A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z

A

Asset Management Company (AMC)
A Company registered with SEBI, which takes investment/ divestment decisions for the mutual fund, and manages the assets of the mutual fund. Kotak Mutual Funds, SBI Mutual Funds, ICICI Prudential Mutual Funds etc. are the various AMC's in the country.
Asset Allocation
Asset Allocation involves the allocation of the total corpus or fund available with the Mutual Funds to different class of assets like equities, bonds, derivatives etc. The asset allocation is done in keeping the objective of the scheme into consideration.
Asset Allocation Fund
A fund that spreads its portfolio among a wide variety of investments, including domestic and foreign stocks and bonds, government securities, gold bullion and real estate stocks. This gives small investors far more diversification than they could get allocating money on their own. Some of these funds keep the proportions allocated between different sectors relatively constant, while others alter the mix as market conditions change.
Asked or Offering Price
The price at which a mutual fund's shares can be purchased. The asked or offering price means the current net asset value (NAV) per share plus sales charge, if any. For a no-load fund, the asked price is the same as the NAV.
Automatic Investment Plan
A plan introduced in mutual funds that enables the investor to give the mandate of allotting fresh units at specified intervals (monthly, quarterly) against which the investor provides post-dated cheques. On the specified dates, the cheques are realized by the mutual fund and on realization, additional units are allotted to the investor at the prevailing NAV.
Automatic Reinvestment Plan
A service offered by most mutual funds whereby income, dividends and capital gain distributions are automatically invested into the fund by buying additional shares and thus building up holdings through the effects of compounding.
Alpha Coefficient
Defined by Jenson in his portfolio evaluation model, it is the excess return of the fund above risk adjusted market return, given its level of risk as measured by beta. An investment with a positive alpha indicates that the fund has performed better than expected and a negative alpha indicates that the fund has under performed, for the level of risk taken by it.
Average Cost Method
It is the method of finding out the cost per unit by adding up all the costs involved in purchasing all the units of investment and then dividing the sum by the total number of units.
Annualized Returns
This refers to the return that a fund can generate within a period of one year. For the fund whose returns are not available for one year, the returns of the fund can be annualized. Annualised returns are widely used to measure the performance of a fund.
Account Statement
It is the document issued by the mutual fund, giving details of various transactions and holdings of an investor in schemes of the fund.
Annual Return
The percentage change in net asset value of any fund over a horizon of one year, assuming reinvestment of distribution such as dividend payment and bonuses.

B

Balance Sheet
A financial statement showing the nature and amount of a company's assets, liabilities and shareholders' equity.
Balanced Fund
A mutual fund that maintains a balanced portfolio, generally 40% bonds and 60% equity.
Beta
It is the measure of the relative sensitivity of a stock or mutual fund to the market. The market is assigned a beta of 1. The higher the beta, the more sensitive the stock or fund is considered to be relative to the market as a whole. In other words, funds with beta more than 1 will react more to any fluctuations (whether upward or downward) in market than funds with beta less than 1.
Bid or Sell Price
The price at which a mutual fund's shares are redeemed (bought back) by the fund. The bid or redemption price means the current net asset value per share, less any redemption fee or back-end load.
Blue Chip Fund
Mutual fund that invests in blue chip stocks. Typically a growth fund.
Benchmark
An unmanaged group of securities whose performance is used as a standard to measure investment performance. Commonly known as a market index. Some well-known benchmarks are the BSE Sensex and NSE Nifty.
Bond
An interest-bearing promise to pay a specified sum of money due on a specific date in the future (maturity date).
Bond Fund
A mutual fund whose portfolio consists primarily of corporate and government securities. These funds generally emphasize income rather than growth.
Bond Rating
System of evaluating the probability of whether a bond issuer will default. CRISIL ICRA CARE and other rating agencies, analyze the financial stability of both corporate and state government debt issuers. Ratings range from AAA (extremely unlikely to default) to D (likely to default). Mutual funds generally restrict their bond purchases to issues of certain quality ratings, which are specified in their prospectuses.

C

Capital
This is the amount of money you have invested. When your investing objective is capital preservation, your priority is trying not to lose any money. When your investing objective is capital growth, your priority is trying to make your initial investment grow in value.
Capital Appreciation Fund
A mutual fund that seeks maximum capital appreciation through the use of investment techniques involving greater than ordinary risk, such as borrowing money in order to provide leverage and high portfolio turnover.
Capital Gains
Profit from a sale of an investment constitutes a capital gain. For example, if you bought a share of stock for Rs. 5/- and later sold it for Rs. 7/-, you would have a capital gain of Rs. 2/-.
Capital Gain Distribution
Payments made usually at the end of the year to mutual fund shareholders of gains realized on the sale of securities in the mutual fund portfolio.
Call Money
Call money is a short-term source of funding. As the name suggests, this can be called at any time, unlike a term loan where the loan tenure is fixed. The instruments are usually issued for a period of one day to 14 days.
Corpus
The total amount of money invested by all the investors in a scheme.
Certificate of Deposit
Interest-bearing, short-term debt instrument mainly issued by Financial institutions.
Close-ended Scheme
These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are two exit options available to an investor after the initial offer period closes. Investors can transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchanges could vary from the net asset value (NAV) of the scheme on account of demand and supply situation, expectations of unit holder and other market factors. Alternatively some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at the schemes NAV however one cannot buy units and can only sell units during the liquidity window. SEBI Regulations ensure that at least one of the two exit routes is provided to the investor.
Commercial Paper
Commercial paper (CP) is a short term, unsecured instrument issued by corporate bodies (public & private) to meet short-term requirements of working capital. Maturity varies between 3 months to 1 year. CP is issued at a discount.
Contingent Deferred Sales Charges (CDSC)
It is the sales load charged by funds in the event of redemptions made within a pre-specified period of purchase. This charge is linked to the period of unit-holding and generally has an inverse relation with the holding period.
Coupon Rate
The annual rate of interest payable on a debt security, expressed as a percentage of the face value of the instrument.
Current load
It refers to the load structure applicable currently on any fund. Funds keep revising the load structures from time to time.
Commission
The broker's or agent's fee for buying or selling securities for a client. The fee is usually based on a percentage of the transaction's market value.
Current yield
The ratio of interest to the actual market price of the bond expressed as a percentage: annual interest/ current market value = current yield.
Credit Quality
The ratio of interest to the actual market price of the bond expressed as a percentage: annual interest/ current market value = current yield
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.

D

Debt / Income Fund
Funds that invest in income bearing instruments such as corporate debentures, PSU bonds, gilts, treasury bills, certificates of deposit and commercial papers. These funds are the least risky and are generally preferred by risk-averse investors.
Dividend
When companies pay part of their profits to shareholders, those profits are called dividends. A mutual fund's dividend is money paid to shareholders from investment income the fund has earned. The amount of each share's dividend depends on how well the company does.
Dividend Distribution Tax
A tax payable by a debt oriented mutual fund before dividend is distributed to the unit holders. This tax varies for liquid/money market funds and other debt funds.
Dividend Frequency
The periodicity of dividend payout of a scheme. This is especially valid in the case of an income/debt schemes like monthly income plans that normally have a regularity in such distributions.
Dividend History
The track record of dividends declared by a fund till date.
Dividend Reinvestment
In a dividend reinvestment plan, the dividend is reinvested in the scheme itself and is not paid out to the investors. That is, instead of receiving dividend in cash, the unit holders receive units allotted to them at the Ex-dividend NAV.
Dividend Yield
It refers to the dividend earned per unit of a scheme at the prevailing per unit price.
Dividend Stripping
When an investor invests with the idea of exiting from the fund immediately after the dividend is paid.

E

Entry Load
It is the load charged by the fund when one invests into the fund. It increases the price of the units to more than the NAV and is expressed as a percentage of NAV. Entry loads on mutual funds have been abolished in India.
Equity Fund
This refers to the funds that invest primarily in equity and equity related instruments with an objective to provide capital appreciation.
Equity Linked Saving Schemes (ELSS)
A special product offered by mutual funds. These schemes invest in equity i.e. shares and generally have a lock-in period of three years. The primary advantage to investors is the rebate under Section 80 c of the IT act, whereby a maximum of Rs 1 lakh invested in ELSS funds is not taxable.
Ex-Dividend Date
It is the effective date of a dividend distribution. When the dividend is paid, the NAV of the fund drops by the amount of the dividend.
Expense Ratio
The Expenses of a mutual fund include management fees and all the fees associated with the fund's daily operations. Expense Ratio refers to the annual percentage of fund's assets that is paid out in expenses.
Exit Load
It is the load charged by the fund when one redeems the units from the fund. It reduces the price of the units to less than the NAV and is expressed as a percentage of NAV.
Ex-Dividend NAV
The NAV declared post record date is the ex-dividend NAV.
Exchange Privilege
The right to transfer investments from one fund into another, generally within the same fund group, at nominal cost.

F

Face Value
The original issue price of one unit of a scheme
Floating Rate Bonds
These are short to medium term interest bearing instruments issued by financial intermediaries and corporate. These bonds are issued for minimum amount of Rs. 10,000 and in multiples of Rs. 10,000 only. The typical maturity of these bonds is 3 to 5 years.
Front End Load
When an investor purchases units of the mutual fund scheme an initial amount charged by a fund for its administrative expenses or for paying commissions to brokers. This charge is termed as the entry load. Entry load is levied as a percentage of NAV.
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 Manager
Appointed by the AMC, he is the person who makes all the final decisions regarding investments of a scheme.
Fund Management Cost
The charge levied by an AMC on a mutual fund for managing their funds.

G

Gilt Fund
Gilts are securities issued by the central government and are said to carry sovereign or minimal risk.
Global Fund
A mutual fund investing in stocks or bonds through out the world.
Growth Fund
A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in common stocks with significant growth potential.
Guaranteed Returns
The return assured by the mutual funds as a minimum return in certain income plans. The launch of plans offering guaranteed returns is now subject to certain restrictions imposed by the SEBI.
Government Securities
Securities created and issued by the Central Government and/or a State Government, and may include securities unconditionally guaranteed by the Government

H

Hedge Fund
Securities created and issued by the Central Government and/or a State Government, and may include securities unconditionally guaranteed by the Government.
Holding Period
Length of time that an individual holds a security
Holdings
Length of time that an individual holds a security

I

Inception Date
The fund inception date gives the date on which the fund commenced operations.
Index Fund
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.
Income Fund
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.
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.
Inflation
Defined as the fall in the value of a currency, it results in the rise in prices of goods and services over a period of time.
Inflation Risk
The chance that the value of assets or income will be diminished as inflation shrinks the value of a currency.
Institutional Investor
An institutional investor is a professional money manager whose job it is to put money into shares and other assets on behalf of private investors who entrust them with money via their pension and life insurance funds.
Interest rate
The monthly effective rate paid (or received if you are a creditor) on borrowed money. Expressed as a percentage of the sum borrowed.
Interest Rate Sensitivity
Interest-rate sensitivity, measured by the average effective duration the longer a fund's duration, the more sensitive the fund is to shifts in interest rates. The relationship between funds with different durations is straightforward: A fund with a duration of 10 years is twice as volatile as a fund with a five-year duration. Duration also gives an indication of how a fund's NAV will change as interest rates change. A fund with a five-year duration would be expected to lose 5% from its NAV if interest rates rose by one percentage point or gain 5% if interest rates fell by one percentage point.
Interest Rate Risk
The prices of a debt security are subject to the interest rate fluctuations in the market. An increase in the interest rates results in decrease in value of the bond. Therefore debt oriented mutual fund schemes; this interest rate risk affects the NAV of the fund.
Investment Objective
The declared purpose of investment of a mutual fund scheme
Investment Strategy
The internal guidelines that a fund follows in investing the money received from the investors

J

Junk Bond
A speculative bond with higher credit risk.

K

Key Information Memorandum (KIM)
It is the official document issued by mutual funds prior to the launch of a fund describing the characteristics of the proposed fund to all its prospective investors. It contains information required by SEBI pertaining to issues such as investment objective and policies, services, and fees.

L

Launch Date
The date on which a scheme is first made open to the public for subscription
Level Load
Commission (load) that does not vary depending on how long the investor held the investment.
LIBOR
LIBOR stands for London Inter Bank Offer Rate. It's the rate of interest at which banks offer to lend money to one another in the so-called wholesale money markets in the City of London. Money can be borrowed overnight or for a period of in excess of five years. The most often quoted rate is for three month money. '3 month LIBOR' tends to be used as a yardstick for lenders involved in high value transactions. They tend to quote rates as 'points above LIBOR'. So if 3 month LIBOR were (say) six per cent, a bank may choose to lend to another bank at (say) 6 and a quarter per cent. e.g. a quarter per cent above 3 month LIBOR.
Liquid Fund
A liquid fund is the same as a money market fund, but avoids a lock-in period.
Liquidity Risk
The liquidity risk is involved in both type of securities i.e. fixed income security as well as equity and refers to the situation when these securities may not be sold in the market at close to their value.
Load
A sales charge or commission assessed by certain mutual funds ("load funds") to cover their selling costs.
Long-in-Period
A sales charge or commission assessed by certain mutual funds ("load funds") to cover their selling costs.
Long-Term Bond Fund
A mutual fund that invests in bonds that mature in more than 10 years.
Long-Term Capital Gain
A profit on the sale of a mutual fund share that has been held for more than one year.

M

Management Expense Ratio
The ratio of management expenses to the total funds under management. It is usually specified in the offer document as a percentage of the assets under management of the fund.
Management Fee
The charge made to a mutual fund for supervision of its portfolio, usually expressed as percentage of assets.
Market Risk
It refers to the risk posed by the market in itself i.e. the risk that the price of a security will rise or fall due to changing economic, political, or market conditions, or due to a company's individual situation.
Maturity
The date upon which the principal of a security becomes due and payable to the security holder.
Money Market
It refers to a market for very short-term securities. Money market instruments are forms of debt that mature in less than a year and are very liquid in nature. Securities such as Treasury Bills and Call Money make up the bulk of trading in the money markets.
Money Market Fund
A mutual fund that aims to pay money market interest rates. This is accomplished by investing in safe, highly liquid securities, including certificates of deposit, commercial paper, and Government securities. Money funds make these high interest securities available to the average investor seeking immediate income and high investment safety.
Minimum Additional Investment
The minimum amount, which an existing investor should invest for purchasing fresh units.
Minimum Subscription
It refers to the minimum amount required to be invested to purchase units of a scheme of a mutual fund.
Minimum Withdrawal
The smallest sum that an investor can withdraw (get redeemed) from the fund at one time.

N

Net Assets
This figure represents the fund's total asset base, net of fees and expenses.
Net Asset Value (NAV)
The value of fund's portfolio at market value less current liabilities divided by the number of units outstanding. Net asset value is normally computed daily or weekly and can be found in the financial section of the daily newspaper.
Net Asset Value per Unit
The current market worth of a mutual fund share. Calculated daily by taking the funds total assets: securities, cash and any accrued earnings, deducting liabilities, and dividing the remainder by the number of units outstanding.
Networth
A person's net worth is equal to the total value of all possessions, such as a house, stocks, bonds, and other securities, minus all outstanding debts, such as mortgage and revolving credit lines.
No Load Fund
A commission-free mutual fund that sells its units at NAV, either directly to the public or through an affiliated distributor, without the addition of a sales charge.
Nominee
The person(s) to whom the assets should be distributed upon the death of the account holder.

O

Objective of Investment
The purpose statement consisting of the goal and the avenues of investment released by the fund.
Offer Document
It is the official document issued by mutual funds prior to the launch of a fund describing the characteristics of the proposed fund to all its prospective investors. It contains information required by SEBI pertaining to issues such as investment objective and policies, services, and fees.
Open Ended Scheme
Scheme of a mutual fund where purchase or sale of units is allowed on a continued basis.
Operating Expenses
Are the expenses that a company incurs for normal cause of business. Includes cost of raw material, wages, etc.
Opening NAV
The NAV disclosed by the fund for the first time after the closure of an NFO.
Opportunity Risk
The risk that a better opportunity may present itself after you have already committed your money elsewhere.

P

Passive Portfolio Management
This investment style is exactly opposite of the active portfolio management. In this style the portfolio manager assumes that markets are efficient and all information is already analysed and reflected in the prices of share and there is no scope of finding any undervalued stock.
Pay-out
Pay-out day is the designated day on which securities and funds are paid out to the members by the clearing house of the Exchange.
Payable Date
The date on which distributions are paid to shareholders who do not want to reinvest them. This date can be anywhere from one week to one month after the record date.
Performance
Performance of an investment indicates the returns from an investment. The returns can come by way of income distributions as well as appreciation in the value of the investment.
Portfolio
It refers to the total investment holdings of the fund.
Portfolio Turnover Rate
The rate at which the fund's portfolio securities are changed each year. If a fund's assets total Rs 100 crore and the fund bought and sold Rs 100 crore worth of securities that year, its portfolio turnover rate would be 100%. Aggressively managed funds generally have higher portfolio turnover rates than do conservative funds which invest for the long term. High portfolio turnover rates generally add to the expenses of a fund.
Portfolio Manager
Also known as the Fund Managers, they are the specialists employed by Mutual Fund/AMC to invest the pool of money in accordance with the fund's investment objectives.
Premium
When the market price of a unit is more than the NAV it is said to be trading at a premium.
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.
Public Sector Understanding (PSU) Bonds
PSU Bonds are medium and long term obligations issued by public sector companies where the government share-holding is generally greater than 51% or more. Some of the PSU bonds carry tax exemptions also. Minimum maturity is 5 years for taxable bonds and 7.
Purchase Price or Offering Price
The price at which a mutual fund's units can be purchased. The asked or offering price means the current net asset value per unit plus sales charge, if any.

R

Rating
The rating is a symbolic indicator of the current opinion of the relative capability and timely servicing of debts and obligations. Ratings are based on an objective analysis of the information. The rating could be done in respect of the creditworthiness of debt instruments, risk of loss in an investment or the performance of an investment.
Record Date
The date by which mutual fund holders are registered as unit owners to receive any future dividend or capital gains distribution.
Recurring Investment Facility
An arrangement provided by the fund management whereby regular purchases of small or large numbers of units may be allowed. The plan sometimes also provides for automatic reinvestment of income dividends and capital gains distribution.
Recurring Withdrawal Facility
The arrangement that the fund provides whereby shareholders can receive periodic payments in a specified amount. These amounts may be more or less than the income of the fund.
Redemption Fee
The commission or charge paid when an investor exits from a mutual fund. They are basically imposed to discourage withdrawals.
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.
Redemption Price
The price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Repurchase Date
The price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Repurchase Price
The price of a unit (net of exit load) that the fund offers the investor to redeem his investment.
R&T Agent
Registrars and transfer agents (R & T agents) handle all paperwork involving investor servicing.
Risk Adjusted Return
The expected returns from an investment depend upon the risk involved in the investment. For the purpose of comparing returns from investments involving varying levels of risk, the returns are adjusted for the level of risk before comparison. Such returns (reduced for the level of risk involved) are called risk-adjusted returns.
Risk
The measure of an investor's ability to withstand volatility in the markets. Investors with a near-term focus are likely to be more conservative than those with a long-term viewpoint who can benefit from the market's fluctuations by taking advantage of compounding and historical growth of the markets.
Risk Free
Absence of credit risk in a security. Usually Government or Government guaranteed securities are only considered to be risk free.
Rollover option
At redemption, some funds offer investors the option of reinvesting the amount. An investor happy with the fund's performance may opt to continue.
R-Squared
This is the square of ‘r’, that is, the correlation co-efficient. This statistic gives the proportion of the determined variable that is being explained by the other. For example the correlation between rainfall and food crop might be 0.8. This means that by the definition of R-Squared, it would be (0.82), which is 0.64. This implies that 64 per cent of the behavior of food crop production is explained by rainfall, the rest being explained by other factors. A higher figure implies that the explanatory variable is indeed a good explanatory factor for the changes in the factor being explained. If this figure is not high it means that there is some other factor(s) that better explains the behavior of the variable in question.
Rupee cost averaging
A system of investing in which individual re-invests money into the same mutual fund on a regular basis, usually monthly.

S

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 Information Document (SID)
It is the official document issued by mutual funds prior to the launch of a fund describing the characteristics of the proposed fund to all its prospective investors. It contains information required by SEBI pertaining to issues such as investment objective and policies, services, and fees.
Scheme objective
The purpose statement consisting of the goal and the avenues of investment released by the fund.
Sector Allocation
It refers to the portion of assets of a fund which is invested in a particular well-defined segment of the economy, like Information Technology, pharmaceuticals, utilities, media, telecommunications, etc.
Sharpe Ratio
The Sharpe ratio measures the risk-adjusted return of a fund. Simply put, the ratio measures the variability of ' excess returns' (defined by returns of the fund over the 'risk less' 91 day T-bill). Mathematically, the formula takes a fund's return in excess of a risk-free investment and divides this by the standard deviation of the returns. The higher the Sharpe ratio, the better the fund.
Sponsors
A sponsor is the person who, acting alone or in combination with another body or corporate, establishes a mutual fund and applies to SEBI for its registration. The sponsor is also closely associated with the AMC. As per SEBI regulations, the sponsor has to contribute a minimum of 40% of the net worth of the AMC.
Standard Deviation
The statistic is the most commonly used measure of assessing risk. The ratio measures the tendency of an instrument to deviate from its average returns. The ratio is used primarily to assess the volatility in returns of an instrument. A lower figure is the better, as a higher figure means more inconsistency and hence higher volatility.
Systematic Investment Plan (SIP)
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 Plan (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.
Systematic Withdrawal Plan (SWP)
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.
Switch
Moving money from one scheme to another with in the fund family. See Exchange privilege.

T

Treasury Bills
These are bills of exchange having short term maturity issued by the Reserve Bank of India These securities are guaranteed by the Govt. of India and hence carry low or no risk and therefore returns are also low. These are also termed as T-Bill.
Treynor Ratio
A gauge of risk-adjusted performance calculated by dividing the excess return of a portfolio above the risk-free rate by its beta. Higher values are desirable and indicate greater return per unit of risk.
Total Asset Under Management
The market value of the total investments of a fund as on a particular date
Total Return
Return on an investment, taking into account capital appreciation, dividends or interest, and individual tax considerations adjusted for present value and expressed on an annualised basis.
Trust
A legal arrangement under which property and assets may be held and managed for the benefit of another person. Mutual funds in India are registered under the Trusts Act.
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.
Turnover
The extent to which the fund's portfolio is turned over during the course of a year. High turnover results in greater investment expenses and therefore in an erosion of the value of share assets.
Turnover Rate
A measure of the fund's trading activity calculated by dividing total purchases or sales of portfolio securities (whichever is lower) by the fund's net assets over a period of time.

U

Unit
A Unit represents one undivided share in the assets of the Schemes.
Unit Holder
A person who holds Unit(s) under a Mutual Fund.
Underwriter
The organization that acts as the distributor of a mutual fund’s units to broker/dealers and the public.
Unsystematic Risk
This is the part of the total risk that is peculiar to a particular company. This risk could arise due to company specific factors like operational factors, financial distress, labour turnover etc. This type of risk can be reduced to a great extent with the help of diversification.

V

Volatility
In investing, volatility refers to the ups and downs of the price of an investment. The greater the ups and downs, the more volatile the investment.
Value Investment
This refers to the investment style that attempts to pick those stocks that are traded below the intrinsic value and hence considered as the undervalued.
Venture Capital Fund
A limited company formed to provide venture or risk capital to new industries.
Vulture Fund
It is a fund that takes over the Non Performing Assets (NPAs) of banks or financial institutions at a discount and issues pass-through certificates to the investors. This usually carries a low rate of returns.

W

Withdrawal Plan
The facility to periodically redeem mutual fund and have proceeds mailed directly to the investor.

Y

Yield
Distributions form investment income, usually expressed as a percentage of net asset value or market price. Unlike total return, yield has the single component of investment income and does not include capital gains distributions or capital appreciation of underlying shares.
Yield Curve
The Yield Curve gives the relationship at a given point in time between yields on a group of fixed-income securities with varying maturities viz. treasury bills, notes, and bonds. The curve typically slopes upward since longer maturities normally have higher yields, although it can be flat or even inverted.
Yield to Maturity
Used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond is held to its maturity date. It takes into account purchase price, redemption value, time to maturity, coupon yield and the time between interest payments.

Z

Zero Coupon Bond
A bond where no periodic interest payments are made. The investor purchases the bond at a discounted price and receives one payment at maturity. The maturity value an investor receives is equal to the principal invested plus interest earned compounded semi-annually at the original rate to maturity. Interest income from zero-coupon bonds is subject to taxes annually even though no payments will be made.
 
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