Funds, ETFs & Index Investing — 55 Terms Defined

Hybrid Fund Funds, ETFs & Index Investing % A mutual fund that invests across both equity and debt, in proportions set by its stated category. Test: the scheme holds a defined mix of equity and debt, with the allocation range specified in the scheme document

IDCW Option Funds, ETFs & Index Investing ₹ The plan option under which a fund periodically distributes part of the NAV to unit holders as income distribution cum capital withdrawal. Post-Payout NAV = Pre-Payout NAV - Amount Distributed per Unit

iNAV Funds, ETFs & Index Investing ₹ The indicative net asset value of an ETF, computed and published continuously through the trading day. iNAV = (Live Value of the Underlying Basket + Cash Component) / Units Outstanding

Index Funds, ETFs & Index Investing index points A rule-based measure of the value of a defined group of securities, used to represent a market or segment. Index Value = (Current Free-Float Market Capitalisation of Constituents / Base Market Capitalisation) x Base Index Value

Index Fund Funds, ETFs & Index Investing qualitative A mutual fund that seeks to replicate an index's holdings and return rather than to beat it. Test: the fund holds constituents in index proportions and measures itself by tracking difference rather than by outperformance

Index Rebalancing Funds, ETFs & Index Investing qualitative The periodic revision of an index's constituents and weights according to its published rules. Test: constituents are reviewed on a stated schedule against eligibility criteria, with additions and deletions announced in advance

Index Weighting Funds, ETFs & Index Investing % The rule determining how much of an index each constituent represents. Free-Float Weight = Constituent's Free-Float Market Capitalisation / Sum of All Constituents' Free-Float Market Capitalisations

International Fund Funds, ETFs & Index Investing % A fund giving Indian investors exposure to securities listed outside India. Return in Rupees = (1 + Foreign Market Return) x (1 + Currency Change) - 1

Liquid Fund Funds, ETFs & Index Investing qualitative A debt mutual fund investing in money-market instruments maturing within 91 days. Test: every instrument in the portfolio has a residual maturity of 91 days or less

Lump Sum Investment Funds, ETFs & Index Investing ₹ Investing an entire amount at one time rather than spreading it across instalments. Future Value = Amount x (1 + Annual Return) raised to the number of years

Multi-Cap Fund Funds, ETFs & Index Investing % An equity fund required to hold a minimum allocation to each of the large, mid and small-cap segments. Test: at least 25% each in large-cap, mid-cap and small-cap, totalling a minimum of 75% in equity

Mutual Fund Funds, ETFs & Index Investing ₹ A pooled investment vehicle that collects money from many investors and invests it in securities according to a stated objective. Investor's Value = Units Held x Net Asset Value per Unit

Net Asset Value Funds, ETFs & Index Investing ₹ The per-unit value of a fund, computed as its assets less liabilities divided by units outstanding. NAV = (Market Value of Assets - Liabilities) / Number of Units Outstanding

New Fund Offer Funds, ETFs & Index Investing qualitative The initial subscription period during which units of a newly launched scheme are sold, usually at ₹10. Test: the scheme has no prior track record and units are offered at a fixed initial price during a stated window

Passive Investing Funds, ETFs & Index Investing qualitative An approach that seeks to match an index's return rather than to beat it, by holding the index's constituents. Test: security selection is determined by index rules rather than by judgement, and success is measured by tracking rather than by outperformance

Portfolio Management Service Funds, ETFs & Index Investing ₹ A SEBI-registered service managing a separate portfolio of securities for a single client, with a high minimum investment. Test: securities are held in the client's own name or demat account and managed under a discretionary or non-discretionary agreement

Portfolio Overlap Funds, ETFs & Index Investing % The proportion of holdings, by weight, that two funds have in common. Overlap % = Sum over all common holdings of the minimum of the two funds' weights in that holding

Portfolio Turnover Ratio Funds, ETFs & Index Investing % The proportion of a fund's portfolio replaced over a year, measuring how actively it trades. Portfolio Turnover = Lesser of Total Purchases or Total Sales / Average Assets Under Management x 100

Regular Plan Funds, ETFs & Index Investing % A version of a mutual fund scheme bought through a distributor, whose commission is embedded in a higher expense ratio. Regular Plan Expense Ratio = Direct Plan Expense Ratio + Distributor Commission

Riskometer Funds, ETFs & Index Investing qualitative SEBI's mandated six-level graphic indicating a mutual fund scheme's risk, disclosed monthly. Levels: Low, Low to Moderate, Moderate, Moderately High, High, Very High, computed from the portfolio's own risk characteristics

Rupee Cost Averaging Funds, ETFs & Index Investing ₹ The effect by which investing a fixed amount regularly buys more units when prices are low and fewer when they are high. Average Cost per Unit = Total Amount Invested / Total Units Purchased

Scheme Categorisation Funds, ETFs & Index Investing qualitative SEBI's framework defining standard mutual fund categories with mandated investment characteristics. Test: the scheme's holdings satisfy the allocation and eligibility rules prescribed for its declared category

Sectoral Fund Funds, ETFs & Index Investing qualitative An equity fund that invests at least 80% of its assets in companies from a single sector. Test: minimum 80% allocation to one defined sector, such as banking, pharmaceuticals or technology

Smart Beta Funds, ETFs & Index Investing qualitative A rules-based index strategy that weights constituents by a chosen factor rather than by market capitalisation. Test: constituent weights are determined by a published rule based on a factor such as value, quality, momentum, low volatility or equal weight