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Mutual Fund Glossary

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  • Account statement
    A document similar to a bank account statement that indicates the mutual fund units owned. A statement is issued each time the investor carries out a transaction.
  • Annual report
    A write-up given to shareholders containing the yearly record of a mutual fund's performance. The report also informs the investor about the fund's earnings and operations. Reports are sent out yearly.
  • Assets
    Assets are a resource of money value such as stocks, bonds, real estate and cash.
  • Asset class
    Different types of investments such as stocks, bonds, real estate and cash.
  • Asset Management Company (AMC)
    The trustee delegates the task of floating schemes and managing the collected money to a company of professionals, usually experts who are known for smart stock picks. This is an asset management company (AMC). AMC charges a fee for the services it renders to the MF trust. Thus the AMC acts as the investment manager of the trust under the broad supervision and direction of the trustees. The AMC must have a net worth of at least Rs10 crores at all times and it can not act as a trustee of any other mutual fund.
  • Annual Return
    The percentage of change in net asset value over a year's time, assuming reinvestment of distribution such as dividend payment and bonuses.
  • Annualized Returns
    Absolute returns over a period (which could be larger or smaller than a year) aggregated to a period of one year.
  • Applicable NAV
    NAV at which a transaction is effected. A cut-off time is set by the fund and all investments or redemptions are processed at that particular NAV. This NAV is relevant if the application is received before that cut-off time on a day. A different NAV holds if received thereafter.
  • Application Form
    Form prescribed for investors to make applications for subscribing to the units of a fund.
  • Asset Allocations
    Allocation of the portfolio of a mutual fund in various categories of assets such as equity, debt and others on the basis of the investment objective of the scheme. The process of diversifying investments among different types of assets like stocks, bonds and cash in order to optimise risk / return tradeoff based on a person's financial situation and goals.
  • Average Maturity
    Average time to maturity of all fixed-period investments in the portfolio of a scheme.
  • Appreciation
    An increase in an investment's value.
  • Automatic Investment Plan
    Periodic investment of a fixed amount by a unitholder , either directly from his bank account or by issuing post-dated cheques, in his mutual fund account.
  • Automatic Withdrawal Plan
    Allows an investor to receive periodic payments of fixed amount or units from his investment in a mutual fund scheme. Retirees who want a regular income supplement often choose this.
  • Average Portfolio Maturity
    The average maturity of all the bonds in a bond fund's portfolio.




  • Balanced funds
    A mutual fund scheme with an investment objective of both long-term growth and income, through investment in stocks and bonds. Generally 60% is invested in stocks and 40% in bonds , in order to obtain the highest returns consistent with a low risk strategy.
  • Bear market
    A period of time during which securities prices are falling in the stock market.
  • Benchmark
    A standard used for comparison. Usually to provide a point of reference for evaluating a fund's performance. The common benchmarks for equiy-oriented funds are the BSE 200 index or the BSE Sensex.
  • Beta
    A measure of a fund's volatility in relation to the stock market, as measured by a stated index. By definition, the beta of the stated index is 1; a fund with a higher beta has been more volatile than the market, and a fund with a lower beta has been less volatile than the market. Based on past historical records, a beta higher than 1.0 indicates that when the market rises, the stock will rise to a greater extent than that of the market; likewise, when the market falls, the stock will fall to a greater extent. A beta lower than 1.0 indicates that the stock will usually change to a lesser extent than that of the market. The higher the beta, the greater the investment risk.
  • Blue chip
    Stock of a nationally known company that has a long record of profit, growth, and dividend payment, and a reputation for quality management, products, and services.
  • Bonds
    A debt security or IOU issued by a government entity or corporation, which generally pays a stated rate of interest, and plans to return the principal amount of the loan on the maturity date. Unlike stockholders, bondholders do not have corporate ownership privileges.
  • Broker
    A broker is a licensed person authorised to receive commissions. Brokers are always affiliated with a brokerage company, or broker-dealer network. He is basically a salesman who sells stocks, bonds, or mutual funds.
  • Bull market
    A distinctive time period, during which the prices of securities are rising, usually characterized by high trading volumes.
  • Basis Point (BP)
    The smallest measure used in quoting yields on fixed income securities. One basis point is one percent of one percent, or 0.01%.
  • Bottom-Up
    An investment strategy that first seeks individual companies with attractive investment potential, then considers the economic and industry trends affecting those companies.




  • Capital Gains
    The gains made on sale of securities and certain other assets (including units of mutual funds) are called capital gains. The gains can be long-term or short-term depending on the period of holding of the asset and are charged to tax at different rates. Gains on mutual fund units held for a period of 12 months or more are long-term gains.
  • Call Risk
    The risk that bonds will be redeemed (or "called") before maturity. This possibility increases during periods of falling interest rates.
  • Capital Appreciation
    An increase in the value of an investment, measured by the increase in a fund unit's value from the time of purchase to the time of redemption.
  • Capital Market
    A market where debt or equity securities are traded.
  • Close-ended schemes
    Schemes, which have a fixed date of redemption.
  • Collection Center
    Locations where application forms are accepted by funds.
  • Corpus
    The total amount of money invested by all the investors in a scheme.
  • Custodian
    The keeper of a fund's securities and other assets.
  • Cut off Time
    In respect of all mutual funds regulated by SEBI, fresh subscriptions and redemptions are processed at a particular NAV. Every fund specifies a cut-off time in respect of fresh subscriptions and redemption of units. All requests received before the cut-off times are processed at that day's NAV and thereafter at the next day's NAV.
  • Call money
    Money, which is, loaned in the call market, which can be demanded for repayment on call, which basically means immediately. The term call money is also known as money at short notice as it is repayable in 24 hours. It is also traded in the money market.
  • Capital (or principal)
    Initial amount of money invested, excluding any subsequent earnings.
  • Capital appreciation
    Increase in the value of an asset such as a stock, bond, commodity or real estate.
  • Capital gains/losses
    Net profit or losses from the sale of securities in the fund's portfolio. Short-term gains or losses are generated on securities held one year or less; long-term gains or losses pertain to securities held for more than one year.
  • Capital growth
    A rise in the market value of a mutual fund's securities shown by it's net asset value per unit. This is a long-term objective of many mutual funds.
  • Certificate of Deposit (CD)
    Short-term debt instrument issued by scheduled commercial banks excluding regional rural banks. They are unsecured instruments that mature between three months to one year.
  • Closed-end scheme/fund
    A type of fund that has a fixed number of shares usually listed on a major stock exchange. Unlike open-end mutual funds, closed-end funds do not stand ready to issue and redeem shares on a continuous basis. Price is determined by supply and demand.
  • Closing price
    The price of a security after the final trade at the end of the day.
  • Commercial paper
    They are short-term unsecured instruments issued by a company that needs to raise money; and is willing to pay an interest rate. These are included in portfolios of some mutual funds. Such instruments have maturities ranging from 3 months to 1 year.
  • Coupon Rate
    The interest rate that the issuer of a bond agrees to pay the bond-holder until maturity of thebond
  • Commission
    A fee charged by a broker or distributor for his or her service in the buying or selling of securities.
  • Commodity
    A commodity is a product which trades on a commodity exchange. Examples of these are food, metal or another physical substance that investors buy and sell which also includes foreign currencies and financial instruments and indices
  • Compounding
    Interest earned not only on the initially invested principal but also on accumulated interest during the period.
  • Consumer Price Index
    The index compiled by a governmental agency which follows the cost of living by following the changes in price of basic goods and services over time. This index measures inflation.
  • Contingent Deferred Sales Charge (CDSC)
    A type of exit sales load which is charged when units are redeemed within a specific time period following their purchase. These charges reduce the longer the units are held.
  • Credit analysis
    The process of analyzing information on companies and bonds in order to estimate whether the issuer will meet with its future obligations to pay out.
  • Credit rating
    A measure indicating the bond issuer's credit worthiness, or his/ her ability to repay the loan. The bonds are rated by an independent rating agency such as CRISIL, ICRA, and CARE.
  • Cumulative total return
    usually calculated in the same manner as standardized average annual total return, except that these figures represent the total change in value of an investment over the stated periods and do not reflect any sales charges.
  • Current assets
    Assets that can be converted to cash within a year.
  • Current liabilities
    Liabilities that must be paid within a year.
  • Cyclical stocks
    Stocks which rise and fall in price with the state of the economy, in such industries as construction, automobile, engineering or those affected by the international economy such as shipping, aviation, and tourism. Cyclical stocks are also stocks which are affected by the natural environment such as fertilizers and tea. Examples of non-cyclical stocks would be drugs, insurance, basic foodstuffs and many other consumer products.
  • Coupon
    Interest rate on a debt security that the issuer promises to pay to the holder until maturity usually expressed as a percentage of the face value of the security.
  • Credit Rating
    A measure of a bond issuer's creditworthiness or the ability to repay the loan as rated by an independent rating agency, such as CRISIL, ICRA and CARE.
  • Credit Risk
    The possibility that a bond issuer will default, and fail to repay principal or interest as promised. Also known as "default risk".
  • Currency Risk
    The possibility that fluctuating currency exchange rates will affect the rupee value of an investment.
  • Custodian
    The organization (usually a bank) that keeps and safeguards the custody of securities and other assets of a fund.




  • Debentures
    Instruments of debt, usually unsecured. They are also usually credit rated.
  • Debt funds/ securities
    A general term for any security representing money loaned that must be repaid to the lender at a future date. Bonds, T-notes, T-bills and money market instruments are debt securities, but they vary in maturities.
  • Default
    A term that denotes the failure to pay the principal or interest on a financial obligation (such as a bond).
  • Derivative
    Financial instrument whose value is based on the value of another underlying security.
  • Discount
    Refers to the selling price of a bond when it's price is below its maturity value.
  • Dividend
    Portion of profits that a company or a mutual fund distributes to its shareholders or unit holders.
  • Dividend Reinvestment
    In a dividend reinvestment plan, the dividend is reinvested in the scheme itself. Hence instead of receiving dividend, the unit holders receive units. Thus the number of units allotted under the dividend reinvestment plan would be the dividend declared divided by the ex-dividend NAV.
  • Dividend Warrant
    An instrument issued by companies/ mutual funds to an investor for the purpose of payment of dividends
  • Distribution
    Pay out to shareholders resulting from a mutual fund's realised capital gains, interest, or dividend income. A mutual fund dividend, or distribution, may be physically paid to the investor, or it may be reinvested in the fund, giving the investor more shares.
  • Diversification
    The investment strategy which spreads investments among securities in different industries, with different risk levels, and in different companies, potentially lowering risk by reducing the impact of any one security. Mutual funds are the best method of diversification because their portfolios consist of a variety of securities, unless otherwise noted. Mutual funds are a diversified investment by nature.
  • Depreciation
    A decline in an investment's value.
  • Duration
    Duration is a measure of a bond's lifetime that accounts for the size and timing of the bond's cash flows. Generally, the shorter the duration, the lower the price volatility, all other things being equal.




  • Earnings (per share)
    The net income for a company during a specific period. It is calculated by subtracting the cost of sales, operating expenses and taxes from revenues, for a specific time period. It is the reason corporations exist and often the single most important determinant of a stock's price.
  • Entry load
    The load on purchases after the Initial (Public) Offer.
  • Equity
    A type of security representing part ownership in a company/ corporation. Common stocks, preferred stock, and convertible stock are types of equity securities, but debt securities are not, as they do not represent ownership.
  • Exit load
    The load on redemption other than the Contingent Deferred Sales Charge (CDSC) permitted under SEBI Regulations. A fee charged by some funds for redeeming or buying back fund shares. The amount sometimes depends on how long the investment was held, so the longer the time period, the smaller the charge.
  • Equity Schemes
    A scheme that invests primarily in stocks while seeking to provide relatively high long-term growth of capital.
  • Ex-Dividend Date
    The date following the record date for a scheme. When a fund's net asset value reduces by an amount equal to a dividend distribution.
  • Expense Ratio
    A fund's operating expenses, expressed as a percentage of its average net assets.
  • Ex Dividend Or Ex Distribution
    The date when the dividend is deducted from assets of a fund i.e. from the NAV




  • Face value
    The value printed on the face of a stock, bond or other financial instrument or document.
  • FCNR
    A Fully Convertible Non-Rupee account that can be opened for funds coming in from abroad or from local funds. The funds in the account are held in a foreign currency.
  • Fixed assets
    A long-term asset that will not be converted to cash within a year such as a house or a plot of land.
  • Fixed deposit
    An investment instrument where you invest a fixed amount of money for a fixed period of time at a fixed rate of interest.
  • Fixed income funds/ securities
    A security that pays a certain rate of return such as a bond but do not offer an investor much potential for growth. This usually refers to government, corporate or municipal bonds, which pay a fixed rate of interest until the bonds mature, or preferred stock, which pays a fixed dividend. A mutual fund investing in these types of securities may also be referred to as a fixed-income investment or security.
  • Fixed rate
    A loan in which the interest rates do not change during the entire term of the loan.
  • Foreign Institutional Investor (FII)
    FII means an institution established or incorporated outside India which proposes to make investment in India in securities and is registered with SEBI.
  • Floating rate
    An interest rate, which is periodically adjusted, usually based on a standard market rate outside the control of the institution. These rates often have a specified floor and ceiling, which limit the floating rate. The opposite of having a floating rate is having a fixed rate.
  • Floor
    A lower limit for a price, interest rate, or other numerical factor. The price at which a stop order is activated (an order to buy or sell at the market when a definite price is reached either above (for a buy) or below (for a sell) the price that prevailed when the order was given). Also the area of a stock exchange where active trading occurs.
  • Front-end load
    A one-off charge that an investor must pay at the time the units of the scheme are bought.
  • Face Value
    The original issue price of one unit of a scheme
  • Fund
    A mutual fund is a trust under the Indian Trust Act. Each fund manages one or more schemes.
  • Fund Category
    Classification of a scheme depending on the type of assets in which the mutual fund company invests the corpus. It could be a growth, debt, balanced, gilt or liquid scheme
  • Fund Family
    All the schemes, which are managed by one mutual fund.
  • Fund Management Costs
    The charge levied by an AMC on a mutual fund for managing their funds.
  • Fund Manager
    The person who makes all the final decisions regarding investments of a scheme
  • Family Of Schemes
    A set of schemes with different investment objectives from a single asset management company usually allowing investors to "switch" their investments from one scheme to another at a no charge or a nominal charge.
  • Fixed Income Security
    A security that pays a fixed rate of interest such as a "bond" but do not offer an investor much potential for growth.
  • Front-End Load
    A one-time charge that an investor pays at the time of buying units of a scheme.




  • Gilts
    A type of government security.
  • Government securities
    Securities that are sold to the public by the government, for example, bonds.
  • Growth funds
    Mutual funds with a primary investment objective of long-term growth of capital. Unlike income, which is somewhat regular and consistent in most cases, growth is much less certain. Growth investments, however, usually outpace the returns on income investments over the long-term (five to ten years, or longer). It invests mainly in common stocks with significant growth potential.
  • Growth investing
    A style of investing that invests in fundamentally sound businesses with the belief that they will go up in price. The stocks in this portfolio are well researched, liquid and of high quality and will usually give you a high P/E ratio and lower dividend yields in comparison to the market.
  • Growth scheme
    A scheme where investments are made in equity and convertible debentures. The objective is to provide capital appreciation over a period of time.
  • Guaranteed Returns
    The return assured by the mutual funds as a minimum return in certain income plans




  • Holdings
    The possessions or securities in an investor's portfolio.




  • Inception date
    The end of a scheme's initial offering period and the start of the scheme's formation.
  • Income funds
    A mutual fund that primarily seeks current income rather than growth of capital. It will tend to invest in stocks and bonds that normally pay high dividends and interest.
  • Indexing
    An investment strategy that consists of the construction of a portfolio of stocks. It is designed to track the total return performance of an index of stocks.
  • Inflation risk
    The possibility that the value of assets or income will be eroded by inflation affecting the purchasing power of a currency. Often mentioned in relation to fixed income funds as they may minimise the possibility of losing principal.
  • Initial Public Offer (IPO)
    A fixed time period during which the first sale of units of a scheme are made available to the public.
  • Interest rate risk
    The risk that a security's value will change due to an increase or decrease in interest rates. A bond's price will always drop as interest rates rise and when interest rates fall, a bond's price will rise.
  • Issue
    A security made available to the public. Mutual funds issue shares to investors in return for cash.
  • Income / Debt Funds
    A fund whose primary objective is current income in the form of interest or dividends. Mutual funds that invest primarily in fixed income securities are called income funds.
  • Index Funds
    A type of mutual fund in which the portfolios are constructed to mirror a specific market index. Index funds are expected to provide a rate of return over time that will approximate or match, but not exceed, that of the market which they are mirroring.
  • Indexation
    The central government specifies an index linked to the wholesale price index. The indices of two years (year of purchase and the year of sale) are used for the purpose of computing capital gains tax. The purchase price is multiplied by the index of the year of sale and the product is divided by the index of the year of purchase. This benefit is available only if the security has been held for more than 12 months. On sale of equity-oriented mutual fund schemes, one can opt for paying tax at the rate of a flat 10% or go in for paying 20% after taking the benefit of indexation.
  • Index
    A benchmark against which the performance of a scheme is measured. Usually, equity funds use BSE 30 or BSE 200 as the benchmark. For fixed-income funds it is a bond index. The benchmark index must consist of securities similar to which the scheme invests in.
  • Index Fund
    A fund that tries to mirror the performance of an index by investing in securities making up that index. (note: it is not possible for investors to actually invest in the actual index, such as the BSE 30). This is a passive management style which normally results in lower management fees.
  • Investment Objective
    The stated purpose or goal of a security's operations. This term often determines the types of investments the security makes, the results expected, and the level of risk with which it is associated.
  • Investment Grade
    High quality bonds that are rated AAA or higher by a rating agency. Investment grade bonds are considered safe. However, the higher the bond's rating, the lower the interest it offers.




  • Liabilities
    The claims of investors who have loaned to a company. The debts of a company.
  • Liquidity
    The ease with which an asset can be converted to cash. Mutual fund units are generally considered highly liquid investments as they can be sold on any business day at their current net asset value.
  • Load fund
    A mutual fund that charges an extra sales fee on top of the other fees. Loads do not mean a fund is managed better. There are two types of loads; front-end, charged at the time of purchase and back-end, charged at the time of redemption.
  • Liquid Funds /Money Market Funds
    Funds investing only in short-term money market instruments including treasury bills, commercial paper and certificates of deposit. The objective is to provide liquidity and preserve the capital
  • Lock In Period
    The period after investment in fresh units during which the investor cannot redeem the units.




  • Market risk
    The potential loss that is possible as a result of short-term volatility of the stock market, indicated by beta. Owning mutual funds shields an investor to some market risk that a stockholder may be vulnerable to because of their diversification.
  • Maturity date
    Date on which the principal amount of a debt instrument or bond becomes due and payable in full.
  • Maturity value
    The amount the issuer agrees to pay out when the bond reaches it's maturity date.
  • Money market funds
    A mutual fund that invests in short-term government securities, certificates of deposit and other highly liquid securities such as T- bills and short-term commercial paper, and generally pays money market rates of interest. An investment in a money market fund is neither insured nor guaranteed by the government or by any other entity or institution, so there is no assurance that the share price will be maintained.
  • Money Market Instruments
    Commercial paper, treasury bills, GOI securities with an unexpired maturity up to one year, call money, certificates of deposit and any other instrument specified by the Reserve Bank of India.
  • Municipal bond fund
    A mutual fund consisting of bonds issued by a state, city, or local government entity. The interest these securities pay is generally passed through to shareholders free of tax.
  • Mutual fund
    A Mutual Fund is a common pool of money from numerous investors who wish to save money. Each fund's investments are chosen and monitored by qualified professionals who use this money to create a portfolio. That portfolio could consist of stocks, bonds, money market instruments or a combination of those. Mutual funds offer investors the advantages of diversification, professional management,affordability, liquidity and convenience.
  • Management Fee
    The amount a scheme pays to its asset management company for its services. Typically, a certain percentage of assets under management. A fund's management fee is listed in its offer document.
  • Market Timing
    Attempting to time the purchase and sale of securities or mutual fund units to coincide with market conditions.
  • Maturity Date
    The date on which the principal amount of a bond is to be paid in full.
  • Management Fee
    The amount paid by a mutual fund to the asset management company for its services; SEBI restricts this to 2.50% p.a. in equity funds and 2.25% p.a. for equity funds.
  • Minimum Purchase
    The smallest investment amount a scheme will accept to open a new unitholder account.




  • Net Asset Value
    Market value of one share of a mutual fund on a given day; also known as the bid price. Unlike the public offering price, the NAV includes no sales charges. The NAV is calculated each day by taking the closing market value of all securities owned by a mutual fund, plus all other assets (e.g. cash), and deducting the fund's liabilities. This sum is then divided by the fund's total number of shares outstanding.
  • Net profit margin
    A measure of a company's profitability and efficiency calculated by dividing a measure of net profits (operating profit minus depreciation and income taxes) by sales.
  • Net worth
    The value found by subtracting total liabilities from total assets.
  • Net Assets
    The net worth of a fund.
  • No Load Fund
    A fund that sells its units to investors without a sales load/charge.
  • NRE
    A Non-Resident External Rupee account that NRIs can open with any Indian bank. They can use this account for making investments in India on a repatriable basis.
  • NRI
    A Non-Resident Indian who is an Indian citizen or a person of Indian origin but who resides abroad. NRIs have to follow specific rules when investing in India.
  • NRO
    An Ordinary Non-Resident Rupee account which can be opened for funds coming in from abroad or from local funds. The amount in the account is, however, non-repatriable.




  • Offer document
    The offer document or prospectus is a booklet, a legal document that provides information about a specific mutual fund such as the funds investment objectives, load structure, subscription and redemption policies. Its purpose is to also inform investors of potential risks involved before they decide to invest in a fund and provides other information that could help an individual decide whether the investment is appropriate for him. An abridged offer document of the scheme also accompanies the application form of every scheme.
  • Offering price
    The price at which mutual fund shares are offered for sale to the public. Also known as offering price. The public offering price represents the net asset value plus any applicable initial sales charges.
  • Offer Document / Prospectus
    A legal document, that describes a mutual fund scheme. It contains information required by the Securities and Exchange Board of India explaining the offer, including the terms, issuer, objectives, historical financial statements,
  • Open-Ended Scheme
    A scheme where investors can buy and redeem their units on any business day. Its units are not listed on any stock exchange but are bought from and sold to the mutual fund.
  • Operating Expenses
    The day-today costs a mutual fund incurs in conducting business, such as for maintaining offices, staff, and equipment. These expenses are paid from the fund's assets before any earnings are distributed.
  • Opening NAV
    The NAV disclosed by the fund for the first time after the closure of an IPO.




  • Performance
    How a fund has done in the past and how well it is doing at present. Past performance is often used to get an idea of future performance, however, past performance does not guarantee future performance will be the same.
  • Portfolio
    A pool of individual investments owned by an investor or mutual fund. Portfolios may include a combination of stocks, bonds, and money market instruments. A list of the fund's current portfolio will usually be contained in a mutual fund's annual report.
  • Preferred stock
    A type of capital stock whose holders are paid dividends at a specified rate. It has preference over common stock in the payment of dividends and the liquidation of assets, but does not ordinarily carry voting rights. The benefits of owning preferred stock are realised if the company ever goes bankrupt. If this occurs, preferred stock shareholders receive their money first. General (also known as common) stockholders may not receive any money, if none is remaining after paying preferred stock holders.
  • Price-earnings ratio (P/E)
    One of the benchmarks used by portfolio managers to help them value companies. It is calculated by dividing a company's share price by its earning per share.
  • Price Of Units
    Price offered by a mutual fund for repurchase or sale of a unit on a daily basis.
  • Prospectus
    An offer document by which a mutual fund invites the public for subscribing to the units of a scheme. This document contains information about the scheme and the AMC so as to enable a prospective investor make an informed decision.
  • Principal (or Capital)
    Initial amount of money invested, excluding any subsequent earnings.
  • Promissory note
    A document signed by the borrower in which he promises to repay a loan under agreed-upon terms.
  • Public Offering Price (POP)
    The price at which mutual fund shares are offered for sale to the public. Also known as offering price. The public offering price represents the net asset value plus any applicable initial sales charges.




  • Rate of return
    Rate of return is calculated by subtracting the purchase value by the present value and then dividing it by the purchase value. For equities, we often include dividends with the present value.
  • Real return
    The rate of return earned on an investment after adjusting for the rate of inflation during the time the investment was held.
  • Redeem
    Cashing in units by selling them back to the mutual fund.
  • Redemption load
    A fee charged by some funds for redeeming or buying back fund shares. The amount sometimes depends on how long the investment was held, so the longer the time period, the smaller the charge.
  • Redemption price
    The price at which a mutual fund's units are redeemed or bought back by a fund. The redemption price is usually equal to the current net asset value per unit and less the exit load if applicable.
  • Repatriable
    The return from abroad of the financial assets of an organisation or individual, and the conversion of foreign currency to Rupees.
  • RBI
    Reserve Bank of India, established under the Reserve Bank of India Act, 1934.
  • Return
    The sum of the income of a fund plus its capital gains.
  • Risk
    In general, risk is the possibility of suffering loss. There are many types of risk, such as credit risk, principal risk, inflation risk, interest rate risk, and investment risk. If you are prepared to accept greater risk, you have the chance of earning higher returns or profits on your money. Low-risk investments, while generally safer, do not usually produce a high return, hence the loss of potential gain.
  • Risk/ reward trade-off
    The compromise made between high- and low-risk investments. High-risk investments generally generate more earnings, while low-risk ones generate a lower rate of return.
  • Risk tolerance
    The willingness of an investor to tolerate the risk of losing money for the potential to make money.
  • Rupee Cost Averaging
    An investment strategy based on investing equal amounts in a fund at regular intervals. Because more shares are bought when prices are low and fewer shares when prices are high, the average cost of your shares may be lower than the average price over the period you bought them. Rupee cost averaging cannot guarantee a profit or protect against loss in declining markets.
  • Record Date
    The date by which mutual fund holders are registered as unit owners to receive any future dividend or capital gains distribution.
  • Redemption Of Units
    Buying back/cancellation of the units by a fund on an on-going basis or on maturity of a scheme. The investor is paid a consideration linked to the NAV of the scheme
  • Refund
    The act of returning money to an investor by the fund. This could be on account of rejection of an application to subscribe units or in response to an application made by the investor to the fund to redeem units held by him.
  • Registrar or Transfer Agent
    The institution that maintains a registry of unitholders of a fund and their unit ownership. Normally the registrar also distributes dividends and provides periodic statements to unitholders.




  • Sales charge
    A charge added on to the price of a mutual fund when you buy it.
  • SEBI
    Securities and Exchange Board of India established under Securities and Exchange Board of India Act, 1992.
  • Sector Fund
    A fund that invests primarily in securities of companies engaged in a specific industry. Sector funds entail more risk, but may offer greater potential returns than funds that diversify their portfolios.
  • Settlement Date
    The date by which a transaction must be settled, that is, to make the payment of funds and the delivery of securities.
  • Standard Deviation
    A measure of the degree to which a fund's return varies from the average of the scheme's own return.
  • Stock Fund
    A fund that invests primarily in stocks.
  • Switching
    The movement of investment from one scheme to another usually within the family of schemes. An investor may switch schemes because of market conditions.
  • Securities
    The holdings of a mutual fund, such as stocks or bonds. Stocks are securities representing ownership shares. Bonds are securities representing a contractual debt obligation of the issuer to repay the holder, with interest.
  • Shareholder (or stockholder)
    The owner of shares of stock.
  • Shares
    Units of ownership in a corporation. In a mutual fund, the value of each unit is calculated by dividing net assets by the number of shares.
  • S & P 500 stocks (Standard & Poor's Composite Index of 500 stocks)
    Market value-weighted index that measures stock market price movements, based on the aggregate performance of 500 widely held common stocks.
  • Stocks
    A share of stock represents ownership, or equity, in a corporation. When a company needs money to grow and expand, it may sell part of its ownership to the public in the form of shares (stock). In exchange for the money received from the sale, the company gives shareholders a portion of its future profits, as well as a measure of its decision-making power. These securities generally have the most potential for capital appreciation, but their rights are subordinated in the event of a company liquidation or bankruptcy.
  • Switching
    Transferring your investment from one scheme to another. An investor may want to switch due to changing market conditions.
  • Systematic Investment Plan (SIP)
    Allows an investor to periodically invest in units by issuing post-dated cheques. It allows the investor to benefit from rupee cost averaging.
  • Systematic Withdrawal Plan (SWP)
    Permits the investor to receive regular payments of a fixed amount or capital appreciation from his investment in a mutual fund scheme on a periodic basis. Retirees in need of a regular income often opt for this.
  • Sale price
    The price at which a fund offers to sell one unit of its scheme to investors. This NAV is grossed up with the entry load applicable, if any.
  • Scheme
    A mutual fund can launch more than one scheme. With different schemes, in spite of there being a common trust, the assets contributed by the unit holders of a particular scheme are maintained and managed separately from other schemes and any profit/loss from the assets accrue only to the unit holders of that scheme
  • Scheme Objective
    The purpose statement consisting of the goal and the avenues of investment released by the fund.
  • Sector Fund or Specialty Fund
    It concentrates its holdings in a specific industry such as health care, energy, insurance, leisure.
  • Systematic Withdrawal Plan (SWP)/Recurring withdrawal facility (RWF)
    A plan offered with some schemes under which post-dated cheques for fixed amounts (as may be fixed by the fund) are issued to the investors for monthly, bi-monthly or quarterly withdrawals. The withdrawals are as per the requirements of the investor specified by him/ her at the time of investment.
  • Systematic Investment Plan (SIP)/ Recurring investment facility (RIF)
    A program that allows an investor to provide post-dated cheques to the mutual fund to allot fresh units at specified intervals (usually monthly or quarterly). On the specified dates, the cheques are realized by the mutual fund and additional units at the prevailing NAV are allotted to the investor. This enables him to invest as little as Rs 1000 a month and take advantage of rupee cost averaging.
  • Systematic Transfer Program (STP)
    A plan that allows the investor to give a mandate to the fund to periodically and systematically transfer a certain amount from one scheme to another.




  • Tax Deducted at Source (TDS)
    No tax is withheld or deducted at source, where any income is credited or paid by a mutual fund, as per the provisions of Section 194K and 196A of the Act.
  • Top-down investing
    The top-down style of investment management places primary importance on country or regional allocation. Top-down managers generally focus on global economic and political trends in selecting the countries or regions where they expect to find investment opportunities. Only then do they employ a more fundamental analysis of individual stocks in order to make their final selections.
  • Total return
    Return on an investment over a specified period of time, which includes share-price appreciation, reinvested dividends or interest, and any capital gains.
  • Transaction costs
    The costs incurred by the buying and selling of securities including broker commissions and the difference between dealer buying and selling price.
  • Treasury bills (T-bills)
    A short-term security with a maturity of one year or less.
  • Treasury bonds (T-bonds)
    A long-term debt instrument with a maturity of 10 years or longer.
  • Treasury notes (T-notes)
    A certificate representing an intermediate-term loan to the government with a maturity between two to ten years.
  • Total Assets Under Management
    The market value of the total investments of a fund as on a particular date
  • Total Returns
    Returns from an investment calculated taking into account income distribution and capital appreciation.
  • Transfer Agent
    A firm employed by a mutual fund to maintain unitholder records, including purchases, sales, and account balances.
  • Treasury Bill (T-bill)
    A debt security issued by the Indian government, having a maturity of less than a year.
  • Turnover Rate
    Based on the corpus, it is the number of times at which the fund buys and sells securities each year.
  • Trustee
    A person or a group of persons having an overall supervisory authority over the fund managers. They ensure that the managers keep to the trust deed, that the unit prices are calculated correctly and the assets of the funds are held safely.
  • Time Horizon
    The period of time one can stay invested (eg. number of years to retirement). Longer time horizons can reduce volatility risk.




  • Unit
    The interest of the investors in either of the Schemes, which consists of each Unit representing one undivided share in the assets of the Schemes.
  • Unit Holder
    A person who holds Unit(s) under a Mutual Fund.
  • Unrealized Gain Or Loss
    Increase or decrease in the prices of securities held by the fund.




  • Value investing
    The investment approach which favours buying under-priced stocks that have the potential to perform well and increase in price in the future.It first seeks individual companies with attractive investment potential, then considers the economic and industry trends affecting those companies. Value managers usually begin their search with fundamental analysis, in order to find companies whose current prices may fail to reflect their potential longer-term value.
  • Volatility
    The tendency of an investment or market to rise or fall sharply in price within a short-term period. Volatility is measured by beta.




  • Year to Date (YTD)
    A time period in a calendar year starting from the first of January and ending on the first of January.
  • Yield to Maturity (YTM)
    The yield earned by a bond if it is held until its maturity date.
  • Yield
    The annual rate of return on an investment usually expressed as a percentage.
  • Yield Curve
    A graph depicting yield vis-a-vis maturity. If short-term rates are lower than long-term rates, it is a positive yield curve, if short-term rates are higher, it is a negative or inverted yield curve. If there is isn't much difference, it is a flat yield curve.




  • Zero coupon bond
    A bond that is sold at a fraction of its face value. It does not, however, provide periodic interest payments but pays principal upon maturity.