A balanced fund is right for you if you are looking for long-term growth possibilities with stability. Balanced funds tend to be costly but can be a worthwhile investment if want a diversified portfolio in one fund and you don’t want to manage your own asset mix or don’t have an advisor to do it for you.

Dividend funds

These funds are designed specifically to provide maximum dividend opportunity. A dividend is how a company pays the people who own its stock. Dividend funds invest in high-quality common shares from blue chip companies (i.e., well-established, financially-sound companies), such as Reliance Industries or Infosys for example, and preferred shares. There is the potential for long-term capital growth. Dividend funds also receive preferential tax treatment, which reduces the amount of tax an investor has to pay on capital gains.

A dividend fund is right for you if you have an interest in investing in corporations and receiving any profits made by the fund on a regular basis. Keep in mind, however, that dividends are not guaranteed, and so there is also a greater risk involved with this type of investment.
 
Equity funds

These funds invest in common or preferred shares (i.e., stocks) of corporations and are broken down further into Indian equity funds and international equity funds, with each of these investing in stocks from companies in the specified country or region. International equity funds invest in money-market securities and in bond and stock markets in various countries and regions of the world.

An equity fund is right for you if you are interested in investing for the long term, i.e., for five years at the very least. Equity funds are also a good vehicle for retirement planning as well as those who are looking to diversify their investment portfolio.

Specialty or sector funds

Specialty funds, also known as sector funds, concentrate on common shares of a group of companies in one industry or geographic location. Examples of specialty funds are natural resource funds, technology funds and infrastructure funds, whose investment decisions are based on the performance and future prospects of the particular sector. Specialty funds can provide huge rates of return, but the reverse is also very possible, thus making them quite volatile.

A specialty or sector fund is right for you if you are an experienced investor looking to diversify your investment portfolio. People who invest in these funds tend to be fairly knowledgeable in the local and international economy as well as actively read up on current affairs.

To learn more read other articles in Learning center for new investors, Basics of stock market investing, Stock Market FAQ's  and stock market analysis. If you have any doubts or questions you can ask the same on stockinvest.in.