Annuities or Annutisation
•A scheme or process that makes a periodic distribution of money
during a specific period.
•A series of periodic payments in a specified period.
•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.
•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
•A portfolio that seeks to have a balanced portfolio by investing in stocks
and bonds. .
•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
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.
•A service enabling investors to write cheques against their mutual fund account
•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
•A money-market instrument that is short-term in nature and is issued by large,
•The danger that some misfortune such as a lawsuit or accident or poor earnings
may hit the company.
•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.
•A risk that the issuer of any bond or debenture will run into financial
problems and default on the loans.
•An independent organisation that keeps track of and physically handles mutual
Daily dividend fund
•A fund (money-market or bond) that calculates dividends on a daily basis,
paying out or reinvesting the same.
•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.
•A term used when a closed-end fund is trading in the market at a price below
its net asset value or the NAV.
•The strategy of spreading money among different securities to reduce risk.
•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
Entry load (Front-end load)
•The sales charge an investor pays when he purchases units of a scheme.
•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
Exit load (Back-end load)
•The sales charge an investor pays when he sells units of a scheme.
•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
•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.
•A fund that can invest in a variety of bonds and has the flexibility to change
Funds of funds
•Mutual funds that invest in other mutual funds.
•A fund that invests in equity shares or high yielding instruments with a view
to provide strong capital appreciation.
•A general term used to describe risk reduction strategies.
•A risk that returns from an investment avenue would be eaten away by the
Initial public offering (IPO)
•The sale of a company's shares or a mutual fund's scheme to investors for the
•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.
•A danger that the stock market would crash due to some unforeseen calamity.
•A fund that invests in short-term debt securities such as Treasury bills and
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.
•The total value of a fund's cash and securities less its liabilities or
•A fund with no front-end or back-end load. Essentially a fund that does not
charge an entry or exit fee.
•The total return on an investment less the inflation rate.
•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.
•When a closed-end fund is trading at a price above its NAV, it is said to be
quoting at a premium.
•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.
•The price you receive when you sell fund units. It equals NAV less any back-end
load (contingent deferred sales charge or redemption fee).
•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
•A fund that invests exclusively in a specific industry or stock group.
•The danger that a particular industry such as software / biotechnology will
Systematic Investment Plan (SIP)/Periodic Investment Plan
•A systematic service that enables you to transfer a specified amount regularly
from your bank account into investments.
•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.
•A service offered by many mutual funds that allows you to receive cheques from
the fund account on a regular basis.