Comprehensive dictionary of mutual fund terms and concepts
A company that manages mutual funds and is responsible for investment decisions, portfolio management, and scheme operations.
StructureA measure of a fund's performance relative to its benchmark. Positive alpha indicates the fund has outperformed its benchmark after adjusting for risk.
PerformanceThe process of distributing investments across different asset classes (equity, debt, gold, etc.) to optimize risk-return balance.
StrategyA measure of a fund's volatility relative to the market. A beta of 1 indicates the fund moves with the market; greater than 1 is more volatile; less than 1 is less volatile.
PerformanceAn index used as a reference point to evaluate the performance of a mutual fund scheme. For example, Nifty 50 for large-cap equity funds.
PerformanceThe mean annual growth rate of an investment over a specified period longer than one year. It represents a smoothed annualized return.
ReturnsA mutual fund scheme with a fixed maturity period. Units can only be purchased during the initial offer period and are later listed on exchanges.
TypesAn entity responsible for safekeeping the securities and assets of a mutual fund scheme.
StructureA mutual fund that invests primarily in fixed-income securities like bonds, treasury bills, and money market instruments.
TypesThe practice of spreading investments across various securities, sectors, or asset classes to reduce risk.
StrategyA plan where the fund distributes profits to investors periodically as dividends. The NAV reduces by the dividend amount.
OptionsTax-saving mutual funds that invest primarily in equity with a mandatory lock-in period of 3 years. Eligible for deduction under Section 80C.
TypesA charge levied when purchasing mutual fund units. Currently, entry loads are not permitted by SEBI in India.
FeesA mutual fund that invests primarily in stocks of companies. Aims for capital appreciation over the long term.
TypesA charge levied when redeeming mutual fund units before a specified period. Designed to discourage short-term withdrawals.
FeesThe annual fee charged by the fund house expressed as a percentage of assets. Includes management fees, administrative costs, and distribution expenses.
FeesA unique identification number assigned to an investor for all their investments in a particular mutual fund.
OperationsA plan where profits are reinvested in the scheme, leading to NAV appreciation. No dividends are distributed.
OptionsA mutual fund that invests in a mix of equity and debt securities, providing benefits of both asset classes.
TypesA mandatory one-time documentation process required before investing in mutual funds. Includes identity and address verification.
ComplianceAn equity fund that invests primarily in top 100 companies by market capitalization. Generally more stable with lower risk.
TypesA debt fund that invests in very short-term money market instruments with maturity up to 91 days. High liquidity and low risk.
TypesA one-time investment of a large amount in a mutual fund scheme.
InvestmentAn equity fund investing in companies ranked 101-250 by market capitalization. Higher growth potential but more volatile.
TypesThe per-unit market value of a mutual fund calculated daily. NAV = (Total Assets - Total Liabilities) / Total Units Outstanding.
ValuationThe initial subscription period when a new mutual fund scheme is launched. Similar to IPO for stocks.
OperationsA mutual fund scheme that allows investors to buy or sell units at any time at the prevailing NAV. No fixed maturity period.
TypesA measure of how frequently securities are bought and sold within a fund. Higher turnover indicates more active trading.
PerformanceAn entity responsible for maintaining investor records, processing transactions, and providing investor services.
StructureThe process of selling mutual fund units back to the fund house at the prevailing NAV.
OperationsReturns calculated over multiple overlapping periods to assess consistency of fund performance.
ReturnsA document containing detailed information about the mutual fund scheme beyond what's in the SID.
DocumentationThe regulatory authority for securities markets in India, including mutual funds.
RegulatoryAn equity fund that invests primarily in a specific sector like banking, pharma, or technology. Higher risk due to concentrated exposure.
TypesA measure of risk-adjusted returns. Higher Sharpe ratio indicates better returns for the amount of risk taken.
PerformanceThe official offer document containing all essential information about the mutual fund scheme.
DocumentationA method of investing fixed amounts regularly (monthly/quarterly) in a mutual fund scheme. Helps in rupee cost averaging.
InvestmentAn equity fund investing in companies ranked 251 and below by market capitalization. Highest growth potential but also highest risk.
TypesA measure of volatility or risk. Higher standard deviation indicates greater fluctuation in returns.
PerformanceA facility to withdraw fixed amounts regularly from a mutual fund investment. Useful for creating regular income.
InvestmentA facility to transfer fixed amounts regularly from one mutual fund scheme to another within the same fund house.
InvestmentThe total cost of managing and operating a mutual fund expressed as a percentage of assets. Same as Expense Ratio.
FeesIndividuals or entities appointed to protect the interests of unit holders and oversee the functioning of the mutual fund.
StructureThe ownership share in a mutual fund scheme. Investors own units proportional to their investment.
BasicsA method to calculate returns when multiple investments and redemptions occur at different times. Most accurate for SIP returns.
Returns