Mutual Fund Terms
Check Here few Mutual Fund Terms:
These are mutual funds with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500).
An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.
They are the employees of the asset management company for managing the investment in the schemes with the help of his team has a number of research analysts and fund managers.
It is a process by which any business verify and identifies its customers or its clients.
- NAV:
Net asset value [NAV] is the total asset value per unit of mutual fund and the value at which the investor enters or exits in the mutual fund.
It is calculated by the end of the day.
It’s the amount charged on the investment when the investor redeems the units of a mutual fund.
Ex: If the exit load set by the mutual fund company is 1% and the investor redeems the investment when the NAV is 100rs, the amount which the investor will get is Rs.99 in his account.
- OTM:
One Time Mandate [OTM] is a virtual checkbook for automatic amount deduction without entering the bank account details again and again, in OTM you can also set the limiting amount for the maximum deduction.
Mainly two types you can invest in mutual funds.
- SIP:
Systematic Investment Plan [SIP] is an investment scheme offered by mutual fund companies using which an investor can invest small amounts in there mutual funds on periodically it can be weekly, monthly, quarterly basis.
It is very similar to bank RDs where a person can start a mutual fund with a minimum amount of 500, 100 etc per month decided by the mutual fund companies.
Lumpsum amount is a single complete sum of money or investing the entire amount in one shot.
It is similar to bank FDs where if the investor is willing to invest the entire amount available with him in the mutual fund can invest all the amount as Lumpsum amount or One-time investment, which will be deducted only once.
Its the annualized cost of credit or debt capital computed as the percentage ratio of interest to the principal.
All these things you should know while investing and if any doubt ask but never stop learning
