| Terms |
Description |
| |
|
| 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. |
| |
|
| Adjusted
NAV (Total Return) |
The Net Asset Value
of a unit adjusting for all changes
caused due to dividend declaration,
bonus etc. assuming reinvestment of
distributions made to the investors
at the prevailing NAV. |
| |
|
| Age
of Fund |
The time elapsed since
the inception of the fund. |
| |
|
| 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. |
| |
|
| Annual
Report |
It is the yearly record
of a Mutual Fund's performance in an
year. Under SEBI's guidelines, it is
distributed to investors and/or shareholders. |
| |
|
| 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. |
| |
|
| Annualized
Returns |
It is the absolute
return over a period either greater
or less than a year aggregated to a
period of one year. |
| |
|
| Applicable
NAV |
The applicable NAV,
if the application is received before
that cut-off time on a day as set by
the fund. All investments or redemptions
are processed at that particular NAV.
A different NAV holds if received thereafter. |
| |
|
| Asset
Allocation |
It
is a means of diversifying the risk
associated with a fund and refers to
the distribution of total funds available
with the fund into instruments of various
types such as stocks, bonds etc. based
on the funds investmetn objective. |
| |
|
| Asset
Management Company (AMC) |
It is the investment
manager for the mutual fund. It is a
company set up primarily for managing
the investment of mutual funds and makes
investment decisions in accordance with
the scheme objectives, deed of Trust
and other provisions of the Investment
Management Agreement. |
| |
|
| 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 |
An investment option
available to mutual fund unitholders
in which the proceeds from either the
fund's dividends, bonus etc. are automatically
used to buy more units of the fund. |
| |
|
| 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. |
| |
|
| Average
Credit Quality |
A measure of the creditworthiness
of the debt securities held by a debt
fund. It is the weighted average of
the credit ratings of the securities
given their relative weights in the
portfolio. For these calculations, Government
of India securities, cash and call money
instruments are taken as AAA credit
quality and non-rated debt instruments
are taken as having BBB credit quality. |
| |
|
| Balance
Maturity Tenure Of A Scheme |
It is defined In the
case of close-ended schemes as the balance
period till the redemption of the scheme. |
| |
|
| Balanced
Funds |
A class of mutual fund
that aims at allocating the total assets
with it in the portfolio mix of debt
as well as equity instruments. |
| |
|
| Bear
Market |
It is a period in market
when investors are on a selling spree
and the share prices are going down. |
| |
|
| Benchmark |
It is the platform
or the parameter with which a scheme
can be compared. For example, the performance
of an index fund can be benchmarked
against the appropriate index specified
by it. |
| |
|
| 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 fluctuaitons (whether upward
or downward) in market than funds with
beta less than 1. |
| |
|
| Blue
Chip Stock |
Usually a high priced
scrip of a major corporation with a
long, fairly stable record of earnings
and dividend payments and with good
expected future growth.. |
| |
|
| Bond |
An interest-bearing
promise to pay a specified sum of money
due on a specific date in the future
(maturity date). |
| |
|
| Bonus |
Bonus is allocation
of additional units to the investors
on the basis of their existing holdings.
Basically, there is a split of existing
units into more than one unit resulting
in the reduction of the NAV per unit. |
| |
|
| Broker |
A broker is an intermediary
who guides the investors on one or more
investment avenues available to an investor
and facilitates the process of investment.
|
| |
|
| Brokerage |
It is the fee payable
to a broker for acting as an intermediary
in a transaction (normally a buy transaction).
For example, brokerage is paid by a
fund to a broker for getting fresh investments
from investors. |
| |
|
| BSE
Index |
A index reflecting
the stock prices of 30 companies listed
on the Bombay Stock Exchange (BSE) which
is taken to be representative of the
stock market movement. It is usually
considered as the benchmark forperformance
evaluation of equity funds. |
| |
|
| Bull
Market |
Period during which
the prices of stocks in the stock market
keep continuously rising for a significant
period of time on the back of sustained
demand for the stocks. |
| |
|
| Capital
Gains |
The profit realizations
on sale of securities and certain other
capital assets (including units of mutual
funds) are called capital gains. The
gains can be classified into long-term
or short-term depending on the period
of holding of the asset and are charged
to tax at different rates. Gains on
mutual fund units held for a period
of 12 months or more are long-term gains. |
| |
|
| Certificates
of Deposit (CD) |
Certificate of Deposit
(CD) is issued by scheduled commercial
banks excluding regional rural banks.
These are unsecured negotiable promissory
notes. Bank CDs have maturity of 91
days to one year, while those issued
by DFIs have maturities between one
and three years. |
| |
|
| Close-Ended
Schemes |
They are schemes that
have a pre-specified maturity period
generally ranging from 2 to 15 years.
One can invest directly in the scheme
at the time for the initial issue and
thereafter 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 scheme's net asset value (NAV) on
account of demand and supply situation,
unitholders' expectations and other
market factors. Some close-ended schemes
provide an additional option of selling
the units directly to the Mutual Fund
through periodic repurchase at NAV related
prices. SEBI Regulations ensure that
at least one of the two exit routes
are 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. These can be issued to
any |
| |
|
| Compliance
Officer |
He is the officer appointed
by the AMC to comply with various regulatory
requirement and to redress investor
grieviences associated with the funds. |
| |
|
| Contingent
Deferred Sales Charge (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. |
| |
|
| Corpus |
The total amount of
money invested by all the investors
in a scheme. |
| |
|
| Cost
Of Churning/Turnover cost |
It refers to the costs
associated with the churning (or changes
made to the holdings) of the portfolio.
Portfolio changes have associated costs
of brokerage, custody fees, transaction
fees and registration fees, which lower
the returns. The quantum depends on
the managementstyle of teh fund manager. |
| |
|
| 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. |
| |
|
| 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 |
| |
|
| 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. |
| |
|
| Debt
/Income Funds |
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. |
| |
|
| Discount |
When the market price
of a listed scheme is less than the
actual NAV of the units, then it is
said to be tradiing at a discount. |
| |
|
| Diversification |
Spreading the risk;
Mutual funds spread investments among
a number of different securities to
reduce the risk inherent in investing. |
| |
|
| Dividend
Distribution Tax |
A tax payable by a
debt oriented mutual fund (a mutual
fund that invests more than 50% of its
portfolio in the debt market) before
dividend is distributed to the unit
holders. The current Dividend Distribution
Tax is 10% plus the 10% surcharge. There
is no such tax applicable on open-end
equity schemes. |
| |
|
| 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
Per Unit |
Total amount of dividend
declared by a fund for a scheme divided
by total number of units issued to all
the investors. |
| |
|
| Dividend
Plan |
In a dividend plan,
the fund pays dividend from time to
time as and when the dividend is declared. |
| |
|
| 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
Warrant |
It is an instrument
issued by companies/ mutual funds to
an investor for the purpose of payment
of dividends. |
| |
|
| Dividend
Yield |
It refers to the dividend
earned per unit of a scheme at the prevailing
per unit price. |
| |
|
| Dividends |
Mutual fund dividends
are paid out of income from the scheme's
investments and can be announced out
of the realized gains only. While dividends
in the hands of the investor are free
from tax, mutual funds are now required
to pay a "distribution tax"
for dividends declared from debt-oriented
schemes. |
| |
|
| Dow
Jones Index |
It is an American index
similar to the BSE Index. Here the basket
comprises 30 blue chip American stocks
whose prices are indicative of the health
of the economy. |
| |
|
| 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. |
| |
|
| Equity
Linked Savings Scheme |
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
basic features of ELSS schemes are:
Tax rebate of 20% under section 88 of
the Income Tax Act on an (maximum) investment
of Rs.10,000/- |
| |
|
| Equity
Schemes |
Schemes where more
than 50% of the investments are done
in equity shares of various companies.
|
| |
|
| Ex-Bonus
NAV |
The NAV declared post
record date in case of a bonus issue
is the ex-bonus NAV. |
| |
|
| 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. |
| |
|
| Ex-Dividend
NAV |
The NAV declared post
record date is the ex-dividend NAV. |
| |
|
| Exit
Load |
It is the load charged
by the fund when oneredeems 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. |
| |
|
| 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. |
| |
|
| Exchange
traded funds |
Exchange traded funds
are a hybrid of mutual funds and stock
which track an underlying index. These
funds have the flexibility of trading
throughout the day like a security and
also offer benefits like diversification,
professional management, low expense
ratio, etc. |
| |
|
| Floating
Rate Bonds |
These are short to
medium term interest bearing instruments
issued by financial intermediaries and
corporates. 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. |
| |
|
| Free
Loading |
A term used when mutual
fund investors who have purchased load
funds switch from one fund family to
another family of funds without having
to pay another sales charge. Not all
funds families have freeloading procedures. |
| |
|
| Face
Value |
The original issue
price of one unit of a scheme |
| |
|
| First-In,
First-Out (FIFO) |
A commonly used mechanism
for the taxation purpose of redeemed
mutual fund shares, it is an accounting
method which assumes that the units
purchased first are the units sold first.
|
| |
|
| 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
Management Costs |
The charge levied by
an AMC on a mutual fund for managing
their funds. |
| |
|
| Fund
Manager |
Appointed by the AMC,
he is the person who makes all the final
decisions regarding investments of a
scheme. |
| |
|
| Gilts/Government
Securities |
Securities created
and issued by the Central Government
and/or a State Government, and may include
securities unconditionally guaranteed
by the Government |
| |
|
| Global
Funds |
Mutual funds that invest
in stocks of companies from all over
the world |
| |
|
| Government
Securities |
These are medium to
long term obligations issued by RBI
on behalf of Government of India and
various state governments. The RBI decides
the cut-off coupon on the basis of the
bids received. These securities are
issued by auction process. On certain
issues |
| |
|
| Gilt
funds |
Funds that invest only
in government securities of different
maturities. They offer lower returns
as the credit risk is virtually absent
and there are no chances of government
defaulting on its payment obligaitons.
This effectiviely reduces the yield
on them. |
| |
|
| Growth
scheme |
A scheme where investments
are made in equity and convertible debentures.
They normally aim to provide capital
appreciation over a period of time. |
| |
|
| 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. |
| |
|
| 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 teh assets
under manaegment of the fund. |
| |
|
| Management
Fee/Expense |
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
or Maturity Date |
The date upon which
the principal of a security becomes
due and payable to the security holder. |
| |
|
| Minimum
Additional Investment |
The minimum amount,
which an existing investor should invest
for purchasing fresh units. |
| |
|
| Minimum
Balance |
It is the minimum amount
specified by a fund that should remain
invested in a scheme after any redemption. |
| |
|
| 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. |
| |
|
| 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. |
| |
|
| Minimum
Fill (MF) |
This is one of the
special conditions where a minimum quantity
is specified for an order. The quantity
of the trade involving an order with
a MF attribute should at least be this
minimum quantity specified. |
| |
|
| Money
Market Instruments |
Refers to Commercial
Papers, Treasury Bills, GOI Securities
etc. with an unexpired maturity less
than or up to one year, Call MSoney,
Certificates of Deposit and any other
instrument specified by the Reserve
Bank of India. |
| |
|
| Mutual
Funds |
An investment company
that pools money from its unitholders
and invests that money into a variety
of securities, including stocks, bonds,
and money-market instruments. This represents
a way of investing money into a professionally
managed and diversified pool of securities
that hopefully will provide a good return
on unitholders' money. |
| |
|
| Income
/ Debt Funds |
They are mutual funds
that invest primarily in fixed income
securities and aim to provide reasonable
returns with low degree of risks. |
| |
|
| Index
Funds |
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. |
| |
|
| 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. |
| |
|
| International
Funds / Emerging Market Funds |
Funds investing in
assets or bonds/shares of companies
from emerging economies. These are not
permissible in India due to regulations
against investing abroad. Most of the
schemes of Foreign Institutional Investors
(FII's) investing in India are funds
of this type. |
| |
|
| Investment
Management |
Investment analysis
and execution of investment plans in
keeping with certain objectives. |
| |
|
| 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 |
| |
|
| Initial
Load |
a kind of sales charge
that is paid before any amount gets
invested into the mutual fund during
its Initial Offer. |
| |
|
| iSEC
Bond Index (I-BEX) |
An index created by
ICICI Securities as a benchmark for
returns from debt instruments in the
market. |
| |
|
| Launch
Date |
The date on which a
scheme is first made open to the public
for subscription |
| |
|
| Liquid
Funds /Money Market Funds |
Funds investing only
in short-term money market instruments
including treasury bills, commercial
paper and certificates of deposit. The
objective is to provide liquidity and
preserve the capital. Due to the low
degree of risks available, they generally
provide lower returns than other avenues. |
| |
|
| Liquidity |
The cash and cash equivalent
assets available with a fund to meet
expenses and immediate redemption requirements
of the investors. It refers to the ability
to buy or sell an asset quickly or the
ability to convert to cash quickly. |
| |
|
| Load |
A charge that may be
levied as a percentage of NAV at the
time of entry into the Schemes or at
the time of exiting from the Schemes. |
| |
|
| Lock
In Period |
The period after investment
in fresh units during which the investor
cannot redeem the units. It is normally
a key feature of Tax schemes. |
| |
|
| 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. |
| |
|
| Nifty |
An index of prices
of a group of fifty stocks listed on
the NSE. |
| |
|
| No-Load
Mutual Fund or No-Load Scheme |
It refers to the fund
that does not charge any load for buying
or selling its units. |
| |
|
| Nominee |
The person(s) to whom
the assets should be distributed upon
the death of the account holder. |
| |
|
| Non
Performing Investments |
Part of the portfolio
investment of a debt fund which is not
making interest payment or principal
amount repayments in time. SEBI has
now evolved a valuation mechanism for
assessing them. |
| |
|
| Objective
Of Investment |
The purpose statement
consisting of the goal and the avenues
of investment released by the fund. |
| |
|
| Offer
Document or Prospectus |
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. |
| |
|
| Offering
period |
The period during which
the initial offer to subscribe for the
units of a scheme is open. |
| |
|
| Open-Ended
Fund |
Funds that do not have
any fixed maturity and are continuosly
open for subscription and redemption.
The key features is liquidity. One can
conveniently buy and sell the units
held at the NAV related price. |
| |
|
| Opening
NAV |
The NAV disclosed by
the fund for the first time after the
closure of an IPO. |
| |
|
| Offshore
Funds |
The funds set up abroad
to channelise foreign investments in
the Indian capital markets. |
| |
|
| Open |
A time period in the
trading day for the different markets
that the exchange deals in. Order entry,
matching, inquiries and other functions
at the workstation will be allowed during
this period. |
| |
|
| Open-End
Scheme |
Scheme of a mutual
fund where purchase or sale of units
is allowed on a continued basis. |
| |
|
| Optional
Distribution |
Payments (distributions)
are from either income or capital gains.
The unitholder of the fund may choose
to take both, either, or none, in cash
or additional units. |
| |
|
| Opportunity
Risk |
The risk that a better
opportunity may present itself after
you have already committed your money
elsewhere. |
| |
|
| 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. |
| |
|
| Premium |
When the market price
of a unit is more than the NAV it is
said to be trading at a premium. |
| |
|
| Public
Sector Undertakings (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. |
| |
|
| 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
Churning |
It refers to the changes
made to the portfolio keeping in view
the market conditions. It includes both
buying and selling of holdings and is
aimed at giving a better yield to the
investor. |
| |
|
| Portfolio
Managers |
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. |
| |
|
| 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. |
| |
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| RBI/
Reserve Bank of India |
Reserve Bank of India,
established under the Reserve Bank of
India Act, 1934, is the Central Bank
in India. |
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| 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. |
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| Record
Date |
The date by which mutual
fund holders are registered as unit
owners to receive any future dividend
or capital gains distribution. |
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| 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. |
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| Registrar
or Transfer Agent |
The institution that
maintains a registry of unitholders
of a fund and their unit ownership.
Normally the registrar also distributes
dividends and provides periodic statements
to unitholders. |
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| Repurchase |
Buying back/ cancellation
of the units by a fund on an ongoing
basis or for a specified period or on
maturity of a scheme. The investor is
paid a consideration linked to the NAV
of the scheme |
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| Repurchase
Date /Period |
In the case of close-ended
schemes, the specified date on which
or period during which the investor
can redeem units held by him in the
scheme before the maturity of the scheme. |
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| Repurchase
price |
The price of a unit
(net of exit load) that the fund offers
the investor to redeem his investment. |
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| Right
of Accumulation |
Right provided to the
unitholder of reduced sales charge on
the units purchased if the total number
of the units bought over a period of
time exceeds a certain pre-determined
amount. |
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| 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. |
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| 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. |
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| Redemption
fee |
A kind of sales charge,
also referred to as a back-end load,
imposed when an investor redeems, or
sells back units of the fund. |
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| Redemption
Price |
The price at which
open-ended schemes repurchase their
units and close-ended schems redeem
their units on maturity. Such prices
are NAV related. |
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| Registrar
or Transfer Agent |
Firm responsible for
maintaining register of unit holders
or shareholders. |
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| Risk-Free |
Absence of credit risk
in a security. Usually Government or
Government guaranteed securities are
only considered to be risk free. |
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| Risk
Adjusted Returns |
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. |
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| 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. |
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| Scheme
Objective |
The purpose statement
consisting of the goal and the avenues
of investment released by the fund. |
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| 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. |
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| Sector
Funds |
Sector Funds are mutual
funds that are established to focus
and invest in the stocks of specific
sectors of the economy, such as pharmaceuticals,
chemicals, or information technology.
This is normally specified in the offer
document of the funds. |
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| Security |
Generally, an instrument
evidencing debt of or equity in a corporation
in which a person invests. The term
includes notes, stocks, bonds, debentures
or other forms of negotiable and non-negotiable
evidences of indebtedness or ownership. |
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| 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 |
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| 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. |
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| Systematic
Investment Plan (SIP)/ Recurring invest |
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. |
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| Systematic
Transfer Program (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. |
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| Systematic
Withdrawal Plan (SWP)/Recurring withdra |
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. |
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| Total
Assets Under Management |
The market value of
the total investments of a fund as on
a particular date |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| Unit |
A Unit represents one
undivided share in the assets of the
Schemes. |
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| Unit
Trust |
A special type of fund,
usually a bond fund, that has a fixed
portfolio, shares or "units"
are sold when the fund is formed, and
the portfolio remains fixed until the
maturity of the underlying securities. |
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| Unitholder |
A person who holds
Unit(s) under a Mutual Fund. |
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| Value
Stocks |
Stocks that are considered
to be undervalued based upon such ratios
as price-to-book or price-to-earnings
(P/E). These stocks generally have lower
price-to-book and price-earnings ratios,
higher dividend yields and lower forecasted
growth rates than growth stocks |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
