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Which Mutual Fund does Your Best Friend Resemble?

ClearTax Team

Friends come in all sorts of shapes, sizes and types. The shapes and sizes would be of more interest to a fashion magazine, while what we are interested in is the types.

Everyone of us has a best friend. And every best friend is different. Some friends are energetic, some are lethargic. Some friends you can depend on, some are not that reliable. But no matter how he or she is, a best friend is always special. So, this Friendship’s Day, let’s see what type of a best friend you have in mutual fund terminology.

The Idealist – Multi-cap Equity Fund

Your idealist friend is like a multi-cap fund. It’s quick to reflect on the investment decisions it has made and adapt to the changing economic scenario. A multi-cap fund invests in stocks of all market capitalisation and across sectors. This flexible investment mandate allows it to take an idealistic view of the economy and invest in a manner to earn the highest possible returns.

The Duty Fulfiller – Liquid Fund

The duty fulfiller friend you have resembles a liquid fund by nature. It is also quietly serious and interested in security. A liquid fund will go about doing it’s job of protecting your investments and generating decent returns. You want someone serious and secure? Your duty fulfiller friend is the one to go to. Ditto for liquid funds.

The Nurturer – Large-cap Equity Fund

You want a friend who is careful and can be depended on to follow through with their word? That’s a nurturer. That’s also a large-cap equity fund. This fund will invest in large companies that are stable and mostly predictable. A large-cap fund will be careful with its equity allocation and you can depend on it for that.

The Performer – Mid- and Small-cap Equity Fund

They are the showstoppers, the centre of attention, the heart and soul of every party. Your friend who is a performer is a lively being and tries out new things. And so does the mid- and small-cap equity fund. It will invest in newer companies in a bid to beat the market by good margins and will never shy from taking bold calls.

The Inspirer – Balanced Fund

There’s always a friend you would look up to because of how flexible he or she is. They will always try to get the most out of what they have and excel at that. Balanced funds are just as flexible. They invest in equities as well as debt. This flexible investment mandate allows them to earn healthy returns without taking undue risks.

The Protector – Income Fund

This is the one friend that none of us can do without. The protector protects. You feel safe with this friend, just as you would feel with an income fund. This type of debt fund takes long duration calls and usually holds the security till it matures. This allows the fund to be a safe bet for investors.

So, just as you would choose to be friends with someone you’re comfortable with, you should choose a mutual fund to invest in just as carefully. It will be a friendship you will cherish and benefit from for a long time to come.

This article is by ClearTax, India’s largest financial services platform for businesses and professionals. (www.cleartax.com)