Mutual Funds Glossary

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.

Price paid while investing in a scheme. May include sales load. Also called Offer Price.

This is the price of buying a unit. Most funds sell units at a premium to its underlying net asset value, and purchase them at the net asset value. When the fund company charges a load when it sells units, it is called entry load. When it charges a load at the time of buying the units back from an investor, it is called exit load.

Repurchase Price is the price at which a close-ended scheme repurchases its units. May include Backend load. Also called Bid Price.

Redemption Price is the price at which an open-ended scheme repurchases its units and a close-ended scheme redeems its units on maturity. Prices here are NAV related.

Sales Load is the charge collected by a scheme when it sells its units. Also called Front End Load. Schemes that do not charge a load are called No Load Schemes.

Repurchase or 'Back-end' Load is a charge collected by a scheme when it buys back the units from the scheme.

SIP or Systematic Investment Plan refers to the practice of investing a constant amount regularly, generally every month. SIP ensures that the investors' acquisition costs are approximated to the average NAV, as when the market will go up fewer units will be bought and when the markets come down more units will be bought. However it does not offer protection from losses.

This is a mirror image of an SIP only here the investor withdraws a constant amount regularly. This is again aimed at getting averaging effect mentioned above.

Among the investors who subscribe to a scheme some might want a regular flow of income while others might prefer their income from the scheme to grow within the scheme itself. The dividend option caters to the first kind of investors by offering the investors divided at regular interval. Each time the dividend is declared the NAV of the scheme will fall. The growth option is for the second kind of investors.