Mutual Fund

Common terminologies of mutual fund

These are the common terminologies used in mutual funds.

Mutual Fund

Mutual Fund is a Trust which collects money from investors and it invests their money in equities, bonds, money market instruments and/or other securities.


When investor invest into mutual fund it owns certain number of units in the fund which represents  portion of the holdings of the fund.


NFO is the short form of New Fund Offerings. When new fund lunches it offers units to the investor to get investment amount. The NFO remains open for certain period of time depends on fund type.

Entry load

Entry load is type of charges applied to investor when it enter or purchase the fund units. Entry load nowadays removed from most of the funds which is good thing for investor.

Exit Load

Exit load is charges applied to investor when it exit or sell the fund units. Exit load usually applied if you sell the units with in certain period of time.


SIP is short form Systematic Investment Plan. SIP is way of investing in mutual fund by investing fix amount every month on specific date. SIP is popular and one of the better way of investing in mutual fund as it helps you  to average out your cost.


SWP is short form of Systematic Withdrawal Plan. SWP is useful when you need certain fix amount every month from your investment. In this case you will set up SWP of certain amount and that amount would be witdraw from your investment monthly and credited to your bank account.


STP is systematic transfer plan. one can switch monthly fixed amount from investment of one scheme to another and gradually all his investment would be shifted to another scheme.


Lumpsum is a fixed amount that an investor wants to invest one time in mutual fund. It is useful when investor has a good amount of money in hand then he can invest in mutual fund


Its Net asset Value.  It is the market price of investments of mutual funds divided by outstanding units of mutual fund. It is being calculated end of every working day.

Flex SIP

It is the type of SIP in which SIP amount varies based on market scenario. If market is down then the SIP amount would be high so that investor gets benefit of investing in low market price.

Index fund

It is the type of mutual fund that invest in market indices like Nifty 50, Sensex etc. Investor would get return same as the index return. That is why these funds are safer funds.

Balanced fund

Balanced are the type of mutual fund which invest in equity and debt as well. One wants to get more return and also he don’t want to take more risk then Balance funds are best for that kind of investors. The ratio of equity and debt would be decided by AMC of mutual fund.

Funds of fund

These are the type of mutual funds that invest in other funds.

Liquid Fund

A mutual fund which invest into safe and short term instruments such as treasury bills, Certificate of deposit and Commercial paper.

Gilt Fund

A mutual fund which invest into government securities.

Largecap Fund

These are the equity oriented mutual funds that invest in large cap companies like ITC, HDFC, TCS and so on

Midcap Fund

These are the equity oriented mutual funds that invest in mid cap companies like Federal bank, Nilkamal and so on.

Smallcap fund

These are the equity oriented mutual funds that invest in small cap companies like datamatics, GRP ltd and so on.


ELSS is short form of Equity linked saving scheme. Investing in this type of mutual fund helps you save tax as this investment comes under SEC 80C. ELSS usually has locking period of 3 years which means you cannot sell your units before 3 years.

Lockin Period

Lockin period is the durating during which investor cannot exit or sell units of mutual fund.

Expense Ratio

It expense occurred by AMC to manage the scheme. The upper limit of this expense ration is fixed by AMFI.

Dividend Fund

Mutual fund which distribute the profit among the investors in form dividend. The NAV of this type of fund remains low compare to Growth fund as the profit is distributed back to the investors.

Growth Fund

Mutual fund which reinvest the profit earned from the investment and does not distribute to the investors. The NAV of this type of fund remains high compare to Dividend fund as profit is reinvested back to the fund.

Open Ended Fund

A mutual fund in which we can invest any time or withdraw amount any time.

Close Ended Fund

A mutual fund with fix maturity period between 3 to 10 years.

Direct Funds

If investor invests directly then investor would be investing into direct plans of the mutual funds,

Regular Funds

If investor investing with the help of mutual fund agent then investor would be investing into regular plans of the mutual fund.


Every mutual fund have specified the benchmark index against which it should be compared. The mutual funds which consistently outperforms its benchmark indexes is good sign.


Every mutual fund have specified the risk associated with their scheme and it depends on the investment category of the fund.


AUM is short form of Asset Under Management.  AUM means Net Assets currently managed by the fund.

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