Mutual Fund Glossary

Absolute return
Absolute return measures the performance of a fund over two points in time, of any length. However, this method fails to account for time, making it less impactful to know returns over a longer period.

An advisor is a certified professional who provides financial advice to investors. They analyze various mutual fund schemes and suggest suitable funds for investment based on the investor’s financial goals, risk appetite, and investment horizon, Often spelled "adviser".

Advisory Fee
A fee is paid to mutual fund managers for their services including fund administration and investor relations.

Asset Class
It is the category that includes various investment types, including Equity, Debt, Money and Money Market, REITS, and so on.

An alert system used by mutual funds to notify you (by phone, post, or e-mail) when a sell target is reached.

Association of Mutual Funds in India (AMFI)
In India, this trade association represents mutual funds. AMFI represents the mutual fund industry at various policy forums and conducts promotional and training activities.

Annual Report
A book-like document released once a year by a fund house providing details on its state of affairs.

Annualized return
This method calculates how much an investment fund would have returned for a year. A compounded annualized return that reflects a fund's performance over a single year is a better indicator than a straight arithmetic average since it breaks down performance into units of one year.

Asset allocation
In percentage terms, how a fund's corpus is distributed across different asset classes.

Asset Management Company
AMC is a legal entity set up by a mutual fund to handle its operations.

Asset Under Management
It is the total money managed by the mutual fund.

Average maturity period
It is the average maturity date of the securities in a debt fund’s portfolio. The longer the maturity period of a debt fund, the more sensitive it will be to interest changes, which will result in greater fluctuations.

After-Tax Return
Any profit made on investment after deducting taxes is termed as an after-tax return.

It is an increase in the value of the asset over time.

Assets are any tangible or intangible resource of economic value.

Automatic Reinvestment
This investment option involves dividends declared by a fund being automatically reinvested back into the fund on behalf of the investor. A new unit is created as a result of this reinvestment.

Average Portfolio Maturity
It is the average time taken by underlying securities to expire.

Annual fund operating expenses
Expenses incurred by investment funds and paid out of fund assets are referred to as annual operating expenses and are generally expressed as a percentage of their net asset value (NAV).

Asset allocation fund
It is a fund that provides investors with a diversified portfolio of investments across different asset classes.

Account Statement
It shows the transactions (purchases, redemptions, dividends, etc.) in your mutual fund account for a particular period.

When security is priced differently in two or more markets at the same time, one can make a profit by buying the security at a lower price and selling it at a higher price. It is called arbitrage.

Application Form
It is a formal written request for something.

Actively Managed
Actively managed are mutual funds in which the portfolio manager makes investment decisions actively.

ARN stands for Application Reference Number. This number is assigned to qualified mutual fund distributors or experts who trade in various schemes.

Age of Fund
The age of the fund is the total time that has passed since the launch of the fund.

Applicable NAV
It refers to the per unit of a mutual fund scheme. The applicable NAV is typically declared daily.

Average Credit Quality
Average Credit Quality gives an overview of a portfolio's credit quality.

Annual Rate of Return
The annual rate of return is the percentage change in the value of an investment over a year.

Average Annual Total Return
An average annual return measures a mutual fund's historical returns, such as the average returns for three, five, and ten years.

Accredited Investor
An accredited investor can be a business institution or an individual who can deal with securities not available to the general public.

Active Portfolio Management
In active portfolio management, an investment portfolio is managed actively to achieve returns over market benchmarks or indexes.

Accrued Interest
The term accrued interest refers to the interest incurred as of a specific date, but not yet paid, on a loan or other financial obligation.

Accrued Dividend Income
A company's accrued dividends, or dividends payable, are dividends declared by the company but not yet paid to shareholders.

Advance Refunding
In advance refunding, funds from a new issuance are used to pay off debts incurred from previous issues.

AMT Bonds
AMT Bonds are municipal bonds used to finance private activity projects such as pollution control facilities or student loans.

Disclaimer -

The terms and definitions provided in this glossary are not officially defined or recognized by the Securities and Exchange Board of India (SEBI) or any other regulatory authority. They are intended for informational purposes only and should not be used as a substitute for professional advice. Please consult with a qualified professional for any matters related to securities regulation.