Asset Management Company is an entity that manages funds of clients. A mutual fund is a trust registered under the Indian Trust Act. It is initiated by a sponsor. A sponsor is a person who acts alone or with a corporate to create a mutual fund. The sponsor then
appoints an AMC to manage the investment, marketing, accounting and other functions pertaining to the fund. In India all AMCs are required to get themselves registered with SEBI before starting its operations.

It is the price per share or per unit of a mutual fund. As stocks have a share price, mutual funds have NAV. It is the indicator of the fund’s performance over a period of time. However, a lower NAV does not mean that the fund is not doing well or a fund with
a higher NAV is performing better. NAV is calculated as: (Assets of the fund-Liabilities of the fund)/Number of outstanding
units of the fund.

Under the growth option whatever interests, bonus, gains and dividends the fund earns is not credited to the investor’s account. Instead, it is re-invested in the scheme itself. The investor gets the return only upon redeeming the fund.

Dividend option in a scheme indicates that there would be intermediate payments to the investor in form of dividends. The rate and time of payment though is not pre-fixed, it depends entirely on the fund performance. In this option, there are two sub options: Dividend Pay-out and Dividend Re-investment. In dividend pay-out the investor receives dividends in form of cash pay-out but in the other option, no cash is paid. Instead the dividends are re-invested and additional units are bought and credited to investor account.

Asset allocation is the asset mix of equity, fixed interest rate instruments and cash or cash equivalents. The asset allocation of any fund depends upon the type and objective of the fund. The asset mix is decided by the fund manager of the investors.

This is the Systematic Investment Plan option. SIP avails the facility to invest in a scheme on a monthly basis with as little as Rs. 500 a month like bank recurring deposits. Every month new units are bought with the monthly payments of the investor at prevailing NAV of the day at the date chosen by the investor.

Systematic Transfer Plan gives the investor a leverage to utilize his funds in a disciplined manner. In this case, as the investor decides, a pre-determined sum shall be transferred to equity fund every week or month. The entire amount gets transferred to an equity fund over a span of time safeguarding the investor from market volatility. STP also ensures flexibility.

Systematic Withdrawal Plan as the name suggests gives investor an option to withdraw his accumulated fund over a span of time. It may also be used as pension for individuals.

New Fund Offer is similar to an IPO of any company. It is an offering made to public to raise capital for a particular scheme. The offer is open for a stipulated time at unit price of usually Rs.10.

Fixed Maturity Plans are closed ended funds. The fund cannot be redeemed before maturity. It is popular because of its tax treatment. Most FMPs are issued for a period of more than 365 days.

Asset Under Management means the total sum of assets which the AMC is controlling. An AUM of an AMC is the sum of total assets held less its liabilities.