Liquid Funds: One can compare these funds against savings or current bank accounts. Simply you can put any time you want or can exit when you need. There is no entry load or exit load in these funds. These funds provide good liquidity and low interest risk. Some mutual funds are also offer ATM card to individual investors for withdraw small amounts from liquid funds. So every Investor can park their surplus funds lying in savings or current bank account in liquid funds.
Ultra Short Term Funds: These funds are similar to liquid funds but time horizon to investment should be minimum one month. Howe ever you can call liquid plus funds. One can also compare this with short term bank Fixed Deposit. So Investors who think short term savings options can park their funds for one to three month horizon.
Short Term Funds: Simply investors looking for Bank FDs can invest their funds in short term funds. Such funds are more tax-efficient than FDs. While choosing a fund, the most important factor you should look is the credit rating of the debt instruments in which these funds are parking their corpus. One can consider investment period in such fund are from 6 months to 2 years.
Income Funds: Long term income funds are combination of government securities, certificate of deposits, corporate bonds and money market instruments. Such funds are managed actively and try to manage the portfolio based on interest rate movements, while at the same time keeping the portfolio credit worthy. So you can think to invest in these funds only with guide of expert advisors only.
Gilt Funds: Gilt funds are predominantly invested in government securities (G-sec). Since Gilt funds are more exposed to rise or fall in interest rate, long term gilt funds take highest impact of interest rate movement. Investors can choose between short-term and long-term Gilt funds depending on their investment horizon.
Fixed Maturity Plans: It is more known as FMPs in financial market and it is close-ended scheme that invests in fixed income securities and remains invested till its maturity. Portfolios of FMPs include CD, CP and other fixed income securities as per funds objectives.
The above basics are only for knowledge of Debt funds. One should take advice from expert before investing in any types of funds and also look in to factors like past performance, fund manager, mutual fund corpus and expense ratio of the fund.