If you are interested in investing in mutual funds, here are some terms you need to understand.
AMC
An Asset Management Company is the fund house or the company that manages the money.
The mutual fund is a trust registered under the Indian Trust Act. It is initiated by a sponsor.
NAV
The Net Asset Value is the price of a unit of a fund. When a fund comes out with an NFO, it is priced Rs 10. Later, depending on the value of the investments, this price could rise or fall.
Load
This is a fee that is charged when you buy or sell the units of a fund.
When you buy the units of a fund, you pay a percentage of it as a fee. This is known as the entry load.
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Portfolio
This is the term given to all the investments made by the fund as well as the amount held in cash.
Corpus
Let’s assume a mutual fund has an initial investment of 1,00 units and each unit is worth Rs 10. Hence, the total amount with the fund is Rs 10,00. This is referred to as the corpus. Later, some other investors invest Rs 2,00. Now the corpus will be Rs 12,00 (Rs 10,00 + Rs 2,00).
The total amount invested (Rs 12,00) is called the corpus or the total amount of money invested in the fund.
AUM
Assets Under Management is the total value of all the investments currently being managed by the fund.
This is a mutual fund that invests in stocks of various companies in various sectors.
ELSS
Equity Linked Saving Schemes are diversified equity mutual funds with a tax benefit under Section 80C of the Income Tax Act.
To avail of the tax benefit, your money must be locked up for at least three years.
Balanced fund
A fund that invests in both equity (shares) and debt (fixed return investments) is known as a balanced fund.
Debt fund
These are funds that invest in fixed return investments like bonds. A liquid fund is one that invests in money market instruments, these are fixed return investments of a very short tenure.
NFO
A New Fund Offering is the term given to a new mutual fund scheme.
SIP
A Systematic Investment Plan refers to periodic investing in a mutual fund. Every month or every three months, the investor will have to commit to putting in a fixed amount. This will go towards the purchase of units.
AMC
An Asset Management Company is the fund house or the company that manages the money.
The mutual fund is a trust registered under the Indian Trust Act. It is initiated by a sponsor.
NAV
The Net Asset Value is the price of a unit of a fund. When a fund comes out with an NFO, it is priced Rs 10. Later, depending on the value of the investments, this price could rise or fall.
Load
This is a fee that is charged when you buy or sell the units of a fund.
When you buy the units of a fund, you pay a percentage of it as a fee. This is known as the entry load.
---------------------------------
---------------------------------
Portfolio
This is the term given to all the investments made by the fund as well as the amount held in cash.
Corpus
Let’s assume a mutual fund has an initial investment of 1,00 units and each unit is worth Rs 10. Hence, the total amount with the fund is Rs 10,00. This is referred to as the corpus. Later, some other investors invest Rs 2,00. Now the corpus will be Rs 12,00 (Rs 10,00 + Rs 2,00).
The total amount invested (Rs 12,00) is called the corpus or the total amount of money invested in the fund.
AUM
Assets Under Management is the total value of all the investments currently being managed by the fund.
This is a mutual fund that invests in stocks of various companies in various sectors.
ELSS
Equity Linked Saving Schemes are diversified equity mutual funds with a tax benefit under Section 80C of the Income Tax Act.
To avail of the tax benefit, your money must be locked up for at least three years.
Balanced fund
A fund that invests in both equity (shares) and debt (fixed return investments) is known as a balanced fund.
Debt fund
These are funds that invest in fixed return investments like bonds. A liquid fund is one that invests in money market instruments, these are fixed return investments of a very short tenure.
NFO
A New Fund Offering is the term given to a new mutual fund scheme.
SIP
A Systematic Investment Plan refers to periodic investing in a mutual fund. Every month or every three months, the investor will have to commit to putting in a fixed amount. This will go towards the purchase of units.
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