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Mutual Fund - Glossary

Mutual Fund - Fillable Forms

Benefit of Use of Fillable Forms -

  1. No risk of wrong records due to illegible or unclear filled forms
  2. They are free from cutting & overwriting which may create problem at the time of redemption

Understanding various terms of Mutual Fund (MF)

What is Mutual fund and why to invest in Mutual Fund

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L

liquid funds / money market funds

Funds investing in short-term money market instruments including treasury bills, commercial paper and certificates of deposit.

liquidity

The cash and cash equivalent assets available with a fund to meet expenses and immediate redemption requirements of the investors.

listing

The process of registration with the stock exchanges after which the stock qualifies for trading on a stock exchange. All close-ended schemes, with few exceptions, of a mutual fund are generally listed on a stock exchange. There are also a few open-ended schemes which have been listed on the stock exchange.

load

The fee charged by the fund either at the time the investor buys into the fund (entry load) or when he redeems his units (exit load). Funds that charge these loads at the time of entry or exit are called load funds. It amounts to the difference between the any of the units of a scheme and the price at which new units are allotted on fresh investments or existing units are redeemed. Though the load is decided by the AMC, it has to fall within the overall limit laid down by SEBI schemes that do not charge any load and are called "no-load" schemes.

lock in period

The period after investment in fresh units during which the investor cannot redeem the units.

M

management fee / expense

Fee, within the limits laid down by sebi, charged by the AMC for managing of the mutual fund scheme.

maturity

The specified date on which the units of a close-ended scheme are due for redemption.

maximum repurchase / withdrawal

A time frame decided by the fund beyond which the fund will not entertain any application for redemption of units. This could be a day or a week or any other period.

minimum subscription

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 instruments

as defined under the sebi (MF) regulations 1996 including commercial paper, treasury bills, GOI securities with an unexpired maturity up to one year, call money, certificates of deposit and any other instrument specified by the reserve bank of India.

money market mutual funds/ liquid funds

These funds invest only in money market instruments including treasury bills, commercial paper or certificate of deposits of a very short-term maturity.

mutual funds

A mutual fund is a collection of stocks or bonds. This happens when a large number of people give their money to professionals, to manage and invest, with the aim of achieving a return. These qualified and experienced professionals invest in instruments according to the objective of the fund.

N

net asset value (nav)

The value of a unit of a scheme on any given business day. Nav reflects the market value of the fund's investments that day after accounting for all expenses.

no load schemes

Schemes where the mutual fund does not charge either an entry or exit load.

non performing investments

Part of the portfolio investment of a debt fund which is not making interest payment or principal amount repayments in time.

nifty

An index of prices of a group of fifty specified stocks listed on the NSE.

O

objective of investment

The purpose statement consisting of the goal and the avenues of investment specified by the fund in its offer document.

offer document

document by which a mutual fund invites the public for subscription to units of a scheme, and informs them of the terms & conditions for management of the scheme on a day to day basis thereafter. The document contains information about the scheme to enable a prospective investor make an informed investment decision.

offering period

The period during which the initial offer to subscribe for the units of a scheme is open.

open-ended schemes

Schemes for which a fixed date of redemption is not specified. the fund offers to sell and buy units at any time at prices linked to the prevailing nav.

P

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

The basket of investments in which the funds of a scheme are deployed.

portfolio churning

Switches between different stocks in the market, keeping in view the market conditions, in order to give unit holders a better yield.

price of units

Price offered by a mutual fund for repurchase or sale of a unit on a daily basis.

prospectus

an offer document by which a mutual fund invites the public for subscription to units of a scheme, and informs them of the terms & conditions for management of the scheme on a day to day basis thereafter. The document contains information about the scheme to enable a prospective investor make an informed investment decision.

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