Glossary
Financial terms, explained
42 terms you will meet on statements, policy documents and fund factsheets, each explained in a sentence or two.
- AMC
- An asset management company: the firm that runs a mutual fund's schemes, such as UTI AMC or SBI Funds Management.
- AMFI
- The Association of Mutual Funds in India, the industry body that registers mutual fund distributors and publishes industry data.
- ARN
- AMFI Registration Number, the licence number every mutual fund distributor must hold and show. You can check it on AMFI's website.
- Asset allocation
- How your money is split between equity, debt, gold and cash. It matters more to long-term results than picking individual schemes. More
- CAS
- Consolidated Account Statement: one statement listing all your mutual fund holdings across fund houses, sent monthly by CAMS and KFintech.
- Claim settlement ratio
- The share of claims an insurer paid out of those it received in a year. A useful but incomplete measure of how an insurer behaves.
- Debenture
- A loan you give to a company in return for fixed interest and repayment on a set date. Non-convertible debentures (NCDs) cannot turn into shares. More
- Debt fund
- A mutual fund that invests in bonds, treasury bills and other fixed-income securities. Less volatile than equity, but not risk-free.
- Direct plan
- A version of a mutual fund scheme bought straight from the fund house with no distributor commission, so its expense ratio is lower.
- ELSS
- Equity Linked Savings Scheme: an equity mutual fund with a three-year lock-in that qualifies for a Section 80C deduction under the old tax regime.
- EUIN
- Employee Unique Identification Number, issued to each person at a distribution firm who interacts with investors.
- Exit load
- A fee some schemes charge if you redeem within a set period, often 1% within a year for equity funds.
- Expense ratio
- The yearly fee a mutual fund deducts from the scheme's assets to run it, shown as a percentage. It is already reflected in the NAV.
- Family floater
- A health insurance policy where one sum insured covers the whole family, shared between members. More
- FATCA
- A declaration about your tax residency and citizenship that every mutual fund and insurance investor must file. NRIs must declare their country of residence.
- Hybrid fund
- A mutual fund that holds both equity and debt in one scheme, in a stated proportion.
- Index fund
- A mutual fund that copies a market index such as the Nifty 50 instead of picking stocks, usually at a low cost.
- KYC
- Know Your Customer: a one-time identity and address verification, done with PAN and Aadhaar, required before any investment. More
- Lock-in
- A period during which you cannot redeem an investment, such as three years for ELSS.
- Lump sum
- Investing a single amount at once instead of in monthly instalments.
- MDRT
- Million Dollar Round Table, an international association recognising life insurance professionals who meet high production and ethics standards.
- Mutual fund distributor
- An AMFI-registered intermediary who helps investors choose and transact in mutual funds and is paid by the fund house. Not the same as a SEBI-registered investment adviser. More
- NFO
- New fund offer: the first subscription period when a new scheme is launched, usually at ₹10 a unit.
- Nominee
- The person who receives your investments or insurance money if you die. Every folio and policy should have one.
- NRE account
- A rupee bank account for NRIs holding money earned abroad. Balances and interest are fully repatriable and tax-free in India. More
- NRO account
- A rupee bank account for NRIs holding money earned in India, such as rent or dividends. Repatriation is limited and interest is taxable.
- PAN
- Permanent Account Number, the ten-character tax ID issued by the Income Tax Department and needed for almost every investment. More
- Pre-existing disease
- A health condition you had before buying health insurance. Policies cover it only after a waiting period, often two to three years.
- Redemption
- Selling mutual fund units back to the fund house. Money usually reaches your bank in one to three working days.
- Regular plan
- The version of a scheme bought through a distributor. Its expense ratio includes the distributor's commission.
- Riskometer
- A six-level scale every mutual fund must show, from low to very high risk.
- Rupee cost averaging
- Buying more units when prices are low and fewer when high by investing a fixed amount regularly, which smooths your average cost.
- SIP
- Systematic Investment Plan: a standing instruction to invest a fixed amount in a mutual fund every month. More
- Step-up SIP
- A SIP whose monthly amount rises by a fixed percentage each year, usually in step with salary increases. More
- STP
- Systematic Transfer Plan: moving a fixed amount from one scheme to another regularly, often from a liquid fund into equity.
- Sum assured
- The amount a life insurance policy pays on death or maturity.
- Sum insured
- The maximum a health or general insurance policy pays in a policy year.
- SWP
- Systematic Withdrawal Plan: taking a fixed amount out of a mutual fund every month, used to create retirement income. More
- Term insurance
- Pure life cover for a fixed period with no maturity payout, which is why it is the cheapest form of life insurance. More
- Top-up health cover
- An extra health policy that pays once a bill crosses a set deductible, used to raise cover cheaply.
- Units
- The shares of a mutual fund scheme you own. Your holding's value is units multiplied by NAV.
A word on your statement still unclear? Ask us.
A first conversation is free and takes about thirty minutes, at the office in Angamaly or over a call.
Opposite St Martin's Shrine, Angamaly South P.O.
Angamaly, Kerala 683573
- Monday to Friday: 9:00 am to 6:00 pm
- Saturday: 9:00 am to 5:00 pm
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Ten minutes from Cochin International Airport