Mutual funds pool money from investors into diversified portfolios managed by professionals. India's MF industry manages ₹50L+ crore.
Types of Mutual Funds
By asset: Equity (stocks, highest return/risk), Debt (bonds, stable), Hybrid (mix). By cap: Large-cap (top 100), mid-cap (101-250), small-cap (251+), flexi-cap, multi-cap. By strategy: Index (passive), active (manager picks), ELSS (tax-saving), sectoral.
Direct vs Regular: Save 1%/Year
Direct plans have 0.5-1% lower expense ratio. Over 20 years on ₹10K SIP, that's ₹8-12L more. Always choose direct plans via Groww, Zerodha, or Kuvera.
Your First Portfolio
Conservative: 60% large-cap index + 40% debt. Balanced: 40% Nifty 50 + 20% Next 50 + 20% flexi-cap + 20% debt. Aggressive: 40% Nifty 50 + 20% mid-cap + 15% small-cap + 15% international + 10% debt.
Key Metrics
Expense Ratio (<0.5% index, <1.5% active). Tracking Error (lower = better for index). Alpha (positive = manager adds value). Sharpe Ratio (>1 is good). Use our [Mutual Fund Calculator](/calculators/mutual-fund-calculator) and [XIRR Calculator](/calculators/xirr-calculator).