Skip Ribbon Commands
Skip to main content
home Canara Robeco > MF Basics > pages > mf-glossary

MFGlossary

  • Annuities or Annutisation

    •A scheme or process that makes a periodic distribution of money during a specific period.

  • Annuity

    •A series of periodic payments in a specified period.

  • ASKED PRICE

    •A price at which a dealer is willing to sell a security. As regards to mutual funds, the ask or offer price equals the net asset value (NAV) plus any front-end load or charge.

  • ASSET ALLOCATION

    •A systematic process of allocating assets according to intended investment outcome and the ability of the asset to provide that. It also includes combining various types of assets so as to bring about the intended investment outcome at a minimum risk.

  • Asset Management Company (AMC)

    •An organisation that pools in money from many people. This pool is then treated as a portfolio, which is structured to achieve certain intended objectives, like investing in multinational stocks, having high growth. Since it manages a host of assets, it is termed as an Asset Management Company. The AMC then floats various types of mutual fund schemes.

  • Asset Management Fee

    •A fee charged by the asset management company (AMC) on an annual basis for portfolio management. It is calculated as percentage of net assets under management.

  • BALANCED FUND

    •A portfolio that seeks to have a balanced portfolio by investing in stocks and bonds. .

  • BID PRICE

    •A price at which a security dealer is willing to pay for a certain security. As regards to the mutual fund, the bid is usually called the redemption charge.

  • CASH FLOW FUND

    •New unit holder's money flowing into a fund. Analysts are of the opinion that a portfolio having consistent cash inflows has an edge.

  • Cheque-writing privilege

    •A service enabling investors to write cheques against their mutual fund account balances.

  • CLOSED-END FUND

    •A fund that is open to subscription for a specified period. It then gets listed on the stock exchange and can be bought or sold there. After a specific period, mentioned in the offer letter, the scheme redeems the money back to unit holders.

  • COMMERCIAL PAPER

    •A money-market instrument that is short-term in nature and is issued by large, creditworthy corporations.

  • Company risk

    •The danger that some misfortune such as a lawsuit or accident or poor earnings may hit the company.

  • COUNTRY RISK

    •A risk faced by international investors that the nation in which they have invested would suffer severe socio-economic, political problems or even natural disasters. And these perils will cause a loss in the value of investments.

  • Credit risk

    •A risk that the issuer of any bond or debenture will run into financial problems and default on the loans.

  • CUSTODIAN

    •An independent organisation that keeps track of and physically handles mutual funds securities.

  • Daily dividend fund

    •A fund (money-market or bond) that calculates dividends on a daily basis, paying out or reinvesting the same.

  • Derivatives

    •Derivatives, as the name suggests, are derived financial instruments. These instruments are derived from a basic underlying real asset like a share, or a commodity, These instruments allow the facility to buy or sell different quantities at different rates at a future date. These derivative instruments were designed to hedge or cover risks that the underlying assets had. Over a period, these instruments have been developed to meet other needs as well.

  • Discount

    •A term used when a closed-end fund is trading in the market at a price below its net asset value or the NAV.

  • Diversification

    •The strategy of spreading money among different securities to reduce risk.

  • Dividend yield

    •The annual dividend divided by the current price of an investment. It says what an investment in a particular share or mutual fund would yield at the current market price.

  • Entry load (Front-end load)

    •The sales charge an investor pays when he purchases units of a scheme.

  • Ex-dividend date

    •Normally, a business day after the "record date". Investors purchasing unit on or after the "ex-dividend" date are not entitled to collect dividends or bonus units.

  • Exit load (Back-end load)

    •The sales charge an investor pays when he sells units of a scheme.

  • Expense ratio

    •The annual expenses of a fund (at the end of the financial year), including the management fee, administrative costs, divided by the number of units on that day.

  • Fee table

    •A table mentioned in the prospectus that explains various kinds of fees charged to the unit holder and the impact of these charges over time.

  • Flexible-bond fund

    •A fund that can invest in a variety of bonds and has the flexibility to change the portfolio.

  • Funds of funds

    •Mutual funds that invest in other mutual funds.

  • Growth/Equity Fund

    •A fund that invests in equity shares or high yielding instruments with a view to provide strong capital appreciation.

  • Hedging

    •A general term used to describe risk reduction strategies.

  • Inflation risk

    •A risk that returns from an investment avenue would be eaten away by the inflation level.

  • Initial public offering (IPO)

    •The sale of a company's shares or a mutual fund's scheme to investors for the first time.

  • Investment adviser

    •An organisation that provides investment advice to the mutual fund for a specified fee or many a times acts as a money manager.

  • Lock In Period

    •It is the period during which you can neither redeem nor transfer your holdings. Generally, the lock in period varies from scheme to scheme and is mentioned in the offer document. Lock-in periods are imposed to prevent premature withdrawals which may destabilize the fund thereby the fund mangers get adequate time to deploy the funds for adequate period of time so as earn a reasonable amount of return to the investor.

  • Market Risk

    •A danger that the stock market would crash due to some unforeseen calamity.

  • Money-market fund

    •A fund that invests in short-term debt securities such as Treasury bills and Commercial paper.

  • Net Asset Value (NAV)

    •The price or value of one unit of a fund, is calculated by adding the current market value of all securities held by the fund, further adding in cash and any accrued income, then subtracting liabilities and finally dividing the result by the number of units outstanding.

  • Net Assets

    •The total value of a fund's cash and securities less its liabilities or obligations.

  • No-load fund

    •A fund with no front-end or back-end load. Essentially a fund that does not charge an entry or exit fee.

  • Nominal return

    •The total return on an investment less the inflation rate.

  • Portfolio turnover

    •A measure of the amount of buying and selling activity in a fund. Turnover is defined as the lesser of securities sold or purchased during a year divided by the average of monthly net assets.

  • Premium

    •When a closed-end fund is trading at a price above its NAV, it is said to be quoting at a premium.

  • Record Date

    •Date on which a fund determines its ‘unit holders on record' who are entitled to an impending dividend or bonus units. The record date is normally the business day prior to the ex-dividend or ex-bonus date.

  • Redemption price

    •The price you receive when you sell fund units. It equals NAV less any back-end load (contingent deferred sales charge or redemption fee).

  • Reinvestment date

    •A date on which a dividend or bonus units will be reinvested in additional full and fractional fund shares. This is normally on the business day following the record date.

  • Sector Fund

    •A fund that invests exclusively in a specific industry or stock group.

  • Sector risk

    •The danger that a particular industry such as software / biotechnology will plung.

  • Systematic Investment Plan (SIP)/Periodic Investment Plan (PIP)

    •A systematic service that enables you to transfer a specified amount regularly from your bank account into investments.

  • Total return

    •The most complete measure of investment performance. It takes into consideration price increase or decrease of an asset along with its income or yield when sold off.

  • Withdrawal Plan

    •A service offered by many mutual funds that allows you to receive cheques from the fund account on a regular basis.