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Funds, ETFs & Index Investing

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Funds, ETFs & Index Investing

ELSS

An equity-linked savings scheme: a diversified equity fund with a three-year lock-in that qualifies for a tax deduction.

Test: minimum 80% in equity, three-year lock-in per instalment, and eligibility under Section 80C of the Income Tax Act qualitative Funds, ETFs & Index Investing

Equal-Weighted Index

An index in which every constituent carries the same weight regardless of company size.

Weight of each Constituent = 1 / Number of Constituents % Funds, ETFs & Index Investing

Equity Fund

A mutual fund investing at least 65% of its assets in Indian equity and equity-related instruments.

Test: minimum 65% allocation to domestic equity, which also determines the scheme's tax treatment qualitative Funds, ETFs & Index Investing

ETF Premium/Discount

The gap between an ETF's market price and the value of its underlying holdings.

Premium or Discount % = (Market Price - iNAV) / iNAV x 100 % Funds, ETFs & Index Investing

Exchange-Traded Fund

A fund whose units trade on a stock exchange throughout the day at market-determined prices.

Test: units are listed and traded on an exchange, with creation and redemption in large blocks by authorised participants qualitative Funds, ETFs & Index Investing

Exit Load

A charge deducted from redemption proceeds when units are sold within a stated period of purchase.

Exit Load = Redemption Value x Load Percentage, applied if held less than the stated period % Funds, ETFs & Index Investing

Expense Ratio

The annual cost of running a fund, expressed as a percentage of its assets and deducted from the NAV.

Expense Ratio = Total Annual Costs / Average Assets Under Management x 100 %