Mutual fund and ETF terms
Everything about pooled investments: how a fund is priced, what it charges, how it is taxed, and the distinctions that cost real money if you get them wrong. The direct versus regular plan difference alone is worth understanding properly.
AMC
The company that runs a mutual fund.
AUM
The total amount of money a fund is managing.
Benchmark
The index a fund measures itself against.
Debt fund
A mutual fund that lends money rather than buying shares.
Direct plan
The version of a mutual fund you buy without a distributor, at a lower fee.
ELSS
An equity mutual fund that qualifies for a tax deduction and locks your money for three years.
ETF
A fund you buy and sell on the stock market like a share.
Exit load
A charge for selling a fund too soon after buying it.
Expense ratio
The yearly fee a fund charges, taken as a percentage of your money.
Folio
Your account number with a particular fund house.
Index fund
A fund that simply copies a market index instead of trying to beat it.
Liquid fund
A very short term debt fund used for money you may need soon.
Lock-in period
A period during which you are not allowed to withdraw your money.
Mutual fund
A pool of money from many investors, invested by a professional manager.
NAV
The price of one unit of a mutual fund.
Regular plan
The version of a mutual fund bought through a distributor, with commission included.
Rupee cost averaging
Investing a fixed amount regularly so you buy more when prices are low.
Tracking error
How far an index fund drifts from the index it is copying.