Mutual Fund Glossary
மியூச்சுவல் ஃபண்ட் சொற்களஞ்சியம் · 37 terms explained simply, in English and Tamil
AMC (Asset Management Company)
An AMC is the company that manages a mutual fund's schemes, also called the fund house.
AMFI
AMFI (Association of Mutual Funds in India) is the industry body of all SEBI-registered mutual fund houses.
ARN (AMFI Registration Number)
An ARN is the registration number AMFI gives to a mutual fund distributor after they pass the NISM certification and complete KYD.
Asset Allocation
Asset allocation is how you divide your money between equity, debt, gold and cash, based on your goals, time horizon and risk comfort.
CAGR and XIRR
CAGR is the yearly growth rate of a one-time investment over a period.
Capital Gains Tax
When you redeem units for more than you paid, the profit is a capital gain and is taxed.
Debt Fund
A debt fund invests in bonds, government securities and money market instruments.
Direct Plan
A direct plan is bought straight from the fund house, without a distributor, so no distribution commission is included and its expense ratio is lower.
ELSS (Equity Linked Savings Scheme)
ELSS is an equity mutual fund with a 3-year lock-in.
Equity Fund
An equity fund invests mainly in company shares.
EUIN (Employee Unique Identification Number)
An EUIN is given by AMFI to each employee or sales person of a distributor who advises investors.
Exit Load
An exit load is a fee charged when you sell (redeem) units before a set period, for example 1% if redeemed within one year.
Expense Ratio (TER)
The expense ratio is the yearly cost of running a scheme, shown as a percentage of its assets.
Folio Number
A folio number is your account number with a fund house.
Growth and IDCW Options
In the growth option, gains stay invested and grow the NAV.
Hybrid Fund
A hybrid fund invests in a mix of equity and debt (and sometimes gold), in the proportion set by its category, such as aggressive hybrid, balanced advantage or multi-asset.
Index Fund and ETF
An index fund copies a market index such as the Nifty 50, holding the same shares in the same weights, so costs are low and there is no fund manager stock picking.
KYC (Know Your Customer)
KYC is the one-time check of your identity and address, using PAN, Aadhaar and other documents, needed before investing in mutual funds.
Large Cap, Mid Cap, Small Cap
SEBI groups listed companies by market value: the top 100 are large cap, 101 to 250 are mid cap, and the rest are small cap.
Liquid Fund
A liquid fund is a debt fund that invests in very short-term instruments of up to 91 days.
Lock-in Period
A lock-in period is the time during which you cannot redeem your units.
Lumpsum Investment
A lumpsum is a one-time investment of a larger amount in a scheme, instead of spreading it over months like a SIP.
Mutual Fund
A mutual fund pools money from many investors and invests it in shares, bonds or other securities, as stated in the scheme's objective.
Mutual Fund Distributor (MFD)
A mutual fund distributor is an AMFI-registered person or firm (holding an ARN) who helps investors choose schemes, complete KYC, start SIPs and track their investments.
NAV (Net Asset Value)
NAV is the price of one unit of a mutual fund scheme.
NFO (New Fund Offer)
An NFO is the first offer of a new mutual fund scheme, open for a few days, usually at ₹10 per unit.
Nominee
A nominee is the person who receives your mutual fund units if something happens to you.
Redemption
Redemption means selling your mutual fund units back to the fund house at that day's NAV.
Regular Plan
A regular plan is bought through a mutual fund distributor.
Riskometer
The riskometer is a SEBI-mandated dial on every scheme showing its risk level: Low, Low to Moderate, Moderate, Moderately High, High or Very High.
Rupee Cost Averaging
Rupee cost averaging is what happens when you invest the same amount regularly: you buy more units when the NAV is low and fewer when it is high, so your average cost per unit evens out over time.
SEBI
SEBI (Securities and Exchange Board of India) is the regulator of the securities market, including mutual funds.
SID and KIM (Scheme Documents)
The Scheme Information Document (SID) gives full details of a scheme: objective, asset allocation, risks, costs and exit load.
SIP (Systematic Investment Plan)
A SIP invests a fixed amount in a mutual fund scheme at regular intervals, usually every month, by auto-debit from your bank account.
STP (Systematic Transfer Plan)
An STP moves a fixed amount at regular intervals from one scheme to another of the same fund house, usually from a debt or liquid fund to an equity fund.
SWP (Systematic Withdrawal Plan)
An SWP takes out a fixed amount from your mutual fund investment at regular intervals, by selling units.
Units
Units are your share of a mutual fund scheme.
Need help choosing?
Talk to an AMFI-registered distributor near you. Find a distributor
This explanation is for awareness only and is not investment advice. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.