. Index Funds: An index fund tries to replicate a specific performance of a market index, for example that of the S &P 500 or the Nifty 50. Due to their passively managed attribute, their costs are more cost-effective. Index funds thus cater well to investors who require broad and diversified exposure at affordable expense costs.
6. Sector Funds: Sector funds invest into a specific industry, say technology, healthcare, or energy. Such funds also can have the potential of yielding good returns if the sector chosen is doing well; however, they are riskier since they do not enjoy the diversification of most other types of mutual fund.