On the basis of Investment Goals mutual funds can be divided as per the explained below:

Growth funds:

Growth funds are those that invest largely in high-performing stocks with the intention of capital growth. Investors looking for large returns over a lengthy period of time may find these funds to be an appealing alternative. These are for investors that are willing to take risks and are searching for capital growth. It is advised to invest in these funds over the long term. These funds invest mostly in equities stocks.

Tax-saving Funds (ELSS):

Mutual funds that invest primarily in corporate securities are called equity-linked saving plans. The Income Tax Act's Section 80C, however, allows them to claim tax deductions. They have a three-year minimum investment horizon. These are created for investors who don't want to take risks and are searching for consistent returns on their money. These programmes often invest in bonds, debentures, and other fixed income securities.

Liquidity-based funds:

On the basis of how liquid the investments are, some funds can be grouped. While plans like retirement funds have longer lock-in periods, ultra-short-term and liquid funds are best for short-term aims. These are intended for investors with limited time windows for making investments and minimal risk appetites. These plans often invest in commercial papers, treasury bills, etc.

Capital protection funds:

On the basis of how liquid the investments are, some funds can be grouped. While plans like retirement funds have longer lock-in periods, ultra-short-term and liquid funds are best for short-term aims. These are intended for investors with limited time windows for making investments and minimal risk appetites. These plans often invest in commercial papers, treasury bills, etc.

Fixed-maturity funds (FMF):

These funds invest capital in debt market securities that mature at the same time as the fund itself or at a time that is reasonably close to it. A three-year FMF, for example, will invest in assets with a three-year maturity or less. These are close ended funds, just like fixed deposits, and they provide an indicative yield. These funds make investments in debt and money market products. When investing the money, care is taken to ensure that the investment's maturity date and the fund's maturity date line up.

Pension Funds:

Pension funds make investments with the intention of generating consistent returns over a long period of time. They are typically hybrid funds that offer modest returns now but may do so in the future. These are designed for investors whose goal is to generate consistent income after retirement. These funds make investments in debt and equities to generate regular returns without taking on excessive risk with the cash.