MUTUAL FUND TERMINOLOGIES

GENERAL TERMS

1. MUTUAL FUND: AN INVESTMENT VEHICLE THAT POOLS MONEY FROM MULTIPLE INVESTORS TO INVEST IN STOCKS, BONDS, OR OTHER SECURITIES.
2. AMC (ASSET MANAGEMENT COMPANY): THE FIRM THAT MANAGES THE INVESTMENTS OF THE MUTUAL FUND.
3. AUM (ASSETS UNDER MANAGEMENT): THE TOTAL MARKET VALUE OF THE INVESTMENTS MANAGED BY A MUTUAL FUND.
4. NAV (NET ASSET VALUE): THE PER-UNIT PRICE OF A MUTUAL FUND, CALCULATED AS THE TOTAL VALUE OF ASSETS MINUS LIABILITIES, DIVIDED BY THE NUMBER OF UNITS.

TYPES OF MUTUAL FUNDS

1. EQUITY FUNDS: MUTUAL FUNDS THAT INVEST PRIMARILY IN STOCKS.
2. DEBT FUNDS: MUTUAL FUNDS THAT INVEST IN FIXED-INCOME SECURITIES LIKE BONDS.
3. HYBRID FUNDS: FUNDS THAT INVEST IN A MIX OF EQUITY AND DEBT INSTRUMENTS.
4. INDEX FUNDS: FUNDS THAT REPLICATE AND TRACK A SPECIFIC STOCK MARKET INDEX.
5. ELSS (EQUITY LINKED SAVINGS SCHEME): A TYPE OF EQUITY MUTUAL FUND OFFERING TAX BENEFITS UNDER SECTION 80C.
6. LIQUID FUNDS: DEBT FUNDS INVESTING IN SHORT-TERM INSTRUMENTS WITH HIGH LIQUIDITY.
7. SECTORAL FUNDS: FUNDS THAT INVEST IN SPECIFIC SECTORS SUCH AS IT, PHARMA, OR BANKING.

INVESTMENT METHODS

1. SIP (SYSTEMATIC INVESTMENT PLAN): A METHOD OF INVESTING SMALL AMOUNTS REGULARLY IN A MUTUAL FUND.
2. LUMPSUM INVESTMENT: A ONE-TIME INVESTMENT IN A MUTUAL FUND.
3. STP (SYSTEMATIC TRANSFER PLAN): A STRATEGY TO TRANSFER MONEY FROM ONE FUND TO ANOTHER SYSTEMATICALLY.
4. SWP (SYSTEMATIC WITHDRAWAL PLAN): A PLAN ALLOWING INVESTORS TO WITHDRAW A FIXED AMOUNT PERIODICALLY.

PERFORMANCE AND RISK

1. EXPENSE RATIO: THE PERCENTAGE OF FUND ASSETS USED TO COVER MANAGEMENT FEES AND OPERATING EXPENSES.
2. BENCHMARK INDEX: THE STANDARD AGAINST WHICH A FUND’S PERFORMANCE IS MEASURED.
3. ALPHA: THE MEASURE OF A MUTUAL FUND’S PERFORMANCE RELATIVE TO ITS BENCHMARK.
4. BETA: A MEASURE OF A FUND’S VOLATILITY COMPARED TO THE MARKET.
5. STANDARD DEVIATION: A METRIC SHOWING THE FUND’S VOLATILITY OVER TIME.
6. SHARPE RATIO: A MEASURE OF RISK-ADJUSTED RETURNS.

TAXATION

1. CAPITAL GAINS: PROFITS EARNED BY SELLING MUTUAL FUND UNITS AT A HIGHER PRICE THAN THE PURCHASE PRICE.
2. SHORT-TERM CAPITAL GAINS (STCG): GAINS EARNED BY SELLING MUTUAL FUND UNITS HELD FOR A SHORT PERIOD, TAXED HIGHER.
3. LONG-TERM CAPITAL GAINS (LTCG): GAINS EARNED BY SELLING UNITS HELD FOR A LONGER PERIOD, OFTEN TAXED AT LOWER RATES.
4. DIVIDENDS: DISTRIBUTIONS OF A FUND’S INCOME TO INVESTORS, TAXABLE AS PER APPLICABLE LAWS.

FUND MANAGEMENT

1. FUND MANAGER: THE PROFESSIONAL RESPONSIBLE FOR MAKING INVESTMENT DECISIONS FOR THE MUTUAL FUND.
2. PORTFOLIO: THE COMBINATION OF SECURITIES HELD BY A MUTUAL FUND.
3. FUND OF FUNDS (FOF): A MUTUAL FUND THAT INVESTS IN OTHER MUTUAL FUNDS.
4. OPEN-ENDED FUND: A MUTUAL FUND THAT ALLOWS INVESTORS TO BUY OR SELL UNITS AT ANY TIME.
5. CLOSE-ENDED FUND: A MUTUAL FUND WITH A FIXED MATURITY PERIOD; UNITS CAN BE TRADED ON EXCHANGES.

KEY REGULATIONS AND DOCUMENTS

1. SEBI (SECURITIES AND EXCHANGE BOARD OF INDIA): THE REGULATORY AUTHORITY FOR MUTUAL FUNDS IN INDIA.
2. SID (SCHEME INFORMATION DOCUMENT): A DETAILED DOCUMENT OUTLINING THE FEATURES OF A MUTUAL FUND SCHEME.
3. KIM (KEY INFORMATION MEMORANDUM): A SUMMARY OF THE KEY FEATURES OF A MUTUAL FUND.
4. CAGR (COMPOUND ANNUAL GROWTH RATE): THE ANNUAL GROWTH RATE OF AN INVESTMENT OVER TIME.
5. KYC (KNOW YOUR CUSTOMER): A PROCESS FOR VERIFYING THE IDENTITY OF MUTUAL FUND INVESTORS.

INVESTOR SERVICES

1. RTA (REGISTRAR AND TRANSFER AGENT): ENTITIES THAT HANDLE MUTUAL FUND TRANSACTIONS AND RECORDS (E.G., CAMS, KFINTECH).
2. EXIT LOAD: A FEE CHARGED WHEN AN INVESTOR REDEEMS MUTUAL FUND UNITS BEFORE A SPECIFIC PERIOD.
3. LOCK-IN PERIOD: A FIXED PERIOD DURING WHICH MUTUAL FUND UNITS CANNOT BE REDEEMED.
4. REDEMPTION: SELLING MUTUAL FUND UNITS BACK TO THE AMC.

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