Aadhaar-Based e-KYC

A digital process where an investor’s identity is verified using Aadhaar credentials and biometric or OTP authentication.

Advance Tax

Tax paid in installments during the financial year based on estimated income.

Aggressive Funds

High-risk, high-return mutual funds that invest predominantly in equities to maximize capital appreciation. These funds suit investors with a high-risk tolerance and a long-term investment horizon.

AIF (Alternative Investment Fund)

A privately pooled investment vehicle that invests in non-traditional asset classes such as private equity, hedge funds, venture capital, and infrastructure.

AIS (Annual Information Statement)

A document containing details of financial transactions reported to the tax department.

Alpha

A measure of an investment’s excess return compared to a market benchmark, indicating its performance due to active management.

AMC (Asset Management Company)

A firm that manages pooled funds from investors and invests them in securities such as stocks, bonds, or other assets.

AML (Anti-Money Laundering)

A regulatory framework aimed at preventing illegal activities such as money laundering and fraud in financial transactions.

Arbitrage Funds

A type of hybrid mutual fund that profits from price differences between cash and derivatives markets. These funds offer low risk, tax efficiency (taxed like equity funds), and stable returns, making them suitable for conservative investors.

ASBA (Application Supported by Blocked Amount)

A facility that allows IPO applicants to apply for shares without transferring funds immediately; instead, the amount remains blocked in their bank account until allocation.

Assessment Year (AY)

The financial year following an income-earning financial year in which tax assessments are conducted by the tax authorities.

Asset Allocation

A strategy of distributing investments across various asset classes (e.g., equities, debt, gold, real estate) to balance risk and return.

AUM - Asset Under Management

AUM's full form is Assets Under Management. Also known as the size of the fund, it represents the total market value of all the investments made by the scheme.

Balanced Fund

A hybrid mutual fund that invests in both equity and debt to offer a balance between growth and stability. These funds reduce market volatility while providing moderate risk-adjusted returns.

Banking & PSU Funds

Banking & PSU Funds focus on bonds issued by banks, public sector undertakings (PSUs), and financial institutions. They offer safety, stable returns, and moderate risk.

Bear Market

A financial market condition characterized by a decline of 20% or more in stock prices over a sustained period, typically caused by economic downturns or investor pessimism.

Belated Return

An ITR filed after the due date but before the end of the assessment year.

Benchmark Index

A reference point used to measure the performance of an investment.

Beneficiary

The individual or entity designated to receive financial benefits from a life insurance policy, investment, or trust.

Beta

A measure of a stock’s volatility in relation to the overall market. A beta greater than 1 indicates higher volatility, while a beta less than 1 suggests lower volatility.

Blue Chip Stocks

Shares of financially strong, industry-leading companies with a proven track record of stability, growth, and regular dividends. These stocks are low-risk investments, ideal for long-term wealth creation.

Blue-Chip Stocks

Shares of large, financially stable, and well-established companies with a long history of reliable performance and strong fundamentals.

Bombay Stock Exchange

Established in 1875, the BSE is Asia’s oldest stock exchange and one of India’s primary financial markets. It operates the SENSEX, a benchmark index tracking the top 30 listed companies. BSE provides trading in stocks, derivatives, mutual funds, bonds, and IPOs.

Bonds

Debt securities issued by entities like governments or corporations, promising to pay interest and return principal at maturity.

Bonus

Additional compensation or financial benefits provided by a company or insurer, often as a reward for performance or loyalty.

Book Building

A price discovery method used in IPOs where investors bid for shares, helping determine the final issue price based on demand.

Book Building

A price discovery process used in an IPO to determine the offer price.

BSE Holidays

The official trading holidays on the Bombay Stock Exchange, affecting equity, derivatives, and bond markets. These include national festivals, special trading suspensions, and weekends.

Budget Cycle

A recurring process that includes planning, approval, execution, and review of government or corporate financial budgets

Budgeting Cycle

A planned financial period where income and expenses are tracked to manage spending.

Bull Market

A period of rising stock prices, typically driven by strong economic growth, high investor confidence, and increased corporate earnings.

Capital Appreciation

 An increase in the value of an asset or investment over time.

 

Capital Appreciation

The increase in the value of an investment or asset over time due to market demand or improved business performance.

Capital Gain Bonds

Capital Gain Bonds, such as Section 54EC bonds, allow investors to save tax on long-term capital gains from property sales. These bonds have a lock-in period of 5 years and offer tax exemption on reinvested gains.

Capital Gain Index

Capital Gain Index refers to the indexed cost of acquisition of an asset, calculated using the Cost Inflation Index. It helps determine taxable long-term capital gains after adjusting for inflation.

Capital Gains

The profit earned from selling an asset (such as stocks, mutual funds, or property) at a price higher than its purchase cost.

Capital Gains Exemption

Capital Gains Exemption is available under Sections 54, 54EC, and 54F, allowing taxpayers to reinvest capital gains in property, bonds, or specified assets to save tax.

Capital Gains On Shares

Capital Gains on Shares arise when selling stocks at a profit. Gains from stocks held for over a year are taxed as LTCG, while those held for less than a year are taxed as STCG.

Capital Gains Tax

Capital Gains Tax is a tax levied on profits earned from the sale of capital assets like stocks, real estate, and mutual funds. It is categorized into short-term and long-term capital gains tax based on the holding period.

Capital Gains Tax (CGT)

A tax imposed on the profits made from the sale of capital assets, classified as short-term or long-term based on the holding period.

Capital Gains Tax On Property

Capital Gains Tax on Property is applicable when selling real estate. Short-term gains (sale within 2 years) are taxed as per income tax slabs, while long-term gains (holding over 2 years) are taxed at 20%.

Capital Guarantee

A feature that guarantees the capital invested, either in a level cover or decreasing cover option.

Capital Preservation

The goal of maintaining the initial investment value, minimizing the risk of loss.

Cash Flow

The net inflow and outflow of money in a business or investment, crucial for assessing liquidity and financial health.

Cash Value

The accumulated savings component of a permanent life insurance policy, which policyholders can withdraw or borrow against.

Category I AIF

A classification of alternative investment funds that invest in early-stage startups, social ventures, and infrastructure projects, often benefiting from government incentives.

Category II AIF

Investment funds that invest in private equity, debt instruments, and structured funds, without specific government incentives or leverage restrictions.

Category III AIF

High-risk funds using complex strategies such as derivatives trading, short-selling, and leverage to generate higher returns.

Central KYC Registry (CKYCR)

A centralized system that stores KYC records for financial institutions to access, reducing the need for repeated KYC submissions.

Claim Settlement Ratio

A metric indicating the percentage of insurance claims successfully processed and paid by an insurance company, reflecting its reliability.

Closed Ended Funds

Close-ended mutual fund schemes have a stipulated maturity period wherein the investor can invest directly in the scheme at the time of the initial issue.

Commodity Funds

Mutual funds that invest in commodities such as gold, silver, oil, or agricultural products, helping investors hedge against inflation and diversify their portfolios.

Compounding

The process of earning returns on both the initial investment and the accumulated earnings over time.

Conservative Funds

Low-risk mutual funds focusing on capital preservation by investing in a mix of debt instruments, fixed-income securities, and some equity. Ideal for risk-averse investors seeking steady returns with minimal volatility.

Contingency Fund

Another term for an emergency fund, meant to cover unforeseen financial needs.

Contra Funds

Contra Funds follow a contrarian investment approach, identifying undervalued stocks in sectors that are currently out of favor. These funds aim to generate long-term gains by capitalizing on market cycles and investor sentiment shifts. Ideal for those with a high-risk appetite and a long-term perspective.

Corporate Bond Funds

Corporate Bond Funds invest primarily in high-rated corporate debt securities, offering stable returns with relatively lower credit risk. Suitable for conservative investors seeking steady income.

Corporate Bonds

Debt securities issued by corporations to raise capital, with the promise of repayment at a fixed interest rate.

Cost Inflation Index

The Cost Inflation Index (CII) is used to adjust the purchase price of assets for inflation, helping taxpayers reduce long-term capital gains tax liability. It is published annually by the Income Tax Department.

Credit Quality

The rating of a bond issuer's financial strength, affecting the risk of default.

Credit Risk Funds

Credit Risk Funds invest in lower-rated corporate bonds to earn higher yields. While they offer attractive returns, they carry higher default risk compared to traditional debt funds.

Customer Due Diligence (CDD)

The process of verifying a customer's identity and assessing risks before allowing financial transactions.

Death Benefit

The amount paid to the nominee or beneficiary upon the death of the insured under a life insurance policy.

Debentures

A type of bond that is not secured by physical assets or collateral.

Debt Fund

A mutual fund that primarily invests in fixed-income instruments like bonds, treasury bills, and corporate debt to generate stable returns.

Debt Mutual Fund

A category of mutual funds that invest in government and corporate bonds, offering lower risk compared to equity funds.

Decreasing Cover

A type of life insurance policy where the sum assured reduces over time, often used for mortgage or loan protection.

Decreasing Cover

A coverage option where the sum assured decreases over time, typically in line with the policyholder's liability reduction.

Default Risk

The risk that a borrower will be unable to make required payments on a debt obligation.

Defensive Stocks

Stocks of companies that provide essential goods or services (e.g., healthcare, utilities) and tend to remain stable during economic downturns.

Demat Account

A digital account used to hold shares and securities in electronic form, required for trading in the stock market.

Derivatives

Financial instruments whose value is derived from an underlying asset, such as stocks, bonds, commodities, or indices.

Discretionary PMS

A type of Portfolio Management Service (PMS) where the fund manager has full authority to make investment decisions on behalf of the client.

Diversification

The practice of spreading investments across different asset classes, sectors, or geographies to reduce risk.

Dividend Payout Date

The date on which a company distributes dividends to its shareholders.

Dividend Stocks

Stocks that pay regular dividends to investors, often issued by financially stable and mature companies.

Dividend Yield

The annual dividend paid by a company as a percentage of its stock price, indicating income potential for investors.

Dividend Yield Funds

Dividend Yield Funds focus on stocks of companies that consistently pay high dividends. These funds provide investors with a regular income stream while also offering potential capital appreciation. They are suitable for those seeking stability along with moderate growth.

Dollar-Cost Averaging

A strategy used in SIPs where fixed investments are made regularly regardless of market conditions.

Double Taxation Avoidance Agreement (DTAA)

A treaty between two countries to prevent double taxation on the same income in both jurisdictions.

Down Capture Ratio

Evaluates how a fund performs in market downturns; a lower ratio is preferable.

 

Download e-PAN Card Online

Get an electronic copy of your PAN card (e-PAN) by downloading it from NSDL or UTIITSL. e-PAN is a valid digital alternative to the physical PAN card.

DRHP (Draft Red Herring Prospectus)

A preliminary document submitted by a company planning to go public, detailing financials and risks.

Duplicate PAN card

A Duplicate PAN Card can be requested if the original is lost, stolen, or damaged. Apply online through NSDL or UTIITSL and get a PAN card quickly.

Dynamic Asset Allocation

A flexible investment strategy in mutual funds where asset allocation between equity and debt is adjusted dynamically based on market conditions, valuations, and risk factors. These funds help in risk management and maximizing returns over different market cycles.

Dynamic Bond Funds

Dynamic Bond Funds actively adjust portfolio duration based on interest rate movements. These funds can invest in both short- and long-term bonds, offering flexibility across market cycles.

E Filing Income Tax

E-Filing Income Tax refers to the process of electronically filing income tax returns through the Income Tax Department’s official portal. It is a secure, paperless way to submit tax returns and claim refunds.

E-verification

The process of electronically verifying an ITR using Aadhaar OTP, net banking, or other methods.

Earnings Yield

The inverse of the P/E ratio, showing earnings per share relative to stock price.

ELSS (Equity Linked Savings Scheme)

A tax-saving mutual fund that invests in equities and offers deductions under Section 80C of the Income Tax Act.

Emergency Fund

A reserve of liquid assets or cash set aside for unexpected expenses such as medical emergencies or job loss.

Emergency Fund

Money set aside for unforeseen expenses such as health issues or job loss.

Emerging market Funds

Investment funds that focus on equities and bonds from developing economies with high growth potential but come with higher risks and market volatility.

Employee Provident Fund

The Employee Provident Fund (EPF) is a government-backed retirement savings scheme for salaried employees, where both employer and employee contribute monthly. It ensures financial security post-retirement and offers tax benefits under Section 80C.

Employee Stock Ownership Plan (ESOP)

A program that allows employees to purchase company shares at a discounted rate.

Employees Pension Scheme

The Employees’ Pension Scheme (EPS) is a government-backed pension scheme under EPF, designed to provide financial security to employees post-retirement. Employees who have completed at least 10 years of service are eligible for a monthly pension after retirement at age 58.

Endowment Plan

A life insurance policy that provides a lump sum payout upon maturity or in case of the insured's death.

EPF Balance

EPF Balance refers to the total amount accumulated in an employee’s provident fund account, including both employee and employer contributions along with accrued interest. It can be checked via the UAN portal, SMS, or the EPFO app.

EPF Interest Rate

The EPF Interest Rate is the annual rate of return set by the EPFO on provident fund contributions. It is revised annually and significantly impacts retirement savings. The interest is compounded yearly and credited to the EPF account.

Equity

Ownership in a company, represented by shares or stocks, giving investors a claim on profits.

Equity Fund

A mutual fund that invests predominantly in stocks, aiming for capital appreciation.

Equity Mutual Funds

Mutual funds that invest in equities, offering higher growth potential but also higher risk.

Equity Savings

A low-risk hybrid fund that invests in equity, debt, and arbitrage opportunities, offering stable returns with lower volatility. These funds benefit from tax treatment similar to equity funds, making them attractive for conservative investors seeking tax-efficient growth.

Equity Share Capital

The total value of funds raised by a company through equity share issuance. It represents ownership stakes in a company, with shareholders having voting rights and potential dividend earnings.

ESG (Environmental, Social, and Governance)

A framework for evaluating a company’s sustainability and ethical impact in investment decisions.

ESG (Environmental, Social, and Governance)

Factors that measure a company’s ethical impact and sustainability in its operations.

Exchange-traded Funds (ETFs)

Marketable securities that track an index, commodity, or sector and trade on stock exchanges like regular stocks, combining the benefits of mutual funds and equities.

Exemption Limit

The income threshold below which no income tax is payable by an individual.

Exit Load

A fee charged by mutual funds when an investor redeems units before a specified holding period.

Exit Strategy

A planned approach for liquidating an investment, such as selling a business, IPO, or merger.

Expense Ratio

Under SEBI (Mutual Funds) Regulations, 1996, Mutual Funds are permitted to charge certain operating expenses for managing a mutual fund scheme – such as sales & marketing / advertising expenses, administrative expenses, transaction costs, investment management fees, registrar fees, custodian fees, audit fees – as a percentage of the fund’s daily net assets.

All such costs for running and managing a mutual fund scheme are collectively referred to as ‘Total Expense Ratio’ (TER)

The TER is calculated as a percentage of the Scheme’s average Net Asset Value (NAV). The daily NAV of a mutual fund is disclosed after deducting the expenses.

Currently, in India, the expense ratio is fungible, i.e., there is no limit on any particular type of allowed expense as long as the total expense ratio is within the prescribed limit. The regulatory limits of TER that can be incurred/charged to the fund by a Mutual Fund AMC have been specified under Regulation 52 of SEBI Mutual Fund Regulations

FII (Foreign Institutional Investor)

Overseas investors who participate in financial markets of a country, impacting liquidity and market trends.

Fiscal Year (FY)

A 12-month period used for accounting and tax purposes; in India, it runs from April 1 to March 31.

FIU (Financial Intelligence Unit)

A government body that monitors financial transactions to detect and prevent financial crimes.

Fixed Deposit (FD) Maturity Date

The date on which an FD reaches its term and the principal along with interest is payable.

Fixed Deposits (FDs)

A low-risk investment where money is deposited for a fixed period at a predetermined interest rate.

Fixed-income Securities

Debt instruments such as government bonds, corporate bonds, and debentures that provide fixed periodic interest payments and return the principal at maturity.

Focused Fund

Focused Funds invest in a concentrated portfolio of selected stocks (typically 20-30), allowing fund managers to take high-conviction bets on companies with strong growth potential. While they offer the possibility of high returns, they also carry higher risks due to limited diversification.

Foreign Exchange (Forex)

The global market for trading currencies, influencing international trade and investments.

Foreign Institutional Investors (FIIs)

Investors from outside India who invest in Indian markets, influencing market liquidity and trends.

Form 16

A certificate issued by employers showing TDS deducted from an employee’s salary.

Fresh Issue

New shares offered by a company in an IPO.

Fund Management Fee

The fee charged by asset management companies for managing an investment portfolio.

Fund Manager

A professional responsible for managing an investment fund or portfolio.

Funds of Funds (FoFs)

 Funds investing in other mutual funds.

 

Gilt Funds

Gilt Funds invest exclusively in government securities, ensuring high safety with no credit risk. They are ideal for conservative investors seeking stable returns with sovereign backing.

Gilt Funds with 10 Year Constant Duration

These funds invest in government securities while maintaining a fixed portfolio duration of 10 years. They are sensitive to interest rate changes and suitable for long-term investors comfortable with volatility.

Global Funds

Funds that invest across both domestic and international markets, allowing investors to diversify their portfolios beyond their home country.

Grey Market

The unofficial market where IPO shares are traded before the official listing.

Growth Option

A mutual fund investment plan where dividends are reinvested to maximize capital appreciation.

Growth Potential

The ability of an asset or investment to increase in value over time.

Growth Stocks

Stocks of companies expected to grow at a faster rate than the overall market. These companies typically reinvest profits instead of paying high dividends, aiming for capital appreciation over time.

Guaranteed Additions

Additional benefits that accrue based on the sum assured, payable at maturity or death.

Guaranteed Income Benefit (GIB)

A feature where a regular income is paid to the policyholder during the income payout term.

Hedge Funds

Private investment funds that use various strategies, including leverage and derivatives, to maximize returns.

High-Yield Bonds

Bonds that offer higher returns due to increased risk, typically issued by companies with lower credit ratings.

Holding Period

The duration for which an investment is held before being sold or liquidated.

Home Loan Interest Deduction

Tax deduction available on interest paid for home loans.

Hurdle Rate

The minimum return an investment must generate before fund managers earn performance fees.

Hybrid Funds

Mutual funds that invest in a mix of equity and debt instruments to balance risk and return.

Income Funds

Mutual funds that invest primarily in bonds and fixed-income securities, aiming to provide regular income to investors while maintaining capital stability.

Income Payout Term

The period during which a policyholder receives regular income from an investment or insurance policy.

Income Tax

Income Tax is a direct tax levied by the government on an individual's or entity's earnings. It is calculated based on annual income and is paid as per the applicable tax slabs defined by the Income Tax Act.

Income Tax Online Payment

Income Tax Online Payment enables taxpayers to pay their income tax liabilities digitally via the Income Tax Department’s website or authorized banks, ensuring a convenient and hassle-free tax payment process.

Income Tax Refund

An Income Tax Refund is issued when a taxpayer has paid more tax than their actual liability. It is credited to the taxpayer’s bank account after filing an ITR and verification by the Income Tax Department.

Income Tax Return

An Income Tax Return (ITR) is a form filed annually with the Income Tax Department, declaring income, deductions, and tax liability. Filing ITR is mandatory for individuals and businesses earning above the exempted limit.

Income Tax Slab

Income Tax Slabs are predefined tax rates applied to different income brackets. India follows a progressive tax system, meaning higher income levels attract higher tax rates. The slabs are revised periodically by the government.

Index Funds

These funds aim to replicate the performance of a specific market index, such as the S&P 500. They invest in the same securities in the same proportion as the index they track, offering low-cost exposure to broad market returns.

Indexation Benefit

A tax advantage that adjusts the purchase price of an asset for inflation, reducing taxable capital gains.

Inflation-Adjusted Returns

Returns that account for the effect of inflation on purchasing power.

Infrastructure Funds

Funds investing in infrastructure projects such as transportation, utilities, and energy.

Initial Public Offering (IPO)

The first sale of a company’s shares to the public, allowing it to raise capital.

Insurance Renewal Date

The due date by which an insurance policy must be renewed to maintain continuous coverage.

Interest Rate Cut

A reduction in benchmark interest rates by central banks to stimulate economic growth.

International Funds

Mutual funds that invest in stocks or bonds outside the investor’s home country, providing exposure to foreign markets and global economic opportunities.

Interval Funds

A type of mutual fund that allows investors to buy or redeem units only at specific intervals, offering a mix of liquidity and long-term investment benefits.

Intraday Trading

A trading strategy where stocks are bought and sold within the same trading day to profit from short-term price fluctuations. Intraday traders use technical analysis, charts, and indicators to make quick decisions, often leveraging margin trading.

Intrinsic Value

The actual worth of a financial asset based on fundamental analysis rather than market price.

Investment Approach

The strategy or methodology used to select and manage investments.

Investment Grade Bonds

Bonds rated highly by credit agencies, indicating low default risk and stable returns.

Investment-Grade Bonds

Bonds rated by credit rating agencies as having a low risk of default.

ITR (Income Tax Return)

A form filed with tax authorities reporting income, deductions, and taxes payable.

Know your PAN Card

Find your PAN details online using your name, date of birth, or acknowledgment number. This service helps retrieve lost PAN details easily.

KYC (Know Your Customer)

A regulatory process that financial institutions use to verify the identity of clients before transactions.

Large Cap Funds

These funds primarily invest in stocks of large-cap companies, which are top 100 companies ranked according to their market capitalization. Large-cap companies are often leaders in their respective industries and are considered relatively stable compared to smaller companies. Accordingly, AMFI, in consultation with SEBI and Stock Exchanges, has prepared the list of stocks, based on the data provided by Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Metropolitan Stock Exchange of India (MSEI).

Level Cover

A type of life insurance policy where the sum assured remains constant throughout the policy term

Lien

The legal right of a lender over an asset until a loan is repaid.

Life Assured

The person whose life is insured under a life insurance policy.

Life Cover

The insurance protection offered to the policyholder’s beneficiaries in case of death.

 

Limited Premium Payment Option

A feature in insurance policies where the premium is paid for a limited period, but coverage continues.

Liquid Funds

Liquid Funds invest in short-term debt instruments with maturities of up to 91 days. They offer higher returns than savings accounts and quick liquidity, making them suitable for parking surplus cash.

Liquid Mutual Fund

Mutual funds that offer quick access to invested funds with better returns than a savings account.

Liquidity

The ease with which an asset can be converted into cash without significantly affecting its price.

Liquidity Ratio

A measure of a company's ability to meet short-term debt obligations using liquid assets.

Liquidity Risk

The risk of being unable to sell an asset quickly without a price drop.

Liquidity Surplus

A situation where there is excess money in the financial system, driving up stock prices.

Listing Price

The initial price of a stock when it begins trading on a stock exchange after an IPO.

Loan-to-Value (LTV) Ratio

The percentage of the loan amount to the value of pledged assets

Lock-in Period

The minimum period during which investments cannot be withdrawn or redeemed.

Long Term Capital Gain Tax On Mutual Funds

Long-Term Capital Gain Tax on Mutual Funds is a 12.5% tax applicable on equity mutual fund gains exceeding ₹1.25 lakh after a one-year holding period. Debt mutual fund LTCG is taxed as per income tax slabs.

Long Term Capital Gain Tax On Shares

Long-Term Capital Gain Tax on Shares is a 12.5% tax applicable on equity share sales exceeding ₹1.25 lakh in gains, without indexation benefits.

Long Term Capital Gains Tax

LTCG Tax applies to profits from the sale of assets held for more than a specified period (1 year for equities and 2 years for real estate). In India, LTCG on stocks and equity mutual funds above ₹1.25 lakh is taxed at 12.5%.

Long-Term Investing

A strategy where investors hold assets for extended periods, usually years or decades, to benefit from market growth.

Low Duration Funds

Low Duration Funds invest in short-term debt instruments with a portfolio duration of 6-12 months. They offer better returns than savings accounts with moderate risk, making them ideal for short-term investors.

Loyalty Additions

Additional units added to the policy’s fund value from the 6th policy year onwards as a reward for policyholder’s continued premium payments.

Lumpsum

A one-time investment made in a mutual fund. This option is ideal if you have a significant amount of money ready to invest and want to maximize market exposure immediately.

Margin Call

A demand by a broker for an investor to deposit more funds to cover potential losses on leveraged positions.

Market Capitalization

The total value of a company’s outstanding shares, calculated by multiplying share price by the number of shares.

Market Correction

A temporary decline of 10% or more in stock prices, often considered a healthy adjustment.

Market Risk

The risk of investment losses due to market fluctuations.

Market Timing Risk

The risk of investing at an inopportune time due to market volatility.

Market Volatility

The degree of variation in market prices over time, impacting investment returns.

 

Market-Linked Returns

Returns that depend on the performance of the stock market rather than fixed interest.

Maturity Benefit

The payout received by the policyholder at the end of a life insurance policy term.

Medium Duration Funds

Medium Duration Funds hold debt securities with a duration of 3-4 years, balancing risk and return. Suitable for investors seeking stable returns over a medium-term horizon.

Mid Cap Funds

Mid-cap funds invest in stocks of companies with rankings from 101 to 250 according to their market capitalization.These companies are generally considered to have higher growth potential than large-cap companies but may also carry more risk. Accordingly, AMFI, in consultation with SEBI and Stock Exchanges, has prepared the list of stocks, based on the data provided by Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Metropolitan Stock Exchange of India (MSEI).

Monetary Policy

The process by which a central bank manages interest rates and money supply to control inflation and growth.

Money Market Fund

Money Market Funds invest in highly liquid, short-term debt instruments like treasury bills and commercial papers. They offer stable returns with minimal risk and high liquidity.

Mortality Charges

The cost levied by an insurance company for covering the risk of the policyholder’s death.

Multi Asset Allocation

A diversified mutual fund category that invests in at least three asset classes, such as equity, debt, gold, or real estate, to enhance risk-adjusted returns. These funds provide better diversification and stability in volatile markets.

Multi Cap Funds

Multi Cap Funds invest in a mix of large-cap, mid-cap, and small-cap stocks, offering a diversified portfolio that balances stability, growth, and risk. These funds adapt to market trends, making them ideal for long-term investors looking for steady wealth creation.

Multibagger Stocks

Stocks that might multiply their value over a period due to strong fundamentals, high growth potential, and market demand. These stocks are often found in emerging industries and require long-term investment patience.

Mutual Fund NAV (Net Asset Value)

The per-unit price of a mutual fund, calculated by dividing total assets by outstanding units.

Mutual Fund Redemption

The process of withdrawing funds from a mutual fund investment.

National Pension System (NPS)

A retirement scheme that offers additional tax deductions.

National Savings Certificate (NSC)

A fixed-income instrument offering tax benefits and fixed returns.

National Stock Exchange

India’s largest stock exchange, known for its electronic trading platform and high liquidity. It operates major indices like the Nifty 50 and facilitates trading in equities, derivatives, currencies, and bonds. NSE ensures fast, transparent, and efficient market operations, making it a preferred choice for investors.

NAV

NAV stands for Net Asset Value. The performance of a mutual fund scheme is denoted by its NAV per unit.

NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on a given date. For example, if the market value of securities of a mutual fund scheme is ₹200 lakh and the mutual fund has issued 10 lakh units of ₹ 10 each to the investors, then the NAV per unit of the fund is ₹ 20 (i.e., ₹200 lakh/10 lakh). Since market value of securities changes every day, NAV of a scheme also varies on day-to-day basis.

NAV (Net Asset Value)

The value of a mutual fund’s assets minus liabilities, representing the price per unit.

New Tax Regime

An optional tax structure with lower tax rates but without exemptions or deductions.

NFO (New Fund Offer)

A mutual fund offering that allows investors to buy units at an initial issue price before it becomes available for public trading.

Nifty

The flagship index of NSE, comprising 50 large-cap companies from various sectors. It serves as a key performance indicator of the Indian equity market and helps investors assess market sentiment. Nifty is widely used for benchmarking mutual funds and ETFs.

Nominee

The person designated by the policyholder to receive the death benefit.

Non-Discretionary PMS

A type of Portfolio Management Service where investment decisions are suggested by the manager, but the final decision is made by the client.

Non-Participating Plan

A life insurance policy that does not share in the insurer’s profits and does not receive bonuses.

NRI KYC

A separate KYC process for Non-Resident Indians, requiring additional documentation such as an overseas address proof.

NSDL

NSDL (National Securities Depository Limited) is India’s premier depository offering services like PAN issuance, tax information management, and e-governance solutions.

NSE Holidays

The official non-trading days on NSE, which include national holidays, weekends, and scheduled market closures for equity, derivatives, and commodities trading. The list is updated annually by the exchange.

Off-market Transaction

A trade of shares that occurs outside the stock exchanges, often in private deals.

Offer for Sale

A method where existing shareholders sell their stakes in a company through an IPO.

Old Tax Regime

The traditional tax structure that allows deductions under various sections like 80C, 80D, etc.

Open Ended Funds

An open-ended mutual fund is a scheme that remains open for buying or selling shares at any time, providing investors with a convenient and economical means of pooling their money. Investors have the opportunity to purchase a diversified portfolio tailored to their investment objectives, whether they seek income or growth from investments in organizations of varying sizes.

Over-the-Counter (OTC)

A decentralized market where securities are traded directly between parties without a central exchange.

Overnight Fund

Overnight Funds invest in securities with a one-day maturity, making them the safest debt funds. Ideal for institutional investors or individuals looking for ultra-short-term parking of funds.

PAN (Permanent Account Number)

A unique identification number assigned by the Indian Income Tax Department for tax-related transactions.

PAN Card Acknowledgement Number Search

The PAN Card Acknowledgment Number is a 15-digit number assigned upon applying for a PAN. Use it to track application status or request an e-PAN.

PAN Card Customer Care Number

For queries related to PAN applications, corrections, or status tracking, contact NSDL or UTIITSL’s PAN Card Customer Care via their toll-free helplines.

PAN Verification

PAN Verification helps verify the authenticity of a PAN card online via NSDL or UTIITSL. It is essential for financial institutions, businesses, and individuals.

Pass-Through Taxation

A system where income is taxed at the investor’s level rather than at the fund level.

Peer Comparison

Analyzing similar companies in the same industry to evaluate the potential of an investment.

Penny Stocks

Low-priced, high-risk stocks of small or micro-cap companies. They have low liquidity and high volatility, making them speculative investments with the potential for both massive gains and heavy losses

Pension Plan

A financial product designed to provide a steady income post-retirement.

Performance Fee

A fee charged by investment managers based on the returns generated above a benchmark.

Pledging

Using securities as collateral to obtain a loan.

Policy Term

The duration for which an insurance policy remains active.

Policyholder

The person who owns the life insurance policy.

Portfolio

 A collection of different investments, including stocks, bonds, and mutual funds.

Portfolio Diversification

The practice of spreading investments across multiple asset classes to minimize risk.

Portfolio Management Services (PMS)

A professional service where fund managers handle an investor’s portfolio based on their goals.

PPF Balance

PPF Balance refers to the total savings accumulated in a Public Provident Fund account, including annual deposits and accrued interest. Account holders can check their balance online via their bank’s net banking portal.

PPF Withdrawal

PPF Withdrawal allows account holders to withdraw funds from their Public Provident Fund account under specific conditions. Partial withdrawals are allowed from the 7th year, while full withdrawal is permitted after the 15-year maturity period.

Pre-IPO

Investment in shares of a company before its Initial Public Offering (IPO).

Premium

The amount paid by an investor or policyholder for insurance coverage or investment plans.

Premium Allocation Charges

Fees deducted from the premium before investing the balance into funds in unit-linked insurance plans.

Premium Payment Term (PPT)

The period during which the policyholder must pay premiums for an insurance policy.

Price-to-Book (P/B) Ratio

A financial ratio that compares a company’s market price to its book value.

Price-to-Earnings (P/E) Ratio

A valuation metric comparing a company’s stock price to its earnings per share.

Private Equity (PE)

Investments in private companies that are not publicly traded, usually involving long-term capital growth.

Private Placements

The sale of securities to a small group of private investors rather than through a public offering.

Proposer

The individual who applies for and owns a life insurance policy.

Public Provident Fund

The Public Provident Fund (PPF) is a long-term savings scheme backed by the Indian government, offering attractive interest rates and tax-free returns. It has a 15-year tenure with partial withdrawals allowed after the sixth year.

Public Provident Fund (PPF)

A government-backed long-term savings scheme offering tax benefits and fixed interest.

Re-KYC

The process of updating or revalidating KYC details to ensure compliance with the latest regulatory requirements.

Real Estate Funds

Investment funds that focus on real estate assets, including properties and REITs, offering capital appreciation and passive income potential.

Recurring Deposits (RD)

A savings scheme where individuals deposit a fixed amount every month and earn interest.

Red Herring Prospectus

A preliminary legal document filed before an IPO, containing important company financials and risks.

Regular Option

A mutual fund investment plan where dividends are paid out to investors instead of being reinvested.

Regulatory Risks

Risks associated with changes in laws and regulations that could impact investments or businesses.

Return of Premium (ROP)

A feature in some insurance policies where the total premiums paid are returned if no claim is made.

Return of Premium (ROP)

A feature that returns all base premiums paid if the policyholder survives the policy term.

Revenue Growth

The increase in a company’s income from its business activities over time.

 

Revenue Growth

The increase in a company's income over a specific period, indicating business expansion.

Rider

An additional benefit or feature added to an insurance policy for extra coverage, such as accidental death or critical illness.

Risk Profile

An assessment of an investor’s ability and willingness to take on investment risks.

Risk Tolerance

The degree of risk an investor is willing to take on in their investment strategy.

Risk-Adjusted Return

A measure of return that accounts for the level of risk taken to achieve it.

Risk-Based KYC

A KYC model where the level of verification depends on the investor’s risk profile.

Risk-Return Tradeoff

The principle that potential returns rise with an increase in risk.

Rolling Returns

A performance metric showing average returns over fixed time periods (e.g., 1-year, 3-year) to assess consistency.

Rupee Cost Averaging

An investment strategy where a fixed amount is invested at regular intervals, reducing the impact of market volatility.

SEBI

The regulatory body governing the securities and investment markets in India, ensuring investor protection, transparency, and fair trading practices.

SEBI (Securities and Exchange Board of India)

The regulatory body overseeing securities markets and mutual funds in India.

Secondary Market

A marketplace where investors can buy and sell previously issued private equity investments.

Section 80c

Section 80C of the Income Tax Act allows taxpayers to claim deductions of up to ₹1.5 lakh per financial year on investments such as PPF, EPF, NSC, life insurance premiums, and ELSS, reducing taxable income.

Sector Allocation

The distribution of a mutual fund’s investments across different industry sectors.

Sector Funds

Sector Funds invest in a specific industry or sector, such as banking, technology, or healthcare. These funds offer high growth potential when the chosen sector performs well but carry higher risk due to limited diversification. They are best suited for experienced investors with a strong understanding of market trends.

Sector Rotation

The practice of shifting investments between industries based on economic cycles.

Securities Transaction Tax (STT)

A tax levied on the purchase and sale of securities in the stock market.

SENSEX

The benchmark index of BSE, representing the performance of 30 top-performing companies across major sectors. It is considered a barometer of India’s economic health and stock market trends. A rising SENSEX indicates a bullish market, while a decline signals bearish trends.

Sharpe Ratio

A measure of risk-adjusted return; a higher ratio indicates better returns relative to risk and vice versa.

Short Term Capital Gain Tax On Mutual Funds

Short-Term Capital Gain Tax on Mutual Funds is 15% for equity mutual fund sales within one year, while for debt mutual funds, STCG is taxed at individual income tax slab rates.

Short Term Capital Gain Tax On Shares

Short-Term Capital Gain Tax on Shares is a 15% tax applied to profits from stocks sold within one year, applicable to equity investments on recognized stock exchanges.

Short Term Capital Gains Tax

STCG Tax is levied on profits from assets sold within a short duration (less than 1 year for equities, less than 2 years for real estate). STCG on listed stocks and equity funds is taxed at 15%.

Short-term Fixed Deposits

Fixed deposits with shorter durations, providing quicker access to funds.

 

Short-term Investment

Investments with an expected horizon of less than one year.

Small Cap Funds

Small-cap funds invest in stocks of companies that are ranked 251 and below according to their market capitalization.These companies may have higher growth potential than large-cap and mid-cap companies but also tend to be more volatile and riskier. Accordingly, AMFI, in consultation with SEBI and Stock Exchanges, has prepared the list of stocks, based on the data provided by Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Metropolitan Stock Exchange of India (MSEI).

Sortino Ratio

Similar to the Sharpe Ratio but focuses only on downside risk, penalizing negative deviations.

Sovereign Bonds

Government-issued bonds considered to be low-risk investments.

Speculation

Buying stocks based on expected future price increases rather than fundamental value.

Standard Deviation (SD)

A metric used to measure a fund’s price volatility.

Stock Broker

A SEBI-registered financial intermediary who executes buy and sell orders on behalf of investors. Brokers can be full-service (offering research, advisory, and trading services) or discount brokers (providing low-cost, execution-only services).

Stock Market Timings

The official trading hours for Indian stock markets: Pre-Open Session: 9:00 AM – 9:15 AM (order placement & volatility control) Regular Trading: 9:15 AM – 3:30 PM (continuous buying and selling) Post-Market Session: 3:40 PM – 4:00 PM (closing price determination) After-Hours Trading (OTC): Available for select assets in international markets.

STP

A Systematic Transfer Plan (STP) is an investment strategy offered by mutual funds that allows investors to transfer a fixed amount of money at regular intervals from one mutual fund scheme to another. It’s a way to move your investments systematically rather than in a lump sum, often used to manage risk and optimize returns.

STP (Systematic Transfer Plan)

A strategy where a fixed amount is transferred regularly from one mutual fund to another.

Subscription Period

The timeframe during which investors can buy units in a New Fund Offer (NFO).

Sum Assured

The guaranteed amount payable in case of the policyholder’s death or at maturity of an insurance policy.

Surrender Charges

Fees imposed when an insurance policy is terminated before its maturity.

Surrender Value

The amount a policyholder receives if they terminate their insurance policy before its maturity.

Systematic Investment Plan

A Systematic Investment Plan (SIP) allows investors to invest a fixed amount regularly in mutual funds. It promotes disciplined saving and takes advantage of market fluctuations through rupee cost averaging.

Systematic Investment Plan (SIP)

A disciplined approach to investing in mutual funds at regular intervals.

Systematic withdrawal Plan

A method that allows investors to withdraw a fixed amount from their mutual fund investments at scheduled intervals, providing a steady income stream.

Systematic Withdrawal Plan (SWP)

A facility that allows investors to withdraw a fixed amount periodically from their mutual fund holdings.

Tax Audit

A detailed examination of financial records to verify compliance with tax laws.

Tax Deduction

A reduction in taxable income, allowing individuals to lower their tax liability.

Tax Deduction at Source (TDS)

A tax deducted by the payer before making a payment to the recipient.

Tax Exemption Limit

The threshold below which capital gains or income is not taxable.

Tax Harvesting

A strategy where capital losses are used to offset capital gains to reduce tax liability.

Tax Relief

Measures implemented by the government to reduce the tax burden on individuals or businesses.

Taxable Income

Income on which tax is calculated after deductions and exemptions.

TDS

TDS is a mechanism where tax is deducted at the source of income, such as salary, interest, or rent, before being credited to the recipient. The deducted amount is then deposited with the Income Tax Department.

TDS (Tax Deducted at Source)

A tax deducted at the time of payment of income such as salary, interest, or dividends.

Terminal Bonus

A one-time bonus paid at the end of a life insurance policy’s term.

Thematic Funds

Thematic funds are mutual funds that focus on specific investment themes or trends, such as sectors (e.g. technology, healthcare), geographical regions (e.g. emerging markets), or global trends (e.g. sustainability, artificial intelligence). As these funds invest only in specific sectors with only a few stocks, these funds may be risky. These funds aim to capitalize on opportunities within a particular theme or trend, allowing investors to gain exposure to specific areas of interest.

Thematic Investment

Investing based on specific sectors or market trends.

Track your PAN Card Status

Check your PAN card application status online using the acknowledgment number issued by NSDL or UTIITSL. Track updates easily via the official PAN portals.

Trading

The process of buying and selling financial instruments like stocks, commodities, and derivatives on an exchange. Trading can be intraday (buy and sell within the same day) or delivery-based (holding stocks for longer periods).

Transparency

The level of disclosure provided about a fund’s investment strategy and holdings.

 

Treasury Bills

Short-term government debt securities with maturities of one year or less.

Treasury Bills

Short-term government securities with maturities of one year or less.

Treynor Ratio

A performance metric that evaluates risk-adjusted returns using beta as a measure of market risk.

Turnover Ratio

A measure of how frequently a fund’s portfolio is changed over a given period.

UAN Member Portal

The UAN Member Portal is an online platform by the Employees’ Provident Fund Organisation (EPFO) that allows users to check their EPF balance, update KYC details, download passbooks, and process withdrawals or transfers.

UAN Registration

UAN Registration is the process of activating your Universal Account Number through the EPFO portal. Once activated, employees can track their EPF balance, update details, and manage their retirement savings online.

ULIP (Unit Linked Insurance Plan)

A life insurance policy that includes an investment component, with returns linked to market performance.

Ultra Short Funds

Ultra Short Duration Funds invest in debt instruments with a portfolio duration of 3-6 months. They provide slightly better returns than liquid funds with relatively low risk.

Universal Account Number

The Universal Account Number (UAN) is a unique 12-digit number assigned to employees contributing to the Employee Provident Fund (EPF). It helps in managing multiple EPF accounts under one ID and simplifies withdrawals and transfers.

Unlisted Shares

Shares of companies not traded on public stock exchanges, typically sold through private placements.

US Federal Reserve (Fed)

The central banking system of the United States, responsible for setting monetary policy and interest rates.

Valuation

The process of determining the value of an asset, investment, or company.

Valuation Bubble

A scenario where asset prices rise significantly above their intrinsic value, leading to a potential crash

Value Funds

Value Funds invest in fundamentally strong yet undervalued stocks, aiming to generate returns as these stocks reach their true market potential. They focus on long-term wealth creation and are suitable for patient investors looking for solid financial growth with lower volatility.

Value Stocks

Stocks that are considered undervalued compared to their intrinsic worth, often providing long-term investment opportunities.

Venture Capital

Financing provided to startups or early-stage companies with high growth potential.

Video KYC

A digital process where investors verify their identity through a live video interaction with a financial institution’s representative.

Wealth Creation

The process of increasing financial assets through investment and savings over time.

XIRR (Extended Internal Rate of Return)

A metric used to calculate the annualized return on investments with irregular cash flows.

Yields

The income generated from an investment, usually expressed as an annual percentage.