Financial Glossary – Investment Terms A-Z

The company that manages a mutual fund. Examples: HDFC AMC, SBI MF, Mirae Asset. AMCs pool investor money and invest it according to the fund's stated objective. All AMCs are regulated by SEBI.

Industry body that regulates mutual fund distributors and maintains the database of all funds. Publishes monthly SIP data, fund NAVs, and AUM figures. Visit amfiindia.com for official fund data.

Total market value of investments managed by a mutual fund or AMC. Higher AUM generally indicates investor trust. India's total MF AUM crossed ₹50 Lakh Crore in 2024.

The annual rate of return that takes compounding into account. Formula: CAGR = (Final Value/Initial Value)^(1/Years) − 1. Best metric for comparing lumpsum investment performance across different time periods.

Monthly statement sent to your email by CAMS and KFin (registrars) showing all your mutual fund holdings across all AMCs in one place. Request at camsonline.com or kfintech.com.

A mutual fund plan where you invest directly with the AMC without a distributor. Lower expense ratio (0.5-1% less than Regular Plan) because no distributor commission. Always prefer Direct Plans for long-term investing. Available on Groww, Zerodha Coin, MF Central.

A mutual fund option that periodically pays out "dividends" to investors. Important: These dividends are paid from YOUR invested corpus — the NAV falls by dividend amount. Growth Option is better for long-term investors as it lets compounding work fully.

The only mutual fund category qualifying for Section 80C tax deduction. 3-year lock-in (shortest among 80C options). Historical returns: 12-15% p.a. Tax saved: Up to ₹46,800/year at 30% slab. Best 80C investment for equity-comfortable investors.

Annual fee charged by the fund for managing your money, expressed as % of AUM. Regular Plans: 1-2%. Direct Plans: 0.1-1%. A 1% difference in expense ratio costs ₹15-20 Lakhs on a ₹10K/month SIP over 20 years.

Mutual fund that can invest in any market cap (large, mid, small) without restriction. Fund manager decides allocation based on market conditions. Generally considered the best category for retail investors with 7+ year horizon.

Unique account number assigned when you first invest with an AMC. Like a bank account number for your mutual fund holdings. All future investments with same AMC go into same folio (unless you open a new one).

Mutual fund option where no dividends are paid — all returns are reinvested and reflected in growing NAV. Best for long-term wealth creation. Opposite of Dividend Option. Most investors should choose Growth Option.

Passively managed fund that mirrors a market index (Nifty 50, Sensex). No active stock picking. Expense ratio as low as 0.05-0.2%. Over 20 years, index funds outperform 85-90% of active funds. Ideal for investors who want market returns without fund manager risk.

Tax on profits from investments held long-term. For equity MF: gains after 1 year. Tax rate: 10% on gains above ₹1 Lakh per year. For debt MF: gains after 3 years, taxed at 20% with indexation.

Investing a single large amount at once, as opposed to monthly SIP. Better when markets have corrected significantly. For regular income, SIP is more practical and removes market timing risk.

Price per unit of a mutual fund, calculated daily. NAV = (Total fund assets − Liabilities) ÷ Total units. Higher NAV is NOT more expensive — it just means the fund has been around longer. Only % returns matter, not NAV level.

Government-regulated retirement savings scheme with market-linked returns (8-12%). Additional ₹50,000 tax deduction under 80CCD(1B). At 60: 60% lumpsum (tax-free) + 40% annuity (pension). Lowest expense ratio among all investment products (0.03%).

Government savings scheme with 7.1% guaranteed tax-free returns (EEE status). 15-year minimum tenure. Maximum ₹1.5L/year. Zero risk — government backed. Best for risk-averse investors and as part of 80C strategy.

Mutual fund plan bought through a distributor/agent. Higher expense ratio (0.5-1.5% more than Direct Plan) because AMC pays distributor commission from your returns. Avoid for long-term investing — prefer Direct Plans.

The benefit of SIP where you automatically buy more units when markets fall (cheap NAV) and fewer when markets rise (expensive NAV). This averages out your purchase cost over time, reducing impact of market timing.

India's capital markets regulator. Regulates mutual funds, AMCs, distributors, and all securities. All legitimate mutual funds are registered with SEBI. Never invest in unregistered funds.

Method of investing a fixed amount in mutual funds at regular intervals (usually monthly). Auto-debit from bank account. Benefits: Rupee cost averaging, disciplined savings, no market timing needed. Minimum: ₹500/month.

Tax on profits from investments held short-term. For equity MF: gains within 1 year taxed at 15%. For debt MF: gains within 3 years added to income and taxed at slab rate.

Opposite of SIP — regularly withdrawing a fixed amount from your mutual fund corpus. Ideal for retirement income. More tax-efficient than FD interest as only gains component of each withdrawal is taxed.

Annualized return that accounts for multiple cash flows at different dates — perfect for SIP performance measurement. More accurate than CAGR for SIPs. Calculate in Excel/Sheets: =XIRR(cash flows, dates). Good equity SIP XIRR over 10 years: 12-16%.