Blogs

Different Types of Mutual Funds

By Fateen Tahseen Alam

Analyst

EDGE AMC Limited

Posted on: 24 Dec, 2023

Last Updated: 13 August, 2026

Mutual funds split into categories along two independent dimensions: how you can buy and sell them (structure), and what they actually invest in (asset class). Understanding both matters, because a fund's structure affects your liquidity, and its asset class determines its risk and return profile. 

By structure 

• Open-End Funds
  Open-end funds let you buy units from the asset manager and sell them back at any time, at the fund's current NAV. Because the fund is essentially perpetual — there's no fixed end date — and because transactions happen directly with the manager rather than depending on finding another buyer, open-end funds generally offer better liquidity and investor protection. This is why the vast majority of mutual funds globally, and every fund EDGE AMC offers, are structured this way. 
• Closed-End Funds
  Closed-end funds issue units only once, at launch, for a fixed period. After that initial offer, you can't buy new units directly from the manager — instead, existing units trade on the stock exchange (like the Dhaka Stock Exchange) between investors, at whatever price the market sets. That price can trade at a premium or a discount to the fund's actual NAV, which is a real, and sometimes significant, risk closed-end investors take on that open-end investors don't.

To better understand how mutual funds work, check out this article. 

By asset class

• Equity funds invest primarily in stocks, and subdivide further by market cap and style (growth, value, large-cap, small-cap).
• Fixed-income funds invest in debt securities — bonds and similar instruments that pay a defined rate of return. The fund's own return isn't fixed, but the underlying holdings typically are, which is why these funds carry lower risk and lower expected return than equity funds.
• Money market funds hold short-term debt (like treasury bills), offering more liquidity than fixed-income funds, generally in exchange for a lower return.
• Balanced funds blend equity and fixed income — commonly around a 60/40 split — to target a moderate risk-return profile.
• Index funds track a specific market index rather than being actively managed.
• Specialty funds concentrate on a single sector or theme.

How EDGE's funds map to these categories: 

If you're trying to decide between them, our fund comparison page lays out NAV, risk profile, fund size, and dividend history for all four funds side by side.

Frequently asked questions about types of mutual funds

Q: Is an open-end fund always a better choice than a closed-end fund?

A: Not automatically — but open-end funds generally offer better liquidity and investor protection, since you transact directly with the asset manager at NAV rather than depending on a buyer in the market. Closed-end funds carry the added risk of trading at a premium or discount to their actual NAV. This is one reason every EDGE AMC fund is structured as open-end.

Q: Can a fund belong to more than one asset class category?

A: Yes. Balanced funds are the clearest example, deliberately blending equity and fixed income rather than fitting into a single category. EDGEBDMF is structured this way.

Q: Which type of mutual fund has the lowest risk?

A: Generally, money market and fixed-income funds carry lower risk than equity funds, since their underlying holdings pay a more defined rate of return. Balanced funds sit in between, and equity funds typically carry the highest risk alongside the highest potential return.

Q: Do index funds cost less than actively managed funds?

A: Index funds track a market index rather than relying on active security selection, which often (though not always) allows for a lower management fee compared to actively managed equity or balanced funds. Specific fees vary by fund and are disclosed in each fund's prospectus on the respective fund's page.

Q: How do I know which type of fund fits my goals?

A: It depends on your investment horizon, risk tolerance, and whether you need income now or are building wealth for later. Try the EDGE Fund Selector tool to find the right fund for your needs. 

Q: Does EDGE AMC offer a money market or index fund?

A: EDGE AMC's current lineup is balanced, equity (growth), fixed-income, and Shariah-compliant funds. Check our fund comparison page for the latest details on all currently available funds.

Links

• Fund Selector tool
• How to invest in a mutual fund
• EDGE AMC Mutual Fund Guide
• Compare the EDGE Funds
• How does a mutual fund work