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21 Mutual Funds Jargon Words You Must Know

Nikhila Sastry

10 Sept 2020



As an investor in Mutual Funds, it is useful to learn Mutual Funds terminologies to simplify things while you look at different mutual fund schemes. Above all, being an informed investor always pays.

It is equally important to have a goal in mind before we begin to invest. Be it buying a house, car, or retirement corpus. To plan for a goal makes it more effective

Mutual Fund is a subject as deep as an ocean. Hence, it becomes important to learn the diving signals before you take a dip.

Here is a list of mutual fund jargon that might come handy:

1. Fund Manager A Fund Manager is responsible for making decisions regarding selling and purchasing funds as per market correction and implementing the investing strategy of the AMC thus playing a critical role in the performance of the fund.

Simply put, a Fund Manager is the guy who manages the money you put into the Mutual Fund scheme.

Hence it is imperative to choose a Fund Manager carefully.

2. Volatility The dedication or dispersion of returns for a given security or market index. A rise or fall of more than 1 percent over a sustained period of time, it is called a "volatile" market.

3. Net Worth

The difference between one's assets and liabilities. It can also be thought of as the excess of returns over losses.

Alternatively, it is everything you own of significance (assets) minus what you owe in debt (liabilities).

4. Growth Funds

Funds whose objective is capital appreciation are called Growth Funds.

5. Gilt Funds Funds that invest primarily in government securities are called Gilt Funds. They fall under the debt funds category.

6. Liquid Funds

Liquid Funds are short-term debt funds that invest in fixed-interest generating money market instruments like treasury bills, commercial papers, etc with a maturity period of fewer than 91 days.

7. Bull Market

A market in which the prices of shares are in the rising trend is called the bull market. This encourages buying.

8. Bear Market

A market in which the prices of shares are in a falling trend is called the bear market. This encourages selling.

9. Portfolio

A portfolio is the collection of investments held by an investment company or an individual.

10. Systematic Investment Plan

SIP is a plan where investors make periodic payments into a mutual fund, trading account, or retirement account.

11. Holdings

Holdings are the contents of an investment portfolio held by an individual or an entity, such as a mutual fund or a pension fund.

12. Assets under management

Assets under management (AUM) measures the total market value of the investments or assets managed by a financial institution such as mutual fund, venture capital, or broker manager.

13. Rating Profile

Rating profile is a profile that represents mutual fund performance in various securities or investments is done by their rating which is basically an evaluation of their creditworthiness.

14. Nature of Scheme

The Nature of Scheme gives an insight into the investment objective of the fund house. Some schemes could aim at capital preservation while some can aim at capital growth. With different investment objectives, the investment instruments vary.

15. Exit Load

Exit load is the fee charged from an investor in case of a premature or untimely withdrawal from a scheme.

16. Entry Load

Entry load is the fee charged while you start investing in a mutual fund as a sales charge or management fee to be paid to the fund manager or fund house managing your funds.

17. Net Asset Value

The per-share value of a mutual fund is called the NAV or Net Asset Value.

18. Beta

The measure of an investment’s volatility in comparison with the market is a Beta factor. The Beta is measured on a scale of 1.

19. Minimum Subscription Amount

The minimum amount which needs to be paid in order to subscribe to a mutual fund is called Minimum Subscription Amount.

20. Yield to Maturity

YTM or yield to maturity is the anticipated rate of return of investment is held until its maturity period. YTM is shown in terms of the Annual Rate.

21. Risk Grade

Risk Grade is the quality rating of the mutual fund and is dependent on the risk of loss associated with it and is used to assess the risk-return profile of a mutual fund.


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