1. Equity Funds: These funds primarily invest in equities and, therefore, are more apt for long-term capital appreciation. Because equity markets bear more risks, it is not apt for short-term investments; however, it offers a higher return in the long term. It also has subcategories in large-cap, mid-cap, and small-cap funds based on the market capitalization of companies.
2. Debt Funds: The investment will be in the form of fixed-income instruments that essentially involve government and corporate bonds along with other debt securities. Typically, these funds present with lower risk profiles and are more focused on steady income rather than capital growth-so would be suited to very conservative investors.