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​Exit load, SIP, AMC: Your Guide to Common Mutual Fund Jargons

Mutual funds are one of the most popular investment vehicles in the country. The mutual fund industry crossed the staggering milestone of (Source: https://www.bloombergquint.com/business/biz-mutual-fund-folios) You can also join the bandwagon and invest in mutual funds, although you must first learn the common mutual fund terms.

Knowing the mutual fund terminologies is vital as it helps you understand what you own, your expenses, and the other aspects of mutual funds. Read on to know what they are.

Net asset value (NAV)

The NAV is a vital term for investors. It is the price at which you buy/redeem each mutual fund unit. Like stock prices, the NAV of a mutual fund also changes every day. The NAV of growth option can tell you the performance of a mutual fund. If it has steadily increased over time, it is proof that the mutual fund has been a consistent performer.

Systematic investment plan (SIP)

SIP is often synonymous with mutual fund investments. It is essentially a facility that allows you to invest in mutual funds. SIPs allow you to systematically invest in debt funds, equity funds, or any other type of mutual fund. You can invest small sums regularly in the mutual fund of your choice through SIPs.

You can choose your SIP amount and continue investing through it for as long as possible. It is one of the best way to accumulate wealth through mutual fund investments.

Asset allocation

Asset allocation is another common mutual fund jargon. It is a concept that gives importance to investing in different asset classes to reduce your risk. Asset allocation in mutual funds may protect your portfolio against adverse market conditions.

The asset management company (AMC)

An AMC is an investment managerthat offers and manages your mutual fund investments. They run several funds with diverse investment objectives. You may invest in the funds that suit your investment goals and risk appetite. AMCs employ fund managers who manage the funds, track their performance, and change their strategy if necessary.

Assets under management (AUM)

AUM is a parameter you can use to judge the credibility and scale of a fund. AUM is the sum of the total assets held and managed by a fund. It is calculated by adding the total assets in a fund. The AUM keeps fluctuating every day because of new investments, redemptions, and changes in the price/ valuation of underlying securities.

Exit load

AMCs allow investors to invest in equities and debt funds. Your investments might be subject to exit load if you redeem before stipulated time period

Open-ended funds

An open-ended fund is a fund you can invest in and exit whenever you want (except for fund(s) wherein lock-in period is prescribed). You can buy the scheme units at the prevailing NAV and sell them when your investment objective is achieved.

Capital gains

You must conduct thorough research before investing in mutual funds. Mutual funds are easy to understand, but knowing the common mutual fund terms can help you determine where your money is invested and at what cost.

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Disclaimer:
This is an investor education and awareness initiative by Nippon India Mutual Fund.
Helpful information for investors: All Mutual Fund investors have to go through a one-time KYC (know your Customer) process. Investors should deal only with registered mutual funds, to be verified on SEBI website under 'Intermediaries/ Market Infrastructure Institutions'. For redressal of your complaints, you may please visit SEBI SCORES . For more info on KYC, change in various details & redressal of complaints, visit mf.nipponindiaim.com/investoreducation/what-to-know-when-investing This is an investor education and awareness initiative by Nippon India Mutual Fund.

The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their associates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document. Language Disclaimer:
While utmost care has been taken in translating the article into respective regional language(s), in case of any confusion or difference of opinion, article available in English language should be deemed as final. The article provided herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional advice for the readers. The document has been prepared on the basis of publicly available data/ information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their associates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of loss of profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this article. "ABOVE ILLUSTRATIONS ARE ONLY FOR UNDERSTANDING, IT IS NOT DIRECTLY OR INDIRECTLY RELATED TO THE PERFORMANCE OF ANY SCHEME OF NIMF. THE VIEWS EXPRESSED HEREIN CONSTITUTE ONLY THE OPINIONS AND DO NOT CONSTITUTE ANY GUIDELINES OR RECOMMENDATION ON ANY COURSE OF ACTION TO BE FOLLOWED BY THE READER. THIS INFORMATION IS MEANT FOR GENERAL READING PURPOSES ONLY AND IS NOT MEANT TO SERVE AS A PROFESSIONAL GUIDE FOR THE READERS."

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