Mutual Funds can be put into various categories based on their risk level. Here is a list of some of the most popular MF categories based on risk.
Funds such as Money Market Funds, which mainly invest in securities with low risk. These funds are for investors who don't want much capital erosion
Funds like Govt Bond Funds, which invest in slightly riskier assets than very low risk ones. Investors with some risk tolerance should go for these
Funds such as balanced funds which try to strike a balance between risk and reward. They invest in a combination of equity and debt
Funds like sector-specific Equity Funds, which focus on faster capital appreciation with higher risk levels.
Sector Funds invest in specific industries or sectors which they expect to perform well. These also fall under high risk bracket.
Index Funds mirror a market's index in their composition. While these have similar volatility, they provide low-cost exposure to investors.
ETFs mix elements of Mutual Funds and stocks, in order to give liquidity to the investor while also provding a diversified exposure.