrid: 10-25% equity, rest in debt
4. Solution-Oriented Funds
- Retirement Funds: 5-year lock-in
- Children's Funds: Lock-in until child turns 18
5. Other Funds
- Index Funds / ETFs
- Fund of Funds (FoF)
- International Funds
Which Category to Start With?
As of 2025, Flexi Cap and Large Cap funds dominate in terms of AUM. For beginners, a large-cap index fund or flexi-cap fund is typically the simplest starting point.
Your Next Step
Use our Fund Screener to filter by category and compare funds side-by-side.