Funds, ETFs & Index Investing

Active Investing

An approach that selects securities in an attempt to earn more than the index return.

Test: holdings deviate deliberately from the benchmark on the basis of judgement, and success is measured against the benchmark net of fees qualitative

Arbitrage Fund

An equity-taxed fund that holds offsetting cash and futures positions, earning the basis rather than market returns.

Test: every cash market holding is fully hedged by a short futures position in the same security qualitative

Funds, ETFs & Index Investing

Asset Management Company

The SEBI-registered entity that manages a mutual fund's schemes and is paid a fee for doing so.

Test: the entity holds a SEBI registration to manage mutual fund schemes on behalf of a trust, and is compensated within the expense ratio qualitative

Funds, ETFs & Index Investing

Assets Under Management

The total market value of the investments a fund or manager oversees.

AUM = Number of Units Outstanding x Net Asset Value per Unit ₹ crore

Funds, ETFs & Index Investing

Authorised Participant

An institution permitted to create and redeem ETF units directly with the fund, keeping the market price aligned with value.

Test: the entity has an agreement with the fund permitting creation and redemption in creation-unit blocks qualitative