IIFL Mutual Funds. Our mutual fund offerings are uniquely structured and positioned as leaders in their respective niche areas. Concentrated picks and the freedom from benchmarking constraints have helped us generate significant alpha for our investors.

MUTUAL FUND

Glossary

Glossary

Asset allocation
The allocation of total funds available in the portfolio across various asset classes like equity, debt, money market instruments etc.

Alpha
Alpha is a measure of a fund’s actual performance over its expected performance adjusted for risk. A positive alpha indicates the fund is creating value.

Back End Load
A fee paid by the investor when selling units of the fund to withdraw money.

Balanced Fund
A mutual fund that balances fixed income and equities.

Benchmark
An unmanaged group of stocks that are collated into an index. Mutual fund performance is measured against the performance of these indexes. Usually the Nifty or Sensex.

Beta
A measure of the fund's volatility (systematic risk) in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM) which calculates the expected return of an asset based on its beta and expected market returns.

Certificate of Deposit
A short-term instrument issued by banks or financial firms that earns interest.

Closed-End Schemes
A mutual fund with investors who have committed capital for a fixed period.

Custodian
A bank or trust that provides safekeeping of assets on behalf of investors.

Debt Fund
A mutual fund that invests in fixed income securities such as bonds and treasuries.

Distributor
The principal underwriter for the mutual fund shares. Serves as intermediary between AMC and investor.

Entry Load
A fee paid to enter a fund and buy units. Since August 2009, entry load is not applicable if an investor adopts a direct plan.

Equity-Linked Savings Schemes (ELSS)
Savings schemes where a majority portion is invested in equity. ELSS provide tax savings under Section 80C of Income Tax Act 1961.

Expense Ratio
The fund’s cost of doing business as disclosed in the prospectus. It is expressed as a percentage of its assets.

Fund Manager
Individual responsible for asset management and portfolio-related decision making.

Growth Plan
A plan where the income earned is reinvested in the scheme. The primary target is capital appreciation.

Inception Date
Date when fund first commenced operations.

Income Fund
A mutual fund that targets income instead of capital appreciation. Usually invested in stocks that pay a dividend or bonds that pay interest.

Index Fund
A mutual fund that tracks a specific index.

Level Load
Commission or load that remains steady regardless of investor’s holding period.

Liquid Fund
Liquid fund invests in money market instruments.

Load:
A charge on the NAV calculated as a percentage of NAV governed by SEBI regulation and subject to industry practice. Usually an exit load is applied to investors seeking to exit the fund. An exit load reduces the repurchase price for the selling investor. To sell units of a MF scheme with NAV Rs. 10 and exit load of 2.25 per cent, the investor would get a price of 10 – (10*2.25/100) i.e. Rs. 9.775.

Lock-In Period
A period during which the investor is not allowed to sell an investment.

Management Fee
A fixed fee to cover money management or advisory services.

Money Market Fund
A mutual fund that invests in money market instruments with a minimum 15-day lock-in period.

New Fund Offer (NFO):
The initial period offer made of fixed price units when a new scheme is launched by a fund house.

Net Asset Value (NAV):
Total value of portfolio LESS liabilities DIVIDED BY number of outstanding units. NAV is calculated on a daily basis.

Open-Ended Schemes
Mutual funds that continuously offer new units to investors.

Portfolio Manager
see Fund Manager
Portfolio Turnover Rate

Rate at which portfolio securities are changed over the course of a year.

Rupee-Cost Averaging
Reinvestment at fixed schedule (usually monthly) to gain from cost averaging over long periods of time.

Series Fund
A mutual fund that allows more than one portfolio. Management can add new portfolios when required.

SIP
A Systematic Investment Plan (SIP) is a scheduled investment plan based on rupee-cost averaging.

Systematic Withdrawal Plans
Mutual fund plan where the investor receives regular payments from the fund. Payments are sourced from dividends, interest, capital appreciation, or (if necessary) principal.

Treasury Bills
Government bonds issued by RBI for 91 days to 364 days.

Unit
A unit represents a share of mutual fund ownership.

Withdrawal Plan
A service offered by mutual funds allowing shareholders to receive income or principal payments from their account at regular intervals.

Zero Coupon Bond
Bonds sold at a fraction of face value which do not pay interest.