Glossary · 148 terms
Mutual Funds
All mutual funds terms in the EquitiesIndia.com glossary — plain-English definitions written for Indian retail investors.
Active Fund(Actively Managed Fund)
An active fund is a mutual fund where a professional fund manager and research team make deliberate stock selection and portfolio construction decisions with the objective of generating returns that exceed a designated benchmark index, after accounting for fund expenses.
Aggressive Hybrid Fund(Balanced Fund)
An Aggressive Hybrid Fund is an open-ended hybrid mutual fund that invests 65–80% of total assets in equity and equity-related instruments and 20–35% in debt instruments, blending growth potential from equities with partial stability from fixed income.
Alpha Generation in Mutual Funds(Fund Alpha)
Alpha generation in mutual funds refers to the ability of an actively managed scheme to deliver returns above its benchmark index on a risk-adjusted basis, with alpha persistence — whether outperformance is sustainable over multiple market cycles — being the central question in the active versus passive investing debate in India.
AMC(Asset Management Company)
An Asset Management Company (AMC) is a SEBI-registered entity that pools investor money, manages mutual fund schemes, and invests on behalf of unitholders according to the stated investment objective of each scheme. In India, prominent AMCs include SBI Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund, and Nippon India Mutual Fund.
AMFI(Association of Mutual Funds in India)
AMFI (Association of Mutual Funds in India) is the industry body and self-regulatory organisation for the mutual fund industry in India, established in 1995, representing all SEBI-registered Asset Management Companies and working to develop the mutual fund sector in a professional and ethical manner.
AMFI NAV Cutoff Time(NAV cutoff)
The AMFI NAV cutoff time is the regulatory deadline by which a mutual fund purchase or redemption application — along with the required cleared funds — must be received by the AMC or Registrar and Transfer Agent (RTA) for the investor to be allotted or redeemed at that day's NAV, with different cutoff times applying to liquid funds, overnight funds, and other fund categories.
Arbitrage Fund(Cash-Futures Arbitrage Fund)
An Arbitrage Fund is a hybrid mutual fund scheme that generates returns by simultaneously exploiting price differences between the cash (spot) and futures markets for the same stock, with at least 65% of its assets in equity and equity-related instruments. Despite its equity classification, it has risk-return characteristics closer to a liquid or short-duration debt fund.
AUM(Assets Under Management)
Assets Under Management (AUM) refers to the total market value of all investments managed by a mutual fund scheme or an Asset Management Company at a given point in time. As of early 2025, the Indian mutual fund industry's total AUM crossed Rs 67 lakh crore, reflecting a decade of sustained retail participation.
Balanced Advantage Fund(BAF)
A Balanced Advantage Fund (BAF) is an open-ended dynamic equity-debt hybrid mutual fund that manages its equity and debt allocation dynamically based on market valuations, with no regulatory floor or ceiling on equity exposure, allowing the fund to vary its net equity between near zero and 100%.
Banking & PSU Fund(Banking and PSU Debt Fund)
A Banking & PSU fund is an open-ended debt mutual fund that invests a minimum of 80% of its total assets in debt instruments issued by banks, public sector undertakings (PSUs), and public financial institutions (PFIs), offering investors relatively high credit quality within the debt fund universe.
Beta (Mutual Fund Context)(fund beta)
Beta in the mutual fund context measures the sensitivity of a scheme's returns to the movements of its benchmark index, with a beta of 1.0 indicating the fund moves in line with the benchmark, above 1.0 indicating amplified movements, and below 1.0 indicating dampened movements, serving as a key indicator of systematic market risk exposure relative to the benchmark.
Bonus Stripping in Mutual Funds(MF Bonus Stripping)
Bonus stripping is a tax avoidance strategy in mutual funds where an investor purchases units before a bonus unit allotment, allowing the original units' cost to be spread over a larger number of units, then sells the original (higher-cost-basis) units at a loss while retaining the bonus units, with Section 94(8) of the Income Tax Act blocking the loss claim.
CAMS (Computer Age Management Services)(CAMS RTA)
India's largest registrar and transfer agent (RTA) for mutual funds, providing back-office services including unit allotment, investor record maintenance, transaction processing, NAV dissemination, and investor servicing for approximately two-thirds of the Indian AMC industry by AUM.
Capital Protection Oriented Fund(CPOF)
A Capital Protection Oriented Fund (CPOF) is a SEBI-defined category of closed-end hybrid mutual fund scheme that seeks to protect the principal invested by allocating the majority of the corpus to high-quality debt instruments (to recover the initial investment at maturity) and the residual to equity to provide potential upside, rated mandatorily by a credit rating agency.
Capture Ratio (Mutual Funds)(upside capture)
Capture ratio in mutual fund analysis consists of the upside capture ratio and downside capture ratio, measuring respectively how much of the benchmark's gains a fund captures during rising markets and how much of the benchmark's losses a fund suffers during declining markets, with an ideal fund showing an upside capture above 100% and a downside capture below 100%.
CAS (Consolidated Account Statement)(Consolidated Account Statement)
A Consolidated Account Statement (CAS) is a single, comprehensive document issued by NSDL or CDSL that consolidates all mutual fund holdings and demat account transactions of an investor across all AMCs and depositories, linked through a common PAN, delivered monthly to investors who have transacted during that period.
Category Average Return(peer group average)
Category average return is the arithmetic mean of the net returns generated by all mutual fund schemes within a defined AMFI or SEBI category over a specified time period, used as a peer-group benchmark to assess whether a particular fund is outperforming or underperforming comparable schemes rather than just a broad market index.
Change in Fund Manager(fund manager transition)
A change in fund manager refers to the replacement of the named portfolio manager responsible for making investment decisions in a mutual fund scheme, classified as a change in fundamental attributes under SEBI regulations, requiring mandatory disclosure to unit holders and triggering a load-free exit window for investors who wish to redeem their units.
Clawback in NFO (Mutual Funds)(NFO commission clawback)
Clawback in the context of a New Fund Offer (NFO) refers to the regulatory mechanism by which upfront commissions or trail commissions paid to distributors are recovered by the AMC if the investor redeems units before a specified holding period, typically implemented to discourage churning of investor portfolios driven by commission incentives during NFO periods.
Conservative Hybrid Fund(MIP Fund)
A Conservative Hybrid Fund is an open-ended hybrid mutual fund that invests 75–90% of total assets in debt instruments and 10–25% in equity and equity-related instruments, prioritising capital preservation with a modest growth kicker from equities.
Consistency Rating (Mutual Funds)(CRISIL consistency score)
Consistency rating in mutual funds is a quantitative measure — most prominently computed by CRISIL and Value Research — that evaluates how reliably a scheme has generated superior risk-adjusted returns relative to its peers over multiple rolling time windows, rewarding funds that deliver stable above-average performance rather than erratic outperformance.
Contra Fund(Contrarian Fund)
A contra fund is an equity mutual fund that invested in stocks or sectors that were currently out of favour, unpopular, or experiencing temporary distress, based on the contrarian view that market overreaction created buying opportunities.
Credit Risk Fund(High-Yield Fund)
A credit risk fund is a debt mutual fund that invested at least 65 percent of its corpus in corporate bonds rated below the highest credit quality (AA+ and above), seeking higher yields by accepting elevated default and downgrade risk.
Direct Plan(Direct Mutual Fund)
A Direct Plan is a variant of a mutual fund scheme that investors can access by investing directly with the AMC — without going through a distributor or intermediary — resulting in a lower expense ratio and correspondingly higher NAV compared to the Regular Plan of the same scheme. SEBI mandated the creation of direct plans for all schemes effective January 1, 2013.
Direct Plan NAV vs Regular Plan NAV Divergence(Direct vs Regular NAV)
Direct plan and regular plan of the same mutual fund scheme hold identical portfolios but have different NAVs because direct plans have a lower expense ratio (no distributor commission), causing the direct plan NAV to grow faster and diverge increasingly over time, with the gap representing the cumulative cost of distribution.
Dividend Stripping in Mutual Funds(IDCW Stripping)
Dividend stripping is a tax avoidance practice where an investor purchases mutual fund units shortly before a dividend (IDCW) record date to receive the dividend at a lower tax rate and then claims a capital loss on the post-dividend NAV fall, with Section 94(7) of the Income Tax Act, 1961 introduced specifically to disallow such losses.
Dividend Yield Fund(Dividend Yield Equity Fund)
A Dividend Yield Fund is an open-ended equity mutual fund that invests a minimum of 65% of total assets in high-dividend-yielding stocks, capturing companies that distribute consistent dividends relative to their share price, which often represent mature, cash-generative businesses.
Dynamic Bond Fund(Dynamic Debt Fund)
A dynamic bond fund is an open-ended debt mutual fund that actively adjusts the portfolio's duration across the entire maturity spectrum — from short-term money market instruments to long-term government securities — based on the fund manager's interest-rate outlook.
ELSS(Equity Linked Savings Scheme)
Equity Linked Savings Scheme (ELSS) is a type of diversified equity mutual fund that qualifies for tax deduction under Section 80C of the Income Tax Act, up to Rs 1.5 lakh per year, and comes with a mandatory three-year lock-in period — the shortest among all 80C instruments. Returns are market-linked and not guaranteed.
Equity Savings Fund(ESF)
An Equity Savings Fund is an open-ended hybrid mutual fund that simultaneously holds unhedged equity (minimum 65% gross equity for tax purposes), arbitrage positions, and debt, creating a three-way structure that targets equity fund tax treatment with debt-like volatility.
ETF(Exchange Traded Fund)
An Exchange Traded Fund (ETF) is a basket of securities that tracks an index or asset class and is listed and traded on a stock exchange like NSE or BSE, just like individual shares, allowing investors to buy and sell units throughout the trading day at market prices.
Exit Load(Redemption Load)
Exit Load is a fee charged by a mutual fund scheme when an investor redeems units before a specified holding period, expressed as a percentage of the redemption amount. It is designed to discourage short-term redemptions and protect long-term investors from the transaction costs associated with high portfolio turnover.
Expense Ratio(TER)
The expense ratio is the annual fee charged by a mutual fund scheme to cover its operating costs, expressed as a percentage of the scheme's daily average net assets. SEBI caps expense ratios for equity schemes at 2.25% for the first Rs 500 crore of AUM, with the cap declining as AUM increases.
Flex SIP(Valuation-Based SIP)
A SIP variant that allows the instalment amount to vary each month based on a pre-set valuation model — typically investing more when markets are undervalued relative to historical averages and less (or nothing) when markets are expensive.
Flexi Cap Fund(Flexicap Fund)
A Flexi Cap Fund is an open-ended dynamic equity scheme required by SEBI to invest a minimum of 65% in equities across large, mid, and small cap companies without any fixed allocation to a specific market cap segment, giving fund managers complete flexibility to move across the market cap spectrum based on market conditions and valuations.
Floater Fund(Floating Rate Fund)
A floater fund is an open-ended debt mutual fund that invests a minimum of 65% of its total assets in floating-rate instruments, including fixed-rate bonds synthetically converted to floating rate through interest rate swaps, offering a natural hedge against rising interest rates.
Focused Fund(Concentrated Fund)
A focused fund is an equity mutual fund that maintained a concentrated portfolio of a maximum of 30 stocks across market capitalisations, reflecting the fund manager's highest-conviction investment ideas.
Folio Number(Mutual Fund Folio)
A folio number is a unique alphanumeric identifier assigned by an Asset Management Company to an investor at the time of the first investment in any scheme of that AMC, serving as the master account reference for all subsequent transactions across schemes of that fund house.
Franklin Templeton Debt Fund Crisis 2020(Franklin Templeton Wind-Up)
In April 2020, Franklin Templeton Mutual Fund abruptly wound up six debt schemes with a combined corpus of approximately 25,000 crore rupees, citing severe illiquidity in the credit markets, marking the first such event in Indian mutual fund history and triggering investor panic and regulatory scrutiny.
Fund House Selection Criteria(AMC Selection)
Fund House Selection Criteria is a framework investors and advisors use to evaluate Asset Management Companies (AMCs) holistically — examining factors such as track record across market cycles, investment process discipline, fund manager stability, AUM size and growth trajectory, and corporate governance — before allocating across that AMC's schemes.
Fund Manager Track Record Analysis(alpha persistence)
Fund manager track record analysis is the systematic evaluation of a mutual fund manager's investment history — including alpha generation, AUM growth, performance across market cycles, and team versus star-driven investment process — to assess whether historical outperformance is attributable to durable skill or to luck, favourable market conditions, or institutional support.
Fund of Funds(FoF)
A fund of funds (FoF) is a mutual fund scheme that invested its corpus in units of other mutual fund schemes rather than directly in stocks or bonds, providing investors access to a diversified basket of funds through a single investment vehicle.
Gilt Fund(Government Securities Fund)
A gilt fund is a debt mutual fund that invested exclusively in government securities — bonds issued by the central or state governments of India — carrying zero credit risk since the Indian government was considered the most creditworthy borrower in the domestic market.
Gold ETF(Gold Fund ETF India)
A Gold ETF (Exchange Traded Fund) is a passively managed open-ended mutual fund scheme that invests in standard gold bullion of 99.5% purity, with each unit representing approximately 1 gram of gold, listed and traded on NSE and BSE just like an equity share, providing investors with electronic gold exposure without physical storage.
Growth Option(Growth Plan)
The Growth Option is a dividend reinvestment variant of a mutual fund scheme where any income earned or profits realised by the fund are not distributed to investors but instead retained within the scheme, causing the NAV to compound over time. It is the most common choice for long-term wealth creation investors.
Hybrid Fund(Balanced Fund)
A Hybrid Fund is a mutual fund scheme that invests in a combination of equity and debt instruments, aiming to provide growth through equity exposure and stability through debt allocation. SEBI defines multiple hybrid sub-categories based on the equity-debt allocation range, including Conservative Hybrid, Balanced Hybrid, Aggressive Hybrid, and Dynamic Asset Allocation funds.
IDCW Option(IDCW)
IDCW, which stands for Income Distribution cum Capital Withdrawal, is the mutual fund option (formerly called the Dividend option) where the scheme periodically distributes a portion of its profits or capital to investors as payouts, causing the NAV to fall by the distribution amount on the record date. SEBI renamed the Dividend option to IDCW in October 2021 to reflect that distributions can include return of capital.
Index Fund(Passive Fund)
An Index Fund is a passively managed mutual fund scheme that replicates the composition and weightage of a specific market index — such as Nifty 50 or Sensex — by holding the same securities in the same proportions, aiming to deliver returns in line with the index rather than outperforming it.
Information Ratio(IR)
The Information Ratio measures the excess return of a portfolio over its benchmark per unit of active risk (tracking error), quantifying the consistency and efficiency of a fund manager's active bets relative to the index.
International Fund(Global Fund)
An international fund is a mutual fund scheme that invested all or a significant portion of its corpus in equity or other securities listed on foreign stock exchanges, allowing Indian investors to participate in global markets without directly opening overseas brokerage accounts.
Investor Protection Fund (MF)(IPEF MF)
The Investor Protection and Education Fund (IPEF) in the context of mutual funds is the SEBI-administered corpus funded by unclaimed dividends and redemption amounts remaining in mutual fund folios beyond a prescribed period, used to protect investor interests, fund investor education initiatives, and ensure that dormant amounts are preserved for eventual legitimate claimants rather than reverting to the AMC.
Jensen Alpha(Jensen's Alpha)
Jensen Alpha measures the excess return a portfolio generates above or below what would be predicted by the Capital Asset Pricing Model (CAPM) given its beta, providing a theoretically grounded measure of the value added or destroyed by active fund management.
KFintech (Karvy Fintech)(KFin Technologies)
India's second-largest registrar and transfer agent (RTA) for mutual funds — formerly known as Karvy Fintech after its separation from Karvy Stock Broking — providing unit registry, transaction processing, and investor servicing for approximately one-third of Indian AMC industry assets.
KIM (Key Information Memorandum)(Key Information Memorandum)
A Key Information Memorandum (KIM) is a concise, standardised summary document published by a mutual fund AMC for each scheme, containing the most essential information about the fund in a compact format prescribed by SEBI, and mandatorily accompanying every application form for investment in the scheme.
Large & Mid Cap Fund(Large and Mid Cap Fund)
A Large & Mid Cap Fund is an open-ended equity mutual fund that invests a minimum of 35% each in large-cap stocks (top 100) and mid-cap stocks (101st–250th by market capitalisation), providing a blend of stability from large-caps and growth potential from mid-caps.
Large Cap Fund(Large Cap Equity Fund)
A Large Cap Fund is an open-ended equity mutual fund scheme that must invest a minimum of 80% of its assets in equity and equity-related instruments of large cap companies — defined by SEBI as the top 100 companies by full market capitalisation, ranked by AMFI — offering relatively stable equity exposure.
Liquid Fund(Liquid Debt Fund)
A Liquid Fund is an open-ended debt mutual fund scheme that invests in money market instruments and debt securities with a residual maturity of up to 91 days, offering high liquidity, relatively stable returns, and next-day redemption proceeds. SEBI mandates that liquid funds cannot invest in illiquid assets exceeding specified limits.
Long Duration Fund(Long-Term Debt Fund)
A long duration fund is an open-ended debt mutual fund with a portfolio Macaulay duration greater than 7 years, primarily investing in long-dated government securities and high-rated bonds, making it highly sensitive to interest rate movements.
Lumpsum vs SIP (Quantitative)(SIP vs lumpsum)
The lumpsum versus SIP comparison evaluates two distinct modes of investing in mutual funds — deploying a large sum at once versus investing fixed amounts at regular intervals — using quantitative metrics such as rolling returns, internal rate of return (XIRR), and probability of positive outcomes across different market cycles to determine which approach generates superior risk-adjusted wealth creation.
Maximum Drawdown (Mutual Fund)(MDD mutual fund)
Maximum drawdown in a mutual fund context is the largest peak-to-trough decline in a scheme's net asset value (NAV) over a specified historical period, expressed as a percentage, measuring the worst loss an investor who entered at the peak and exited at the subsequent trough would have experienced, serving as a critical stress-test and tail-risk indicator.
Medium Duration Fund(Medium Term Fund)
A medium duration fund is an open-ended debt mutual fund with a portfolio Macaulay duration of 3 to 4 years, bridging the gap between short duration and long duration funds and carrying moderate-to-significant interest rate sensitivity.
MF Central(MFCentral)
A joint investor servicing platform launched by CAMS and KFintech — the two dominant RTAs in India — providing a single login for investors to view, transact, and manage mutual fund investments across all AMCs serviced by both RTAs, without needing separate logins for each fund house.
Micro SIP(₹100 SIP)
A SIP with a minimum instalment amount as low as ₹100 to ₹500, designed to enable financial inclusion by allowing first-time investors with limited disposable income — including students, gig workers, and rural savers — to participate in mutual funds.
Mid Cap Fund(Mid Cap Equity Fund)
A Mid Cap Fund is an open-ended equity mutual fund scheme required by SEBI to invest a minimum of 65% of its assets in mid cap companies — defined as those ranked 101st to 250th by full market capitalisation as per AMFI — offering potentially higher long-term returns than large-cap funds at higher volatility.
Money Market Fund(MM Fund)
A money market fund is an open-ended debt mutual fund that invests exclusively in money market instruments with a maximum maturity of up to one year, including treasury bills, commercial paper, certificates of deposit, and collateralised borrowing and lending obligations (CBLOs).
Multi Cap Fund(Multicap Fund)
A Multi Cap Fund is an open-ended equity mutual fund that must invest a minimum of 25% each in large-cap, mid-cap, and small-cap stocks, ensuring diversified exposure across all market capitalisation segments with no segment being overwhelmingly dominant.
Multi-Asset Fund(Multi-Asset Allocation Fund)
A multi-asset fund is a mutual fund scheme that mandatorily invested in at least three asset classes — such as equity, debt, and gold — with a minimum allocation of at least 10 percent in each, providing built-in diversification within a single fund.
Mutual Fund Distribution Channels(MF Distribution)
Mutual Fund Distribution Channels refer to the various pathways through which investors can purchase and manage mutual fund units in India — including direct investment through AMC platforms, registered mutual fund distributors (MFDs), banks, online fintech platforms, and SEBI-registered investment advisors — each with different cost structures, advisory models, and regulatory classifications.
Mutual Fund Distributor (MFD)(MFD)
A Mutual Fund Distributor (MFD) is an entity or individual registered with AMFI holding a valid ARN (AMFI Registration Number), authorised to distribute mutual fund schemes to investors through the regular plan route, earning upfront and/or trail commissions from AMCs.
Mutual Fund Exit Strategy(When to Redeem Mutual Fund)
A Mutual Fund Exit Strategy is a pre-defined framework for determining when and how to redeem mutual fund investments, anchored to financial goals, time horizons, and valuation context rather than to short-term market movements or emotional reactions to interim NAV fluctuations.
Mutual Fund Expense Impact Calculator(Expense Ratio Calculator)
A Mutual Fund Expense Impact Calculator is a financial planning tool that illustrates the long-term drag on corpus caused by annual expense ratios, demonstrating through compounding arithmetic how even small differences in TER between a regular plan and a direct plan, or between an active fund and a passive index fund, can compound into lakhs of rupees of difference over a multi-decade investment horizon.
Mutual Fund Factsheet(Fund Factsheet)
A mutual fund factsheet is a monthly disclosure document published by each AMC, typically by the tenth of the following month, that summarises each scheme's portfolio holdings, sector allocation, top-10 stocks, key performance metrics, fund manager commentary, and statistical risk-return measures, serving as the primary source of post-investment monitoring data.
Mutual Fund Industry Overview (India)(MF industry India)
India's mutual fund industry has grown from ₹7 lakh crore AUM in 2014 to over ₹60 lakh crore by 2024, driven by financialisation of savings, SIP adoption, digital distribution, and SEBI's rationalisation of fund categories — making it one of the fastest-growing fund industries globally.
Mutual Fund Industry Statistics India(India MF Industry Data)
Mutual Fund Industry Statistics India refers to the key quantitative indicators tracking the size, growth, and depth of the Indian mutual fund industry — including total AUM, SIP monthly flows, number of folios, and category-wise asset distribution — published monthly by AMFI and providing insight into the pace of financial intermediation in India.
Mutual Fund KYC(MF KYC)
The Know Your Customer verification process mandated by SEBI for all mutual fund investors, conducted through SEBI-registered KYC Registration Agencies (KRAs) such as CAMS KRA and KFintech KRA, with PAN as the primary identifier and video KYC as a digital onboarding option.
Mutual Fund Merger Impact on Investors(Fund Merger)
Mutual Fund Merger Impact on Investors describes the process, NAV adjustment mechanics, tax implications, and practical considerations for unit holders when SEBI approves the merger of one mutual fund scheme into another — an event that can alter the investor's portfolio risk profile, fund manager, and investment mandate without triggering immediate tax liability under specific conditions.
Mutual Fund NAV Calculation Methodology(NAV Formula)
Mutual Fund NAV Calculation Methodology explains how the Net Asset Value of a mutual fund scheme is computed daily — dividing the total market value of all securities held in the portfolio (less liabilities) by the number of units outstanding — and the valuation principles applied to different asset classes including equities, bonds, and money market instruments.
Mutual Fund Nominee(MF nomination)
A mutual fund nominee is a person designated by the unit holder(s) of a mutual fund folio to receive the units or redemption proceeds in the event of the unit holder's death, with SEBI mandating nomination for all individual folios opened on or after a specified date and enabling a simplified transmission process that bypasses lengthy legal succession procedures.
Mutual Fund Overlap Analysis(fund overlap)
Mutual fund overlap analysis is the process of identifying the degree to which two or more mutual fund schemes hold the same underlying securities, expressed as a percentage of overlapping stocks or bonds relative to the combined portfolio, helping investors assess whether multiple funds in their portfolio provide genuine diversification or simply replicate each other at a higher combined cost.
Mutual Fund Risk Metrics Overview(Fund Risk Metrics)
Mutual Fund Risk Metrics Overview is a combined reference covering the five primary quantitative risk measures — standard deviation, beta, Sharpe ratio, Sortino ratio, and maximum drawdown — used to evaluate the risk-adjusted performance of a mutual fund scheme, helping investors distinguish between funds that merely delivered high returns versus those that delivered superior returns relative to the level of risk accepted.
Mutual Fund SID(SID)
A Scheme Information Document (SID) is a comprehensive offer document published by an Asset Management Company (AMC) for each mutual fund scheme, providing complete details of the scheme's investment objective, strategy, benchmark, fund manager, risk factors, costs, and all regulatory disclosures required by SEBI.
Mutual Fund Statement (CAS vs AMC Statement)(Consolidated Account Statement)
The official record of mutual fund holdings and transactions issued either as a Consolidated Account Statement (CAS) covering folios across all AMCs linked to a single PAN, or as an individual AMC statement for a specific fund house — with CAS generated jointly by CAMS and KFintech via NSDL/CDSL infrastructure.
Mutual Fund Taxation 2024 (Post-Budget)(MF tax 2024)
The Union Budget 2024 overhauled mutual fund taxation in India by raising short-term capital gains (STCG) tax on equity-oriented funds from 15% to 20%, raising long-term capital gains (LTCG) tax from 10% to 12.5% while retaining the Rs 1.25 lakh LTCG exemption (up from Rs 1 lakh), and definitively confirming that debt mutual funds invested after April 1, 2023 are taxed at slab rates without indexation benefit.
Mutual Fund Taxation for NRIs(NRI mutual fund tax)
Mutual fund taxation for Non-Resident Indians (NRIs) involves specific TDS (Tax Deducted at Source) obligations on capital gains, applicability of Double Taxation Avoidance Agreements (DTAA) for residents of treaty countries, and Section 196A provisions governing deduction rates — creating a tax framework materially different from that applicable to resident Indian investors.
Mutual Fund Transmission(MF unit transmission)
The process of transferring mutual fund units from a deceased investor's folio to a nominee or legal heir, governed by SEBI and AMFI guidelines, with distinct procedures for registered nominees versus transmission to legal heirs through succession documents.
Mutual Fund vs Direct Stock Investing(MF vs Stock Picking)
Mutual Fund vs Direct Stock Investing is a comparative analysis of the two primary equity investment approaches available to Indian retail investors, examining the trade-offs across effort, skill requirements, time commitment, diversification, cost structure, and tax treatment to help investors determine which approach or combination suits their profile.
Mutual Fund vs PMS vs AIF(MF vs PMS vs AIF)
Mutual Fund vs PMS vs AIF is a product-comparison framework that helps investors understand the structural, regulatory, and eligibility differences among three professionally managed pooled or segregated investment vehicles available in India — Mutual Funds regulated under SEBI MF Regulations, Portfolio Management Services regulated under SEBI PMS Regulations, and Alternative Investment Funds regulated under SEBI AIF Regulations.
NAV(Net Asset Value)
Net Asset Value (NAV) is the per-unit market value of a mutual fund scheme, calculated by dividing the total net assets of the scheme by the number of outstanding units. In India, SEBI mandates that AMCs publish the NAV of all open-ended schemes by 11 PM on every business day.
New Fund Offer Premium(NFO misconception)
The New Fund Offer (NFO) premium misconception refers to the widespread but incorrect belief among retail investors that purchasing units of a new mutual fund at the standard ₹10 NAV is cheaper or better value than purchasing units of an existing fund with a higher NAV, when in reality the entry NAV has no bearing on future returns.
New Fund Offer vs Existing Fund(NFO vs existing scheme)
The comparison between a New Fund Offer (NFO) and an existing mutual fund scheme addresses the common misconception that an NFO priced at Rs 10 per unit is inherently cheaper than an existing fund with NAV of Rs 500, when in fact the NAV price is irrelevant to future returns — only the portfolio quality, fund manager capability, and investment mandate determine performance outcomes.
NFO(New Fund Offer)
A New Fund Offer (NFO) is the initial launch of a new mutual fund scheme by an AMC, during which units are offered to investors at a fixed price — typically Rs 10 per unit — for a specified subscription period before the scheme is closed and units begin being issued at NAV.
Overnight Fund(Overnight Debt Fund)
An Overnight Fund is an open-ended debt mutual fund scheme that invests exclusively in overnight securities — instruments maturing the next business day — making it the lowest risk debt category with virtually no credit risk, no interest rate risk, and high liquidity.
Passive Fund(Index Fund)
A passive fund is a mutual fund or ETF that replicates the composition and weightings of a specified market index — such as the Nifty 50, Nifty 500, or Nifty Next 50 — without active stock selection, aiming to deliver returns that closely mirror the index's performance before fees.
Pause SIP Facility(SIP Pause)
The pause SIP facility allows investors to temporarily suspend their Systematic Investment Plan instalments for a period of one to three months without cancelling the SIP mandate, after which the SIP resumes automatically, providing flexibility during temporary financial stress without the administrative burden of SIP cancellation and fresh registration.
Perpetual SIP(Ongoing SIP)
A perpetual SIP is a Systematic Investment Plan registered without a specified end date, continuing indefinitely until the investor explicitly cancels or modifies it, requiring a valid auto-debit or e-mandate from the bank that must be renewed as per NPCI guidelines, and representing the recommended setup for long-term wealth accumulation.
Point-to-Point Returns(PTP Returns)
Point-to-point returns measure the percentage gain or loss of a mutual fund investment between two specific dates — the investment date and the redemption date — expressed as an absolute return or annualised as CAGR for periods exceeding one year.
Portfolio Turnover Ratio (Mutual Funds)(PTR)
The portfolio turnover ratio of a mutual fund measures how frequently the fund manager replaces the scheme's holdings over a one-year period, calculated as the lesser of total purchases or total sales divided by the average AUM, expressed as a percentage, with high turnover generally indicating higher transaction costs and potential tax drag.
Quarter-End Window Dressing (Mutual Funds)
Quarter-end window dressing in mutual funds referred to the practice of fund managers adjusting portfolio holdings near the close of March, June, September, and December to improve the appearance of their disclosed portfolio — buying recent outperformers and trimming laggards before the mandatory monthly or quarterly portfolio disclosure to AMFI and unitholders.
Quartile Ranking (Mutual Funds)(Q1 fund ranking)
Quartile ranking is a performance classification system that divides all mutual fund schemes within a category into four equal groups — Q1 (top 25%), Q2 (second quartile), Q3 (third quartile), and Q4 (bottom 25%) — based on risk-adjusted or absolute returns over a defined period, enabling investors to identify consistently top-performing schemes relative to peers.
Redemption Pressure (Mutual Funds)(fund outflow pressure)
Redemption pressure in mutual funds refers to the operational and market-impact challenge that arises when a scheme faces large-scale or concentrated outflows in a short period, forcing the fund manager to liquidate portfolio holdings — potentially at unfavourable prices — to meet redemption obligations, with the risk that remaining unit holders bear the cost through lower NAV or impaired portfolio quality.
Registered Investment Adviser vs Mutual Fund Distributor(RIA vs MFD)
SEBI's 2013 Investment Advisers Regulations created a formal segregation between Registered Investment Advisers (RIAs), who charge clients a fee for advice and cannot earn distribution commissions, and Mutual Fund Distributors (MFDs), who earn commissions from AMCs and cannot charge clients advisory fees.
Regular Plan(Regular Mutual Fund)
A Regular Plan is a variant of a mutual fund scheme sold through distributors, brokers, and banks, where the AMC pays a trail commission to the intermediary from the scheme's assets, resulting in a higher expense ratio and lower NAV compared to the Direct Plan of the same scheme.
Riskometer(fund risk label)
The Riskometer is a SEBI-mandated graphical risk labelling tool displayed on every mutual fund scheme document, classifying the scheme into one of five risk levels — Low, Low to Moderate, Moderate, Moderately High, and High, with Very High added subsequently — to help investors quickly gauge the risk profile of a fund before investing.
Rolling Returns(Rolling Period Returns)
Rolling returns are a series of return calculations computed over a fixed time window (e.g., 1 year, 3 years, or 5 years) starting from every day (or month) within a historical data set, capturing the distribution of returns an investor would have experienced depending on when they invested.
Scheme Categorisation (SEBI 2017)(SEBI categorisation)
SEBI's October 2017 scheme categorisation and rationalisation circular mandated that each AMC may offer only one open-ended scheme per defined investment category across 36 prescribed categories for equity, debt, and hybrid funds, fundamentally restructuring the Indian mutual fund product landscape by eliminating redundant schemes and creating standardised fund types with clear portfolio mandates.
Scheme Merger (Mutual Funds)(fund merger)
A mutual fund scheme merger is the process by which an Asset Management Company (AMC) consolidates two or more existing schemes into a single surviving scheme, typically to eliminate redundant offerings, reduce costs, simplify the product lineup, or comply with SEBI's one-scheme-per-category mandate, subject to regulatory approvals and unit holder exit options.
SEBI Mutual Fund Regulations Overview(MF Regulations India)
SEBI Mutual Fund Regulations Overview summarises the key provisions of the SEBI (Mutual Funds) Regulations, 1996 and its subsequent amendments — covering the trust and AMC structure, scheme categorisation, TER caps, disclosure requirements, and investor protection mechanisms that govern how Indian mutual funds are constituted, managed, and monitored.
Sectoral and Thematic Fund(Sectoral Fund)
Sectoral and thematic funds are equity mutual funds that concentrated at least 80 percent of their portfolio in stocks belonging to a specific sector (such as banking or pharma) or a broader investment theme (such as consumption, infrastructure, or ESG), as defined by SEBI's mutual fund categorisation framework.
Sharpe Ratio in Mutual Fund Context(Sharpe Ratio MF)
In the mutual fund context, the Sharpe ratio measures the excess return earned by a scheme over the risk-free rate (typically the 91-day T-bill yield) per unit of total risk (standard deviation of returns), most meaningfully evaluated on a rolling 3-year basis and used to compare funds within the same category rather than across categories.
Short Duration Fund(Short-Term Debt Fund)
A short duration fund is an open-ended debt mutual fund with a portfolio Macaulay duration of 1 to 3 years, designed for investors seeking better yields than money market or ultra short duration funds with moderate exposure to interest rate risk.
SID vs KIM: Scheme Information Document and Key Information Memorandum(KIM)
The Scheme Information Document (SID) is a comprehensive legal and regulatory disclosure document for a mutual fund scheme, while the Key Information Memorandum (KIM) is a concise, investor-friendly summary that must accompany every application form, both mandated by SEBI to ensure adequate investor disclosure.
Side Pocketing in Mutual Funds(Segregated Portfolio)
Side pocketing is a mechanism introduced by SEBI in December 2018 that allows mutual fund schemes to segregate distressed or defaulted debt securities into a separate portfolio, protecting continuing investors from being disadvantaged while ensuring that proceeds from recovery of the segregated assets are distributed proportionately to all investors who held units at the time of the credit event.
Silver ETF(Silver Fund ETF India)
A Silver ETF is a passively managed exchange-traded fund that invests in physical silver of 99.9% purity, with SEBI permitting the launch of Silver ETFs in India from November 2021, enabling investors to gain silver price exposure through a regulated, demat-held instrument traded on Indian stock exchanges.
SIP(Systematic Investment Plan)
A Systematic Investment Plan (SIP) is a method of investing a fixed amount in a mutual fund scheme at regular intervals — typically monthly — allowing investors to build wealth gradually through disciplined, automated contributions. AMFI data showed SIP inflows reached over Rs 26,000 crore per month in early 2025, reflecting its mass adoption in India.
SIP Book Growth (India)
India's SIP (Systematic Investment Plan) book has grown from under ₹3,000 crore per month in 2016 to over ₹20,000 crore per month by 2024 — representing a structural shift in household savings from bank deposits and gold to equity-linked mutual funds through disciplined monthly contributions.
SIP Cancellation Process(SIP termination)
The operational procedure through which an investor terminates an active SIP mandate, involving submission of a cancellation request to the AMC or RTA and a separate NACH cancellation instruction to the investor's bank, with specific timelines governing when the cancellation takes effect.
SIP Frequency (Monthly vs Weekly vs Daily)(SIP Frequency Comparison)
SIP Frequency refers to the interval at which systematic investment plan instalments are deducted and invested — monthly, weekly, or daily — and the evidence-based analysis of whether higher frequency improves rupee-cost averaging outcomes meaningfully or whether the difference is statistically negligible over long investment horizons.
SIP Insurance(SIP with life cover)
A complimentary term life insurance cover offered by select AMCs to investors enrolled in eligible SIPs, where the cover amount is a multiple of the annual SIP instalment and typically increases with tenure — providing a life protection component bundled with the investment mandate.
SIP Return vs Lumpsum Return(SIP vs Lumpsum)
SIP Return vs Lumpsum Return compares the two most common mutual fund investment modes — systematic investment plan and one-time lumpsum — by examining the appropriate return calculation method for each (XIRR for SIP and CAGR for lumpsum), and the historical circumstances under which each mode has tended to outperform the other.
SIP Top-Up(Step-Up SIP)
A facility that automatically increases a SIP instalment amount by a fixed sum or percentage at a pre-set frequency — typically annually — so that investments grow in line with rising income without manual intervention.
Small Cap Fund(Small Cap Equity Fund)
A Small Cap Fund is an open-ended equity mutual fund scheme required by SEBI to invest a minimum of 65% of its assets in small cap companies — defined as those ranked 251st and below by full market capitalisation as per AMFI — offering the highest long-term return potential in the equity fund universe but also the highest volatility and liquidity risk.
Smart SIP and Value Averaging(Flex SIP)
A Smart SIP (also called a flex SIP or value averaging plan) is a variant of the standard Systematic Investment Plan where the monthly instalment amount is not fixed but varies inversely with market valuations or index levels — investing more when markets are lower and less when markets are higher — with the goal of improving cost averaging outcomes.
Solution Oriented Fund(Retirement Fund)
A Solution Oriented Fund is a SEBI-defined category of mutual fund designed to address specific financial life goals — retirement planning or children's future — with a mandatory lock-in period of 5 years or until the investor reaches retirement age or the child attains majority, whichever is earlier.
Sortino Ratio(Sortino)
The Sortino Ratio is a risk-adjusted performance metric that measures a portfolio's excess return over the minimum acceptable return (MAR) per unit of downside deviation, penalising only negative volatility rather than total volatility as the Sharpe Ratio does.
Stamp Duty Impact on SIP(SIP stamp duty)
The stamp duty on mutual fund transactions, introduced at 0.005% on purchase transactions (including SIP instalments) effective July 1, 2020 under an amendment to the Indian Stamp Act, 1899, represents a small but permanent drag on compounding returns for systematic investors, with its long-term impact amplifying over decades due to the mathematics of compounding on reduced principal.
Stamp Duty on Mutual Funds(MF Stamp Duty)
Stamp duty on mutual funds is a levy of 0.005% on the purchase amount of mutual fund units, introduced effective 1 July 2020 under the amended Indian Stamp Act, 1899, applicable to all purchase and switch-in transactions including SIP instalments, and deducted by the AMC before unit allotment.
Standard Deviation (Mutual Fund Context)(fund volatility)
Standard deviation in the mutual fund context is the statistical measure of the dispersion of a scheme's monthly or annual returns around its mean return over a trailing period, typically three years, serving as the primary indicator of a fund's historical volatility and enabling comparison of how much return variability investors accept relative to the average outcome.
STP(Systematic Transfer Plan)
A Systematic Transfer Plan (STP) is a facility that allows an investor to automatically transfer a fixed or variable amount from one mutual fund scheme to another within the same AMC at regular intervals. It is commonly used to gradually shift a lump sum from a liquid or debt fund into an equity fund, reducing timing risk.
Swing Pricing in Mutual Funds(NAV Swing)
Swing pricing is an NAV adjustment mechanism where the AMC shifts the transaction price for large-flow days — applying a 'swing factor' to the fund's NAV — to allocate transaction costs (market impact and bid-ask spreads incurred on large redemptions or purchases) to the investors who triggered those flows, rather than diluting returns for the entire investor base.
Switch Transaction(Fund Switch)
A switch transaction in mutual funds is an instruction to redeem units from one scheme and simultaneously invest the proceeds in another scheme of the same AMC, processed at the respective NAVs on the transaction date, and treated as a taxable redemption event for capital gains purposes.
SWP(Systematic Withdrawal Plan)
A Systematic Withdrawal Plan (SWP) is a facility that allows a mutual fund investor to redeem a fixed amount from their scheme at regular intervals — monthly, quarterly, or otherwise — providing a structured cash flow from accumulated investments. It is widely used by retirees in India as an alternative to annuity products.
Systematic Equity Plan — Broker Route vs AMC Route(stock SIP)
A Systematic Equity Plan (SEP) offered through brokers routes periodic investments into a self-managed basket of individual equity stocks in a demat account, while the AMC-route variant — offered through Portfolio Management Services (PMS) — places the recurring investments into a manager-curated equity strategy, with the two routes differing in minimum investment, regulatory oversight, tax reporting complexity, and cost structure.
Systematic Equity Plan (SEP)(SEP)
A Systematic Equity Plan (SEP) is a product offered by some stockbrokers and investment platforms — not directly by mutual fund AMCs — that automates the periodic purchase of a basket of individual equities or ETFs akin to an SIP in mutual funds, allowing investors to dollar-cost-average into direct stock portfolios rather than fund schemes.
Systematic Transfer Plan (Detailed Mechanics)(STP Mechanics)
A Systematic Transfer Plan (STP) is a facility offered by AMCs that allows an investor to automatically transfer a fixed or variable amount from one scheme (the source scheme) to another scheme (the target scheme) of the same AMC at regular intervals, commonly used to deploy lump sums into equity funds in a staggered manner.
Target Maturity Fund(TMF)
A target maturity fund is a passively managed open-ended debt mutual fund that holds a portfolio of bonds maturing on or before a specified target date, offering investors predictable returns if they remained invested until that date.
TER Breakdown (Total Expense Ratio Components)(TER Components)
The Total Expense Ratio (TER) of a mutual fund scheme is composed of multiple sub-components including the investment management fee, registrar and transfer agent charges, custodian charges, audit fees, marketing and distribution expenses, and other miscellaneous costs, each subject to SEBI-mandated sub-limits within the overall TER cap.
Total Return Index (MF Benchmarking)(TRI benchmarking)
In the context of mutual fund benchmarking, the Total Return Index (TRI) is the SEBI-mandated benchmark format that includes dividend reinvestment in addition to price changes, replacing the Price Return Index (PRI) from February 2018 to ensure a fair and complete comparison of fund performance against the benchmark by accounting for all income generated by the index constituents.
Tracking Difference(TD)
Tracking difference is the divergence between an index fund or ETF's actual return over a given period and the return of its benchmark index during the same period, serving as a more comprehensive measure of fund cost and execution quality than tracking error, which only measures the volatility of the divergence.
Tracking Error(Active Risk)
Tracking Error measures the deviation between the returns of an index fund or ETF and the returns of its benchmark index over a given period, expressed as the annualised standard deviation of the return difference. A lower tracking error indicates that the fund more faithfully replicated the benchmark's performance.
Treynor Ratio(Treynor Index)
The Treynor Ratio measures a portfolio's excess return over the risk-free rate per unit of systematic risk (beta), rewarding fund managers specifically for bearing market risk and ignoring unsystematic (diversifiable) risk.
TRI vs PRI Benchmarking in Mutual Funds(TRI Benchmark)
SEBI mandated in 2018 that all actively managed mutual fund schemes benchmark their performance against a Total Return Index (TRI) — which includes dividend reinvestment — rather than a Price Return Index (PRI), making fund performance comparison more accurate and raising the alpha bar for active fund managers.
Trigger Facility in Mutual Funds(Auto Switch Trigger)
A trigger facility is an automated instruction registered with an AMC that initiates a switch, redemption, or STP when a specified pre-set condition is met — such as the scheme's NAV reaching a target level, portfolio appreciation reaching a percentage threshold, or an index level being breached — a feature that many AMCs have since discontinued or restricted.
Trigger SIP(Market-fall SIP)
A conditional SIP variant that activates an additional investment instalment only when a specified market condition — such as the index falling by a defined percentage — is met, allowing investors to systematically deploy more capital during market corrections.
Ultra Short Duration Fund(Ultra Short Fund)
An ultra short duration fund is an open-ended debt mutual fund with a portfolio Macaulay duration of 3 to 6 months, positioned between liquid/money market funds and short duration funds on the risk-return spectrum.
Unclaimed Mutual Fund Amount(dormant folio MF)
Redemption proceeds or dividend payouts that remain unclaimed by investors due to incorrect bank details, dormant folios, or untraced investors, governed by SEBI circulars requiring AMCs to transfer such amounts to AMFI-administered accounts after a specified period and publish dormant folio data.
Upfront vs Trail Commission (Mutual Funds)(trail commission)
Upfront commission in mutual funds was a one-time payment made by the AMC to the distributor at the time of investor subscription, while trail commission is an ongoing annual payment (typically expressed as basis points of AUM) paid as long as the investor remains invested — SEBI banned upfront commissions in September 2018, mandating a trail-only model to align distributor incentives with long-term investor interests.
Value Fund(Value Investing Fund)
A value fund is an equity mutual fund that followed a value investing philosophy, seeking to invest in stocks trading below their intrinsic or fair value as determined by fundamental analysis, with the expectation that the market would eventually recognise and correct the undervaluation.
XIRR(Extended Internal Rate of Return)
XIRR (Extended Internal Rate of Return) is a financial function that calculates the annualised rate of return for a series of cash flows — investments and redemptions — occurring at irregular time intervals, making it the correct metric for measuring the actual return earned by a mutual fund investor through SIPs, STPs, or partial withdrawals.