Objective of the Blog:
The primary objective of my blog is to provide honest, research-backed guidance to investors. I understand that beginners can often feel overwhelmed by the various terminologies commonly used in the mutual fund and stock market space. Since these terms will frequently appear in my articles, I have created a comprehensive glossary of key investment terminologies along with their definitions. This will help readers better understand the concepts and make informed decisions with greater confidence.
Table of Contents
Mutual Fund Terminologies
A
AUM (Assets Under Management): The total market value of the investments managed by a mutual fund or asset management company.
Alpha: A measure of a fund’s performance on a risk-adjusted basis compared to its benchmark index. A positive alpha indicates outperformance.
AMC (Asset Management Company): A firm that manages pooled funds from investors to invest in various securities through mutual funds.
B
Benchmark: A standard index (like Nifty 50 or Sensex) against which a fund’s performance is compared.
Beta: A measure of a fund’s volatility in relation to the market. A beta greater than 1 indicates higher volatility than the market.
C
CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specific period of time.
Cut-off Time: The deadline time for submitting mutual fund transactions to get the same day’s NAV (Net Asset Value).
D
Debt Mutual Fund: A fund that invests primarily in fixed-income instruments like bonds, treasury bills, and government securities.
Direct Plan: A mutual fund plan where the investor buys directly from the AMC, avoiding distributor commissions.
Dividend (IDCW) Option: Earlier known as Dividend Option, now referred to as IDCW (Income Distribution Cum Capital Withdrawal); it pays periodic income to investors from fund profits.
E
ELSS (Equity Linked Savings Scheme) Mutual Fund: A tax-saving equity mutual fund with a mandatory 3-year lock-in period under Section 80C.
Equity Mutual Fund: A fund that primarily invests in stocks or equity-related instruments.
ETF (Exchange Traded Fund): A type of mutual fund traded on stock exchanges, combining features of mutual funds and stocks.
Et Money: A popular Indian personal finance and investment app that helps track, manage, and invest in mutual funds.
Executed Order: A buy or sell order that has been successfully processed and completed.
Exit Load: A fee charged when units of a mutual fund are redeemed within a specified time period.
F
Flexible SIP: A type of SIP that allows the investor to change the amount and/or date of the SIP based on cash flow or market conditions.
Fund Allocation: The distribution of a mutual fund’s investments across different asset classes, sectors, or securities.
Fund Fact Sheet: A detailed document published by the AMC that provides performance, portfolio, and risk-related information of a mutual fund.
G
Growth Option: A mutual fund plan that does not pay out periodic income but reinvests profits to compound returns over time.
H
Hybrid Mutual Fund: A fund that invests in a mix of equity and debt instruments to balance risk and return.
I
IDCW (Income Distribution Cum Capital Withdrawal): See “Dividend Option”.
Index Fund: A mutual fund that replicates the composition and performance of a market index like Nifty 50 or Sensex.
Investment Calculator (Lumpsum/SIP): A tool used to estimate potential returns based on a one-time (lumpsum) or periodic (SIP) investment.
Inception/Launch Date: The date when the mutual fund scheme was launched and became available for investment.
L
Large Cap Mutual Fund: A fund that primarily invests in large, established companies with a stable market presence.
Liquid Mutual Fund: A fund that invests in very short-term debt instruments and is ideal for parking idle cash.
Locked Units: Mutual fund units that cannot be redeemed until the lock-in period ends (e.g., ELSS).
Lumpsum Investment: A one-time investment made in a mutual fund instead of periodic contributions.
M
Midcap Mutual Fund: A fund that invests primarily in mid-sized companies with high growth potential.
Morningstar Rating: A star rating system that evaluates mutual funds based on past performance and risk metrics.
Mutual Fund: A pooled investment vehicle that collects money from multiple investors to invest in stocks, bonds, or other securities.
Mutual Fund Portfolio: A collection of all the mutual fund schemes an investor holds.
N
NAV (Net Asset Value): The per-unit price of a mutual fund, calculated as the total assets minus liabilities divided by the number of outstanding units.
NFO (New Fund Offer): The first-time subscription offer for a new mutual fund scheme.
P
Pending Order: An order that has been placed but not yet executed.
Power of Compounding: The process by which investment earnings are reinvested to generate additional earnings over time.
R
Redeem: The process of selling mutual fund units to realize returns.
Regular Plan: A mutual fund plan that includes distributor commissions and is typically sold through intermediaries.
S
Sectoral/Thematic Mutual Fund: A fund that invests in specific sectors (like IT, Pharma) or themes (like ESG, Consumption).
SIP (Systematic Investment Plan): A method of investing fixed amounts regularly into a mutual fund.
Standard Deviation: A statistical measure of the fund’s volatility; higher values indicate greater fluctuations in returns.
STP (Systematic Transfer Plan): A facility to transfer money from one mutual fund to another at regular intervals.
SWP (Systematic Withdrawal Plan): A facility that allows regular withdrawals from an existing mutual fund investment.
V
Value Research Rating: A mutual fund rating system provided by Value Research, assessing performance, risk, and consistency.
Stock Market Terminologies :
A
Account Value: The total value of cash and securities held in an investor’s trading or demat account.
Bear Market: A market condition where stock prices fall continuously, typically by 20% or more from recent highs, signaling pessimism.
Baskets and Basket Order: A feature that allows placing a single order for a group of multiple stocks or instruments simultaneously.
BSE (Bombay Stock Exchange): One of India’s leading stock exchanges, based in Mumbai.
C
Capital Gains: Profit earned from the sale of stocks or other capital assets.
CDSL (Central Depository Services Limited): One of India’s two depositories that holds securities in electronic form.
Candle Stick Chart: A popular charting method that displays price movements using candles, showing open, high, low, and close prices.
Closing Price: The final price at which a stock is traded at the end of a trading session.
Collateral: Assets pledged by an investor (like stocks) to secure margin or loans for trading.
Daily Chart: A chart that shows the stock’s price movements over individual days.
Demat Account: A digital account that holds an investor’s shares and securities in electronic form.
Dividend: A portion of a company’s earnings distributed to shareholders.
D
DP (Depository Participant): An agent (like a stockbroker) through whom investors open demat accounts with depositories like CDSL or NSDL.
Dow Jones: A major US stock market index that tracks 30 large publicly owned companies in the U.S.
Downtrend: A sustained downward movement in the price of a stock or index.
Fundamental Analysis: A method of evaluating a stock by examining financial and economic factors like earnings, industry position, and management.
Fundamentals: Core financial indicators of a company such as revenue, earnings, debt, and profit margins.
Futures Trading: A derivatives contract to buy or sell a financial asset at a predetermined future date and price.
G
Gift Stocks: Stocks received as a gift, which are subject to tax implications based on their value and relationship with the donor.
H
High Price: The highest price at which a stock is traded during a particular time frame.
I
Index: A statistical measure that represents the performance of a group of stocks. For example, Nifty 50 or Sensex.
IPO (Initial Public Offering): The first sale of shares by a private company to the public to raise capital.
L
Limit Order: An order to buy or sell a stock at a specific price or better.
Limit Price: The set price in a limit order at which buying or selling should occur.
Liquidity: The ease with which an asset can be quickly bought or sold in the market without affecting its price.
Low Price: The lowest price at which a stock is traded during a specified period.
M
Margin Trading: Buying stocks by borrowing funds from a broker against collateral.
Market Capitalisation: The total market value of a company’s outstanding shares (calculated as price per share × number of shares).
Market Order: An order to buy or sell a stock immediately at the best available price.
Monthly Chart: A stock price chart where each candlestick or bar represents one month’s worth of data.
MTF (Margin Trading Facility): A facility offered by brokers allowing investors to trade stocks on borrowed funds.
N
Nasdaq: A leading American stock exchange known for listing technology and growth-oriented companies.
Nifty 50: A benchmark Indian stock market index representing the top 50 large-cap companies listed on the NSE.
Nifty Next 50: Represents the 51st to 100th largest companies listed on the NSE.
Nifty Midcap 150: An index representing 150 mid-sized companies listed on the NSE.
Nifty Smallcap 250: An index comprising 250 small-cap companies in the Indian equity market.
NSDL (National Securities Depository Limited): Another depository in India that holds securities in dematerialized form.
NSE (National Stock Exchange): One of India’s leading stock exchanges, based in Mumbai.
O
Open Order: An order that has been placed but not yet executed or canceled.
Opening Price: The price at which a stock begins trading at the start of the market session.
Options Trading: A derivatives contract that gives the right, but not the obligation, to buy or sell a security at a specified price before expiry.
P
Pending Order: An order that has been submitted but not yet executed due to price or time conditions.
S
Share Market/Stock Market: A platform where shares of publicly listed companies are bought and sold.
Stock Broker: A registered intermediary who facilitates buying and selling of stocks on behalf of clients.
Stock Exchange: A regulated marketplace where securities are traded (e.g., BSE, NSE).
Stock Portfolio: A collection of different stocks owned by an investor.
Stop Loss: A pre-set order to sell a stock if it falls to a certain price, helping limit losses.
Technical Analysis: A method of forecasting stock price movements based on historical price patterns, charts, and indicators.
Trading Account: An account required to place buy/sell orders in the stock market.
Trade Book: A digital record of all trades executed by an investor.
U
Uptrend: A consistent upward movement in a stock’s price over time.
W
Weekly Chart: A stock chart where each candlestick or bar represents one week of price data.
Further Addition of Terminologies
Further additon of new terminologies will be done periodically.
Disclaimer:
“This article is for educational purposes only. Read our full disclaimer .”