Mutual Fund

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An investment security type that enables investors to pool their money together into one professionally managed investment. Can be invested in stocks, bonds, cash and/or other assets.

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Mutual Fund

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Combination of holdings that form one mutual fund; collection of assets owned by the mutual fund or an individual.

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Portfolio

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A document that shares information about the invetsment, its objective, risks, costs, shares being offered, and other policies.

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Prospectus

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Portfolio of stocks, bonds or other securities that generate profits for the investor, or shareholder of the mutual fund.

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Mutual Fund

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Dividing the total net assets by the total number of units issued.

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Net Asset Value

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The decline in your investment's value in the mutual fund.

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Depreciation

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The amount a mutual fund charges investors for various reasons. (Management fees, entry or front-to-end loads, exit loads)

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Load

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Total value of the assets a fund buys.

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Assets Under Management (AUM)

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Distributing the profits to mutual funds make from selling some of the underlying assets at higher values.

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Capital Gains Distribution

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Practice of investing in different types of securities or asset classes. This is done to reduce risk.

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Diversification

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Every day, values of financial assets change. So, when you buy at two different times, your purchase/market price will differ.

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Rupee-cost Averaging

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Mutual fund houses announce the amount of dividend to be distributed a few days before the actual distribution.

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Ex-dividend Date

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Amount paid to your fund manager for his expertise and portfolio management skills.

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Management Fees

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Amount of mutual fund charges when units are purchased by investors. This is usually rare.

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Entry/front-end Load

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Amount of mutual fund charge you pay for selling or redeeming your shares.

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Exit Load

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Total amount of profits an investor makes keeping in mind the dividends, capital gains from selling units, distribution or fund income as well as returns earned or reinvestments.

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Total Return

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Many fund houses group a set of mutual funds together based on their investment objectives, or other factors like management. This is called a family of funds.

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Fund Switch / Exchange Privilege

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Every investor puts his money in financial instruments for a particular reason. This may be to increase wealth or accumulate money for buying something in the future, or simply to preserve your money from inflation.

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Investment Objective

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An investment vehicle much like a mutual fund, but which is traded on stock exchanges. It generally tracks an index, a basket of assets or a commodity.

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Exchange-Traded Fund (ETF)

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Mutual funds invested in multiple types of assets like stocks and bonds. They can also be invested across mutual funds.

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Fund of Funds

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When a stock gets listed on the exhange, it comes up with what

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IPO or Initial Public Offering.

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When a mutual fund starts a new scheme and invites investors to put in money in exchange for units.

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New Fund Offering (NFO)

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There are two ways to exit a mutual fund - sell it to another investor or back to the fund. What is the latter called?

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Redeeming

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The organization that issues debt market securities like bonds, commercial papers abd certificate of deposits. It could be a company, a government organization or the government itself.

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Issuer

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These are again a debt-market instrument, issued by corporations to raise money for the short term. They are usually unsecure as the company does not pledge any of its assets as collateral.

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Commercial Paper

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A kind of debt-market instrument issued by banks or financial organizations. It acts as a proof of saving by the investor and promises interest payments.

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Certificate of Deposit (CD)

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In a bond market, there are two different interest rates prevalent. One is the fixed rate for interest payment, and the other is called the yield-to-maturity.

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Interest Rate Risk

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A person who establishes a mutu fund, acting alone or in combination with another body corporate. They form a trust, appoints the board of trustees, and has the right to appoint the asset management company (AMC) or fund manager.

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Sponsor

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They play a critical role in ensuring full compliance with Sebi's requirements.

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Trustees

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Functions under the supervision of its own board of directors and also under the direction or trustees and Sebi.

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Asset Management Company (AMC)

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Appointed by trustees for safekeeping of physical securities while dematerialised securities holdings are held in a depository through a depository participant.

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Custodian

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They are responsible for issuing and redeeming units od the mutual fund as well as providing other related services, such as preparation of transfer documents and updating investor records.

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Registrar and Transfer Agents

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First layer in the three-tier structure of Mutual Funds in India. According to SEBI regulations, he is any person or any entity that can set up a mutual fund to earn money by fund management.

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Fund Sponsor

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They form the second layer of the structure of mutual funds in India. A _____ is created by the fund sponsor in favor of the _____, through a document called a trust deed.

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Trust and Trustees

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Responsible fkr the safekeeping of the securities of the mutual fund. They manage the investment account of the mutual fund and ensure the delivery andbtransfer of the securities.

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Custodian

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They are the thirs layer in the structure of mutual funds. They acts as the fund manager or as an investment mabager for the trust.

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Asset Management Company (AMC)

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They scrutinize rceord books of accounts and annual reports of various schemes.

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Auditor

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AMC uses the services of ______ to buy and sell securitiea on the stock market. The AMCs use research reports and recommendations from many _____ to plan their market moves.

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Brokers

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Are set up in the form of trusts structures; maturity date is not fixed.

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Open ended funds

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Are set up as corporate entities; maturity period is fixed.

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Closed ended funds

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It underwrites new debt and equity securitiea, help with selling securities, and drive mergers and acquisitions, reorganizations, ans brokee trades.

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Investment Banks

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It provides loans to people and small businesses and offer checking ans savings account and certificate of deposits.

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Commercial Banks

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Combination of open and closed ended funds is called _____

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Interval Funds

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These are the funds in which the majority of the investment is made in the equity shares. The investment goal under this kind of funds is to achieve long term growth.

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Equity or Growth Funds

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The investment under this kind of funds is made in securities such as bonds, debentures, government securities, etc. The investment goal under this type of funds is safety and to achieve moderate growth of funds.

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Debt or Income Funds

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The money is invested in both equity and debt instruments. The investment goal is to achieve both profits and moderate growth.

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Balanced Funds

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This kind of funds go for short term investments such as Treasury bills, commercial papers, etc. under which period is less than 91 days. The investment objective under this funds is to attain liquidity, increase in capital and moderate return on funds.

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Money Market or Liqyid Funds

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These are the government securities that carry no credit risk and are considered as the safest kind of funds.

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Gilt Funds

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The portfolio manager buys and sells investments, attempting to outperfrom the return of the overall market or another identified benchmark.

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Active Management

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Involves buying a portfolio of securities designed to track the performance of a benchmark index.

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Passive Management

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These funds buy investments that pay a fixed rate of return like government bonds, investment grade corporate bonds, and high yield corporate bonds.

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Fixed Income Bonds

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These funds aim to track the performance of a specific index such as the S&P/TSX Composite Index.

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Index Funds

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These funds focus on specialized mandates such as real estate, commodities, or socially responsible investing.

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Specialty Funds

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A common approach to investing that looks at the big economic picture, and then finds industries or countries that look like they are going to do well. Then invest in specific companies within the chosen industry or country.

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Top-down Approach

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A common approach to investing that focuses on selecting soecific companies that are doing well, no matter what the prospects are for their industry or the economy.

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Bottom-up Approach

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A common approach to investing wherein a portfolio manager managing a global portfolio can decide which countries to favor based on a top-down analysis but the portfolik of stocks within each country based on the bottom-up analysis.

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A combination of top-down and bottom-up approaches

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Attempts to forecast the direction of investment prices by studying past market data.

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Technical Analysis

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Investments that can be called by the issuer before the maturity date.

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Callable Bonds

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Refers to situations when the rate of price increases in the economy deteriorates the returns associated with the bond.

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Inflation Risk

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A security that tracks an index a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. It experiences price changes throughout the day as they are bought and sold.

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Exchange-Traded Fund (ETF)

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It is generally a form of debt which the investors pay to the issuers for a defined time frame. It doesn't have a fixed maturity date.

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Bonds

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A technique for determining the theoretical fair value of a particular bond. It includes calculating the present value of a bond's future interest payments (cash flow), and the bond's value upon maturity (face value oe par value)

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Bond Valuation

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Amount of money a holder will get back once a bond matures, the price of any tradable bond will be influenced among other things by the amounts stated.

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Par Value