These are the common terminologies used in mutual funds.
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 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 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.
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.
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.
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 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.
A mutual fund which invest into safe and short term instruments such as treasury bills, Certificate of deposit and Commercial paper.
A mutual fund which invest into government securities.
These are the equity oriented mutual funds that invest in large cap companies like ITC, HDFC, TCS and so on
These are the equity oriented mutual funds that invest in mid cap companies like Federal bank, Nilkamal and so on.
These are the equity oriented mutual funds that invest in small cap companies like datamatics, GRP ltd and so on.
Open Ended Fund
Close Ended Fund
A mutual fund with fix maturity period between 3 to 10 years.
If investor invests directly then investor would be investing into direct plans of the mutual 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.