These are equity funds that give investment tax benefits. Two types of tax saving funds are currently available – Debt Linked Savings Schemes (ELSS) and Rajiv Gandhi Equity Saving Scheme (RGESS). These offer tax advantages according to section 80C (for ELSS) and section 80GG (for RGESS).
In addition to risks and returns, while investing in mutual funds, investors must look at the costs involved. Although these costs are a small component, particularly if a scheme does not perform well, they can knock down the earnings of investors. TER is an annual percentage tax on AUM and is measured as * 100/total net assets of the fund (total expenditures during an accounting period).
The ratio includes investment management and advisory fees, sales / agent commissions and ongoing service fees, legal and audit fees, fees for registrars and transfer agents, administrative expenses for funds, and marketing and sales costs. A mutual fund scheme's NAV is net of all liabilities like TER, resulting in a lower TER resulting in higher returns and vice versa. Investors will invest in a scheme that pays a lower TER than peers because higher spending reduces the fund's returns.
List of all sources of an investment return over a specified period of time.
The amount by which the portfolio's performance differed from that of the benchmark when using an indexing or any other benchmarking strategy.
Expenses and charges incurred in the course of a particular transaction.
The company, usually a bank, which uses mutual funds to manage and keep records of investor accounts. In-house transfer agencies operate some mutual fund groups.
A government security, sold for short-term loans via Reserve Bank of India, 91 days to 364 days.
A variation of the Sharpe Ratio, it calculates the risk-adjusted output determined by alpha (i.e. market risk) for each dispersion function. Compared to the Sharpe Ratio, this ratio only uses alpha as the indicator of uncertainty. The ratio separates the difference between a fund's average return and the fund's beta (market risk) risk-free rate.
Mutual funds provide an additional feature that will be triggered automatically (through an alert) when a pre-defined event occurs. This facility helps an investor to set a date, NAV, or index amount for entering or exiting a fund or shifting to another fund.
Investors may choose a one-time trigger (deactivated once the action is complete) or opt for repeated triggers in which the fund house will continue to make theadjustments pre-described. There are various trigger forms including NAV, index-based, time-based, capital appreciation / depreciation, entry trigger, etc.
Legal trustee who takes care of all the money invested in a trust system or mutual fund.