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<p>The standard disclaimer for <a href="https://www.utimf.com/">mutual funds</a> reads, &quot;Mutual Fund investments are subject to market risks, read all scheme related documents carefully.&quot; As mutual funds generate returns through the underlying securities in the portfolio, several investment risks come along with mutual fund investments. These may include volatility risk, liquidity risk, interest rate risk, credit risk, etc.</p>

<p dir="ltr"><span>When investing in equity markets, investors may adopt various investment strategies to pick the stocks. Such investment strategies may be broadly classified into growth investing, value investing, and contrarian investing. While growth investing chases high-growth shares often quoting at a premium, value investing aims for highly discounted valuations for stock picking.&nbsp;</span></p>

<p dir="ltr"><span>Mutual funds have continued to be the preferred choice amongst retail investors for savings and investments, as is reflected by AMFI (Association for Mutual Funds in India) data for monthly SIP (Systematic Investment Plan) inflows. During June 2020, monthly SIP inflows into </span><a href="https://www.utimf.com/mutual-fund-products/">mutual funds</a> were Rs. 7,927 crores, after consistently staying above Rs.

<p dir="ltr"><span>An Arbitrage fund is a mutual fund scheme following an arbitrage strategy to generate returns for the investors. In other words, it looks out to extract benefits out of the inefficiencies in the equity markets in terms of pricing specific stocks at different prices in different market segments, i.e., cash segment, and futures segment.

<p dir="ltr"><span>Listed companies are classified into three buckets based on their market capitalisation, viz. large caps, mid-caps, and small caps. The large-cap companies occupy the top 100 ranks as per the market capitalisation, mid-cap companies feature amongst the next 150 ranks. Any companies beyond the rank 250 are categorised as small-cap companies.&nbsp;</span></p>

Public Provident Fund (PPF) has traditionally been one of the preferred investment options to save taxes, as it provides fixed returns through interest income and aims to cater to long-term investment needs. Hence, it suited the preferences of conservative investors looking for assured returns. However, with the evolution of financial markets, increasing awareness of financial planning, and the availability of newer options, investors are exploring choices beyond PPF.

Mutual funds have continued to be preferred by the retail investors with sustained SIP inflows during recent times. Investors may choose from a vast universe of mutual funds, which may be primarily classified into five major categories – equity funds, debt funds, hybrid funds, solution-oriented schemes, and other funds. Different types of mutual fund schemes tend to suit investors with different variants of risk profile, investment horizon, financial goals, etc.

<p dir="ltr"><span>Money markets are an integral function of an economy&#39;s financial system; wherein short duration financial securities are issued. While corporations use it to bridge the short-term funding requirements, financial institutions, including banks, use it for liquidity management. However, retail investors may not be able to generally invest in money market instruments due to the large-ticket transaction sizes. Such investors can have similar investment exposure through money market funds.&nbsp;</span></p>

<p>When it comes to debt investments, investors are generally inclined to traditional investment products like bank deposits. However, one can also invest in debt funds for investment exposure towards debt securities.

<p dir="ltr"><span>When planning to invest in equity markets, investors may choose large-cap funds or mid-cap funds or small-cap funds depending upon their risk profiles. While large-cap funds are considered relatively stable and suitable for investors with relatively conservative to moderate risk profile, small-cap funds are generally seen as funds aiming for aggressive returns but also have a higher risk attached. At the same time, the risk profile of an investor may not remain constant throughout the investing cycle.