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10 mutual funds investments terms you must know

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Understanding the jargon used in mutual funds can be a pretty daunting task. Here are 10 essential terms that may help yoy navigate through the maze of investing in mutual funds.

Asset Management Company (AMC)

An AMC is a SEBI- registered firm that deals in asset management. Such companies make the investment decisions for mutual funds.

Net Asset Value (NAV)

The value of one unit in a mutual fund scheme, used to measure performance.

Systematic Investment Plan (SIP)

Akin to recurring deposit (RD) where the investor can make a fixed contribution at equal intervals to build a corpus, an SIP is a good option for investors who don't have a lump sum to invest. An SIP lets you direct a fixed amount of funds into a mutual fund.

Unit holder

A unit holder is an investor who put money in mutual funds.

Expense Ration

The amount of money that needs to be paid to a fund for receiving the benefit of owning the fund.

Entry Load

The entry fee levied at the time an investor buy units of a scheme.

Exit Load

Exit load is the fee that an investor needs to pay for exiting a mutual fund.

Debt Fund

The fund investors in investment instruments like bonds and treasury bills, which are fixed income in nature and are typically meant for investors with a low- risk appetite.

Closed-End Scheme

A mutual fund scheme in which the money is committed for a particular tenure.

Balanced fund

A balanced fund comprises both equity and debt funds with a 50- 75 % allocation to equity, and the rest to debt.

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10 mutual funds investments terms you must know | earnwarns