Glossary & Formula Sheet

Securities and Exchange Board of India. Regulates mutual funds, depositories, custodians, RTAs and credit rating agencies; issues the Mutual Fund Regulations and all related circulars.

Reserve Bank of India. Regulates the banking system and money markets; mutual funds must comply with RBI rules on money-market investment, forex, and remittances.

Insurance Regulatory and Development Authority of India. Regulates the insurance market — one of India's four financial-sector regulators.

Pension Fund Regulatory and Development Authority. Regulates the pension market in India.

Association of Mutual Funds in India. Sets ethical standards, issues the ARN to distributors, disciplines Code of Conduct violations, and represents the industry to SEBI. AMFI is NOT a regulator and NOT a Self-Regulatory Organisation (SRO).

KYC Registration Agency. Processes and stores investor KYC data centrally so it can be reused across any SEBI-registered intermediary without repeating the process.

Central Registry of Securitisation and Asset Reconstruction and Security Interest of India, designated to operate the Central KYC Records Registry (cKYCR) under the PMLA Rules.

The promoter who sets up the mutual fund trust. Must have ≥5 years in financial services, positive net worth in each of the preceding 5 years, and average net annual profit of at least Rs. 10 crore over that period.

Appointed under the Trust Deed to protect unit-holder interests and oversee the AMC. At least two-thirds of the Board of Trustees must be independent of the sponsor/AMC.

Runs the mutual fund's day-to-day operations — fund management, distribution, operations. Must maintain a net worth of at least Rs. 50 crore (from Jan 1, 2024) and have at least 50% independent directors on its board.

Holds the scheme's securities and settles transactions on the fund's behalf. Appointed by the Trustees, registered with SEBI under the Custodian Regulations, 1996.

Maintains investor folios, processes purchase/redemption transactions, issues account statements. Appointment is optional — an AMC may handle this in-house instead.

Holds securities, including mutual fund units, in dematerialised form. India has two: National Securities Depository Limited and Central Depository Services Limited.

The true worth of one unit of a scheme — net assets divided by outstanding units. Recalculated daily to reflect mark-to-market changes in the portfolio.

The total size of a scheme (or an AMC) — the sum of all investor money currently invested, equal to NAV × total outstanding units.

Number of units issued by a scheme, multiplied by the face value (typically Rs. 10 per unit).

The nominal value assigned to one unit at the time of issue — typically Rs. 10, sometimes Rs. 100 — relevant mainly for accounting purposes.

Valuing every security in a scheme's portfolio at its current market value, done daily to calculate an accurate NAV.

The first-time offer of a scheme's units to the public, before it opens for ongoing purchase/sale.

All permitted costs charged to a scheme, expressed as a percentage of daily net assets — base expense ratio + brokerage cost + transaction cost + statutory levies.

A charge once added to the NAV when buying units. Banned by SEBI — the sale price now always equals the NAV.

A charge deducted from the NAV when redeeming units, credited back to the scheme (not kept by the AMC). Must be applied uniformly, regardless of subscription size.

The renamed 'dividend' option. Pay-out IDCW pays cash to the investor; Reinvestment IDCW buys additional units at the ex-dividend NAV; both differ from the Growth option, where nothing is paid out and all gains stay in the NAV.

The NAV immediately after a dividend/IDCW payout has reduced it. The NAV just before payout is called the cum-dividend NAV.

An investor's account record with a mutual fund, identified by a folio number, under which all their holdings in that mutual fund are tracked.

International Securities Identification Number — a unique code assigned to each option of a scheme, used for demat holding and identification.

A six-level pictorial risk indicator (Low, Low to Moderate, Moderate, Moderately High, High, Very High) shown on every scheme's documents, re-evaluated monthly.

The Riskometer shown together with a short, plain-language 'this product is suitable for investors who are seeking...' statement, so an investor can judge suitability at a glance without reading the full SID.

The five-level risk indicator used specifically for Specialized Investment Fund (SIF) strategies, in place of the standard Riskometer.

A mechanism to isolate a defaulted or downgraded debt/money-market instrument from the rest of a scheme's portfolio, protecting the remaining investors' NAV.

SEBI-permitted restriction on redemptions during a systemic, market-wide liquidity crisis — never for a single security's illiquidity. Max 10 working days in any 90-day period; the first Rs. 2 lakh of any request is always paid.

Sets out everything a prospective investor should know about one specific scheme — objective, asset allocation, risks, loads, fees.

Statutory information about the mutual fund/AMC as a whole (constituents, valuation norms, investor rights) — one SAI covers every scheme of that mutual fund.

A summary of the SID and SAI, mandatorily attached to every application form.

An interim update to scheme documents, issued between full revisions; must accompany the KIM until the documents are formally revised.

A monthly, non-mandatory document (an AMFI best practice, not a regulation) showing a scheme's NAV, AUM, portfolio, and key ratios like PE, Beta, and Sharpe Ratio.

Mandatory identity and address verification for every investor, done once via any SEBI-registered intermediary and reused across the securities market via the KRA system.

A mandatory one-time physical/video verification step within the KYC process, performed by an authorised intermediary; not required to repeat once done.

PAN Exempt KYC Reference Number, issued to small investors (Micro-SIP / lump sum up to Rs. 50,000/year) who are exempt from providing a PAN card.

Foreign Account Tax Compliance Act / Common Reporting Standards — disclosure required whenever an investor's citizenship, birthplace, or tax residency is outside India; reportable status changes must be intimated within 30 days.

For non-individual investors: anyone owning/entitled to more than 25% of a company's shares/profits (15% for partnerships and trusts) must be identified and verified.

AMFI Registration Number — mandatory identification for a mutual fund distributor, obtained after passing NISM-Series-V-A and completing KYD. Minimum age 18.

The document a corporate (non-individual) investor must submit to invest in a mutual fund — a resolution from its Board specifically authorising that investment and naming the signatories, not a general shareholders' resolution or blanket authorisation.

Employee Unique Identification Number — identifies an individual employee of an institutional distributor (e.g. a bank) who interacts with investors; operates under the institution's own ARN.

Document + biometric verification process for ARN holders, done via CAMS-PoS, required to register or renew an ARN.

The only form of commission SEBI now permits for distributors — a percentage of the current (daily) value of the investor's holding, paid periodically for as long as the money stays invested.

Investing a fixed amount at regular intervals into a scheme — achieves rupee cost averaging. Can be used to make a fresh purchase: a first-time investor's initial SIP instalment itself creates the folio, an existing folio is not required.

Redeeming a fixed amount at regular intervals from a scheme, paid out to the investor's bank account.

Multiple scheduled tranches moving money out of a source scheme (like an SWP) and into a target scheme of the same mutual fund (like a SIP).

A one-time redemption from one scheme combined with a purchase into another, in a single transaction — functionally a single-tranche STP.

A facility to automatically step up the SIP instalment amount over time, by a fixed rupee amount or a percentage, at intervals the investor chooses.

A one-time, pre-set instruction (e.g. a stop-loss trigger or date trigger) to redeem or switch units automatically once a defined NAV, index level, or date is reached.

Alternate form: (Total Assets − Liabilities other than to unit-holders) ÷ Outstanding Units.

Used only when no dividend has been paid during the period measured.

Captures the effect of compounding over multi-year holding periods.

SEBI's prescribed method whenever a scheme has paid a dividend during the period being measured.

Applied to the daily value of the investor's holding, not the original amount invested.

A ratio of 2 (200%) implies an average holding period of 12 ÷ 2 = 6 months.

Measures total risk (fluctuation vs. a scheme's own average return). Annualize monthly data ×√12, weekly ×√52, daily ×√252.

Measures a scheme's sensitivity to market moves, relevant only for equity schemes. The market itself has a Beta of 1; Beta >1 means more volatile than the market, <1 means less.

Risk premium earned per unit of total risk. Only comparable within the same scheme category.

Risk premium per unit of market (systematic) risk — most meaningful for diversified equity schemes. Worked example: return 10%, risk-free 7.5%, Beta 0.5 → (10% − 7.5%) ÷ 0.5 = 5%.

The scheme's actual return minus its CAPM-predicted ('optimal') return, given its Beta. Positive Alpha = fund manager out-performance.

The only risk-adjusted ratio AMCs must disclose daily, using the Tier-1 benchmark.

Standard deviation of a scheme's excess returns over its benchmark — measures how consistently a fund out/under-performs, not just by how much.

Measures a debt security's price-sensitivity to interest rate changes; higher duration means higher interest-rate risk.

A simpler (less precise) proxy for interest rate sensitivity than Modified Duration, based on the maturity-weighted average of a debt portfolio's holdings.

in financial services, with positive net worth in each of the preceding 5 years.

annually, over the preceding 5 years.

maintained continuously, effective from January 1, 2024.

of the Board of Trustees.

of the AMC's Board of Directors.

(or a majority of trustees) can terminate an AMC's appointment.

at prevailing NAV, with no exit load.

maximum, from date of receipt.

with a specified percentage split, or equal split by default.

(includes accrued income); after 3 years, capped at the NAV as of the 3-year mark.

of each half-year close (September / March).

of the financial year close.

within 1 month of each half-year close.

of month/half-year close; debt schemes: fortnightly, within 5 days.

decimal places.

decimal places.

(1.85% for non-equity-oriented schemes, same slab).

(1.65% for non-equity-oriented schemes).

of trade value, over and above the base TER.

of trade value.

of that issuer's outstanding such bonds, per mutual fund.

same as the age of legal majority in India.

of the first year's investment (lump sum or SIP).

holding this much (or more) of an AMC's net worth deems a person its sponsor (Reg. 7(c)).

one of four independent thresholds (any ONE) that bring a distributor under SEBI's due diligence framework.

raised across the industry in the non-institutional category (incl. HNIs) — another of the four triggers.

the remaining two of the four due-diligence triggers; any ONE of all four is sufficient, they are not cumulative.

above Rs. 1.25 lakh exemption per financial year; holding period > 12 months.

holding period ≤ 12 months.

regardless of holding period, for both short- and long-term gains.

taxed as non-equity-oriented for holding-period purposes.

payable by the seller; nil on purchase; not applicable to debt schemes at all.

combined across all 80C avenues; old tax regime only.

from the date of each investment (each SIP instalment locks in separately).

if dividend from a fund exceeds Rs. 5,000 in a year.

of amount invested (purchase, SIP, STP, switch-in, IDCW reinvestment).

e.g. between demat accounts.

for unabsorbed long-term or short-term capital losses.

the bonus record date — buying/selling within this window disallows the capital loss.

maximum 15 days for non-ELSS schemes.

of NFO closure; scheme re-opens within 5 business days of allotment.

charged to the AMC (not the scheme) for the period of delay.

for applicants who quoted a demat account.

single / joint / either-or-survivor modes of holding.

per investor, per mutual fund (Micro-SIP + lump sum combined).

per investor, per mutual fund, for eligible small investors.

per investor, per mutual fund — a shared umbrella limit.

of the investment's value; liquid schemes only, same-day credit.

same-day NAV if funds available for utilisation before cut-off.

applicable NAV is the previous calendar day's closing NAV, not the current day's.

per folio, one designated as default.

of financial year close (March 31).

of shares or profits; 15% for partnerships, bodies of persons, and trusts.

of any redemption request, even during a gating restriction.

within any rolling 90-day period.

of creation, to provide investors an exit route.

mandatory shift from Price Return Index to Total Return Index.

historically, in Indian markets.

(3 years for long-duration debt funds), across multiple market cycles.