There are many types of Mutual funds and some of the more popular ones are:
Equity Funds: An equity fund is a type of mutual fund that invests mainly in stocks or equities. Large Cap Funds, Mid Cap Funds, and diversified equity funds are some of the prominent categories of equity funds.
Debt Funds: Debt Funds invests in a mix of debt or fixed income securities like Government securities, Treasury bills, Corporate bonds, etc. The prices of debt funds are considered to fluctuate less as compared to equity funds. People whose risk-appetite is low and prefer to earn steady income over time can choose to invest in debt funds. There are different types of debt funds like liquid funds, ultra short term funds, short term funds, long term funds and gilt funds.
Hybrid Funds: Also known as balanced funds, they invest their corpus in both debt and equity equity instruments. These schemes are classified into debt-based hybrid funds and equity-based hybrid funds based on their underlying debt or equity proportion. People who wish to earn regular income over long-term combined with capital appreciation can wish to invest in hybrid funds.