Glossary

SIP & mutual fund glossary

258 terms explained in plain English, from absolute return to YTM: fund types, costs, returns, risk, tax under the Income-tax Act, 2025, and the paperwork. Have a question instead? Try the FAQ.

A

Absolute return: The total percentage gain or loss, ignoring how long it took. It is meaningless for comparing investments held for different periods. Returns & risk
Accrual strategy: A debt-fund strategy that earns mainly from the interest on bonds held, rather than from price gains as rates move. Debt & bonds
Active fund: A fund where the manager picks stocks aiming to beat a benchmark. It costs more than a passive fund. Fund types
Aggressive hybrid fund: A hybrid fund that holds 65–80% in equity and the rest in debt. It is taxed as an equity fund. See these funds → Fund types
AIF (Alternative Investment Fund): A privately pooled fund, such as private equity or a hedge-fund style strategy, regulated by SEBI. It is meant for large, sophisticated investors. Fund types
AIS (Annual Information Statement): The tax department's statement of your reported financial transactions, including mutual fund redemptions. Check it against your records before filing. Tax
Allotment: Crediting units to your folio after a purchase is processed. Accounts & regulation
Alpha: The return a fund earns above what its benchmark and its risk level would predict. Positive alpha suggests value added by the manager. Returns & risk
AMC (Asset Management Company): The company that manages a mutual fund's schemes, also called the fund house. Fund types
AMFI (Association of Mutual Funds in India): The industry body of mutual funds. It publishes daily NAVs, registers distributors (ARN) and issues the market-cap list. Methodology → Accounts & regulation
AMFI market-cap list: The list AMFI publishes every six months, ranking listed companies by average market value. Funds use it to classify stocks as large, mid or small cap. Markets & indices
Annualised return: A return expressed as an equivalent yearly rate, so periods of different lengths can be compared. Returns & risk
Applicable NAV: The NAV at which your purchase or redemption is processed, set by the cut-off time and when your money reaches the fund house. Accounts & regulation
Arbitrage fund: A fund that earns the price difference between a stock's cash and futures markets. It is low-risk and taxed as equity. Fund types
ARN (AMFI Registration Number): The registration number every mutual fund distributor must hold and quote on transactions. Accounts & regulation
Asset allocation: How your money is split between asset classes such as equity, debt, gold and cash. It drives most of a portfolio's risk and return. SIP & planning
Asset class: A group of investments that behave alike, such as equity, debt, gold, real estate or cash. Markets & indices
AUM (Assets Under Management): The total market value of the money a scheme or fund house manages. Returns & risk
Average maturity: The weighted average time until the bonds in a portfolio mature. Debt & bonds

B

Backtest: Running a strategy, such as a monthly SIP, on past data to see how it would have performed. It is evidence, not a forecast. Fund SIP returns → Returns & risk
Balanced advantage fund: A hybrid fund that changes its equity and debt mix dynamically, often based on valuations. It is also called a dynamic asset allocation fund. See these funds → Fund types
Banking & PSU fund: A debt fund that invests mostly in bonds issued by banks, public sector undertakings and public financial institutions. Fund types
Bear market: A sustained fall, commonly defined as 20% or more from a recent peak. Markets & indices
Benchmark: The index a fund compares itself against, chosen to match its category and stated in its scheme documents. Returns & risk
Beta: How strongly a fund moves with the market. A beta of 1.2 means it has tended to rise or fall about 20% more than the benchmark. Returns & risk
Bid-ask spread: The difference between the buying and selling prices of an ETF or stock on the exchange. It is a hidden cost of trading. Costs & charges
Blue-chip: An informal term for large, well-established, financially strong companies. Markets & indices
Bull market: A sustained period of rising prices and optimism. Markets & indices

C

CAGR (Compound Annual Growth Rate): The steady yearly rate that turns a starting value into an ending value. It is right for lump sums, but not for SIPs with many cash flows. Returns & risk
Calendar-year returns: Returns for each January-to-December year. They are useful for seeing the bad years, not just the average. Returns & risk
CAMS: Computer Age Management Services, an RTA serving many fund houses and issuing consolidated statements. Accounts & regulation
Capital gain: The profit made when you sell or redeem an investment for more than its cost. Tax
Capital loss: The loss made when you redeem below cost. It can be set off against gains, subject to rules. Tax
Carry forward of losses: Unused capital losses can be carried forward for 8 years, provided your return is filed by the due date. Tax
CAS (Consolidated Account Statement): A single statement of all your mutual fund holdings across fund houses, linked to your PAN, issued by CAMS and KFintech or by NSDL and CDSL. Accounts & regulation
Category average: The average return of all funds in a SEBI category. It is a basic yardstick for a fund's performance. Returns & risk
Certificate of deposit: A short-term, tradable deposit instrument issued by banks. Debt & bonds
Chhoti SIP: A SEBI-backed initiative from 2025 that lets first-time investors start ₹250-a-month SIPs in selected schemes, with eligibility conditions set by SEBI. SIP & planning
CKYC (Central KYC): A central registry of KYC records across financial sectors, with a 14-digit KYC identifier. Accounts & regulation
Close-ended fund: A scheme that raises money only during its launch and has a fixed maturity. Units can be traded only if they are listed on an exchange. Fund types
Commercial paper: Short-term unsecured debt issued by companies, commonly held by liquid funds. Debt & bonds
Compounding: Earning returns on your earlier returns as well as on the money you put in. Over long periods, most of a SIP's final value comes from compounding. SIP & planning
Conservative hybrid fund: A hybrid fund that holds mostly debt (75–90%) with 10–25% in equity. Fund types
Contra fund: An equity fund that follows a contrarian strategy, buying sectors or stocks that are currently out of favour. Fund types
Corporate bond fund: A debt fund that invests mostly in the highest-rated corporate bonds. Fund types
Corpus: The total accumulated value of an investment, such as the amount built up for retirement. SIP & planning
Cost of acquisition: What you paid for units, including stamp duty. Gains are measured from this cost, adjusted for grandfathering where it applies. Tax
Cost of delay: The extra investment, or the lost final value, that comes from starting a SIP later. Try the calculator → SIP & planning
Coupon: The fixed interest rate a bond pays on its face value. Debt & bonds
CPI (Consumer Price Index): India's main measure of retail inflation, published by the National Statistics Office. SIP & planning
Credit rating: An agency's grade of a borrower's ability to repay, from AAA (highest safety) downwards. Debt & bonds
Credit risk: The risk that a borrower delays or fails to pay interest or principal. Debt & bonds
Credit risk fund: A debt fund that invests largely in lower-rated bonds to earn higher yields, accepting a higher risk of default. Fund types
Custodian: An independent entity that holds a fund's securities in safekeeping, separate from the fund house. Accounts & regulation
Cut-off time: The deadline (3 pm for most schemes) for money to reach the fund house to get that day's NAV. Accounts & regulation

D

Debt fund: A scheme that invests in bonds, government securities and money-market instruments. It has lower volatility than equity, but it carries interest-rate and credit risk. Fund types
Demat account: An electronic account that holds securities. It is required for ETFs but optional for mutual funds. Accounts & regulation
Depository (NSDL / CDSL): The institutions that hold demat accounts and securities electronically. Accounts & regulation
Direct plan: A version of a scheme bought without a distributor. It has a lower expense ratio, so higher returns, than the regular plan of the same scheme. Fund types
Distributor commission: The fee a fund house pays a distributor, as an ongoing trail built into a regular plan's expense ratio. Costs & charges
Diversification: Spreading money across many securities, sectors or asset classes so that one bad outcome does not sink the whole portfolio. SIP & planning
Dividend: Part of a company's profit paid to shareholders. In a growth-option fund, dividends are reinvested in the NAV. Markets & indices
Dividend yield: Annual dividends per share divided by the share price. Markets & indices
Dividend yield fund: An equity fund that invests mainly in stocks with high dividend yields. Fund types
Downside capture ratio: How much of the benchmark's losses a fund suffered in falling months. Below 100% means it fell less than the index. Returns & risk
Drawdown: A fall from a previous peak value, expressed as a percentage. Returns & risk
DTAA (Double Taxation Avoidance Agreement): A treaty between India and another country that can reduce tax for NRIs on Indian income, depending on the treaty. Tax
Duration: A measure of how long, on average, a bond's cash flows take to arrive. Longer duration means more sensitivity to interest rates. Debt & bonds
Dynamic bond fund: A debt fund that changes its portfolio duration freely as the manager's view on interest rates changes. Fund types

E

ELSS (Equity Linked Savings Scheme): A tax-saver equity fund with a 3-year lock-in for each instalment. Its investments qualify for a deduction of up to ₹1.5 lakh under the old tax regime (Section 123 of the Income-tax Act, 2025; earlier Section 80C). See these funds → Fund types
Emergency fund: Money kept in safe, quickly accessible places, often 6 months of expenses, so that you never have to sell long-term investments in a crisis. SIP & planning
e-NACH: The electronic National Automated Clearing House mandate, run by NPCI, used for recurring debits such as SIP instalments. SIP & planning
Entry load: A charge on purchases that SEBI abolished in 2009. Mutual funds no longer have one. Costs & charges
EPS (Earnings Per Share): A company's net profit divided by its number of shares. Markets & indices
Equal weight index fund: An index fund that gives every stock in the index the same weight instead of weighting by company size. Fund types
Equity: Ownership in a company through its shares. It has the highest long-term growth potential and the largest swings. Markets & indices
Equity fund: A scheme that invests mainly in shares. SEBI's equity categories include large, mid, small, flexi and multi cap, sectoral, ELSS and others. Fund types
Equity-oriented fund: For tax purposes, a fund with at least 65% in listed Indian equity (directly, or through equity ETFs within the rules). Its gains get equity tax rates. Tax
Equity savings fund: A hybrid fund that combines equity, hedged arbitrage positions and debt, aiming for steadier returns while staying equity-taxed. Fund types
ETF (Exchange Traded Fund): A fund, usually passive, whose units trade on the stock exchange at live prices. It needs a demat and trading account. Fund types
Execution-only platform: A platform that processes direct-plan transactions without giving advice. Accounts & regulation
Exit load: A charge for redeeming within a set period, often 1% within 12 months for equity funds. It is deducted from the redemption amount. Costs & charges
Expense ratio (TER): The annual fee charged by a scheme, as a percentage of assets, deducted from the NAV every day. SEBI caps it by scheme type and size. Costs & charges

F

Factsheet: A fund house's monthly summary of each scheme's portfolio, returns, expense ratio and risk measures. Accounts & regulation
FATCA declaration: A self-declaration of tax residency and citizenship required by US and international reporting rules, needed to invest. Accounts & regulation
FIFO (first in, first out): The rule that the oldest units are treated as redeemed first. It decides which SIP instalments are being sold for tax. Tax
Financial year: The April-to-March year. The ₹1.25 lakh LTCG exemption resets at the start of each one. Tax
Flexi cap fund: An equity fund that must invest at least 65% in equity but can split it across company sizes however the manager chooses. See these funds → Fund types
Flexi SIP: A SIP whose instalment changes with a rule, such as investing more when the market has fallen or valuations are lower. SIP & planning
Focused fund: An equity fund that holds a concentrated portfolio, capped by SEBI at 30 stocks. Fund types
Folio: Your account number with a fund house. It can hold several schemes. Accounts & regulation
Free-float market cap: Market value counting only shares available for public trading, excluding promoter and locked-in holdings. Most indices weight stocks by it. Markets & indices
Fund of funds (FoF): A scheme that invests in other mutual fund schemes or ETFs. It adds an extra layer of cost. Fund types
Future value: What a sum or a series of payments will be worth at a future date at a given rate of return. SIP & planning

G

Geometric monthly rate: The monthly rate that compounds to a given annual rate: (1 + r)^(1/12) − 1. Simply dividing by 12 overstates SIP projections. Methodology → Returns & risk
Gilt fund: A debt fund that invests mainly in government securities. It has no credit risk but can be volatile when interest rates move. Fund types
Goal-based investing: Setting a target amount and date for each goal, such as education or retirement, and choosing the SIP amount and funds to match. Try the calculator → SIP & planning
Gold fund: A gold ETF holds physical gold; a gold fund of funds invests in gold ETFs so you can buy it without a demat account. Try the calculator → Fund types
Grandfathering (31 Jan 2018): For equity units bought on or before 31 January 2018, the tax cost is the higher of actual cost and the 31 January 2018 value (capped at the sale value), so older gains stay untaxed. Tax harvesting calculator → Tax
Growth option: An option in which gains stay invested in the NAV. It is the usual choice for SIPs. Fund types
G-sec (Government Security): A bond issued by the central or a state government. It carries no default risk. Debt & bonds

H

Holding period: How long you held a unit before redeeming it. It decides whether the gain is short- or long-term. Every SIP instalment has its own holding period. Tax
Hybrid fund: A scheme that combines asset classes, usually equity and debt, in proportions set by its SEBI category. Fund types

I

IDCW (Income Distribution cum Capital Withdrawal): The option, formerly called the 'dividend' option, that pays out part of the NAV. The payout comes from your own capital and is taxed at your slab rate. Fund types
Impact cost: The extra cost of buying or selling a security because a large order moves its price. It matters more for less liquid stocks and ETFs. Costs & charges
Income-tax Act, 2025: The law that replaced the Income-tax Act, 1961 from 1 April 2026. It renumbers sections but kept the 12.5% and 20% equity capital gains rates. Tax
Indexation: Raising the purchase cost for inflation to reduce taxable gains. It was removed for most assets sold on or after 23 July 2024 and no longer applies to mutual funds. Tax
Index fund: A passive fund that copies an index, such as the Nifty 50, stock for stock. It is low-cost, and its returns track the index minus costs. Index funds compared → Fund types
Index rebalancing: The periodic review in which an index adds or drops companies and resets weights. Index funds must follow it. Markets & indices
India VIX: NSE's volatility index, showing the near-term volatility the options market expects. It rises when markets are fearful. Markets & indices
Inflation: The general rise in prices over time, which reduces what a rupee can buy. Long-term plans should be judged in inflation-adjusted terms. SIP & planning
Information ratio: Excess return over the benchmark divided by tracking error. It measures how consistently an active manager beats the index. Returns & risk
Instalment: Each individual SIP payment. Every instalment buys units at that day's NAV and has its own holding period for tax and exit load. SIP & planning
Interest rate risk: The risk that bond prices fall when interest rates rise. It is larger for longer-duration funds. Debt & bonds
International fund: A scheme that invests in foreign stocks, directly or through overseas funds. It is affected by currency movements and overseas investment limits. Fund types
Interval fund: A scheme that allows purchases and redemptions only during specified transaction windows. Fund types
Investment horizon: How long you intend to stay invested before you need the money. It is the main factor in choosing between equity, hybrid and debt funds. SIP & planning
IRR (Internal Rate of Return): The discount rate that makes the present value of all cash flows zero. XIRR is IRR for irregular dates. Returns & risk
ITR (Income Tax Return): The annual return you file declaring income, including capital gains from mutual funds, even when they fall within the exemption. Tax

K

KFintech: KFin Technologies, formerly Karvy, an RTA serving many fund houses and issuing consolidated statements. Accounts & regulation
KIM (Key Information Memorandum): A short summary of the SID that comes with the application form. Accounts & regulation
KRA (KYC Registration Agency): A SEBI-registered agency that stores KYC records. Your status there can be Validated, Registered or On hold. Accounts & regulation
KYC (Know Your Customer): The one-time identity and address verification, using PAN and approved documents, required before investing in mutual funds. Accounts & regulation

L

Large cap fund: An equity fund that must invest at least 80% in large-cap stocks, the 100 largest listed companies by market value. See these funds → Fund types
Large & mid cap fund: An equity fund that must invest at least 35% each in large-cap and mid-cap stocks. Fund types
Life cycle fund: A category introduced in SEBI's February 2026 categorisation circular, replacing solution-oriented retirement and children's schemes. Each fund targets a maturity year and changes its asset mix along a glide path as that year approaches. Fund types
Liquid fund: A debt fund that invests in instruments maturing within 91 days. It is often used for parking money for short periods. Fund types
Liquidity risk: The risk that a fund cannot sell a holding quickly without accepting a lower price. Debt & bonds
LTCG (Long-Term Capital Gain): A gain on units held longer than the threshold: 12 months for equity funds. Equity LTCG is taxed at 12.5% above ₹1.25 lakh a year. Read the guide → Tax
Lump sum: Investing a large amount in one go rather than in instalments. Try the calculator → SIP & planning

M

Macaulay duration: The weighted average time, in years, to receive a bond's cash flows. Debt & bonds
Market capitalisation: A company's share price multiplied by its total shares. SEBI's large, mid and small cap categories are based on it. Markets & indices
Market correction: A fall of roughly 10% or more from a recent peak. Corrections are a normal part of equity investing. Markets & indices
Market timing: Trying to buy before rises and sell before falls. It is consistently hard to do, which is one reason SIPs exist. Markets & indices
Mark-to-market: Valuing holdings at current market prices daily. It is why debt fund NAVs move with interest rates. Debt & bonds
Maturity value: In a calculator, the projected value of a SIP at the end of the chosen period. A real SIP has no automatic maturity; units stay invested until you redeem them. SIP & planning
Maximum drawdown: The largest peak-to-trough fall over a period. It shows the worst loss an investor could have sat through. Returns & risk
MF Central: A platform built jointly by CAMS and KFintech where investors can view and service all their folios in one place. Accounts & regulation
Micro SIP: A SIP of a small amount, typically a few hundred rupees a month, meant to make regular investing accessible. Try the calculator → SIP & planning
Mid cap fund: An equity fund that must invest at least 65% in mid-cap stocks, companies ranked 101 to 250 by market value. See these funds → Fund types
Minor folio: A folio in a child's name, operated by a parent or legal guardian, with payments from the child's bank account (or one held jointly with the guardian). Accounts & regulation
Missed SIP instalment: An instalment that fails, usually because of insufficient balance. Fund houses don't charge a penalty, but your bank may, and repeated failures can cancel the SIP. Try the calculator → SIP & planning
Mode of holding: How a folio is held: single, joint, or anyone or survivor. It decides who can transact. Accounts & regulation
Modified duration: The approximate percentage change in a bond fund's value for a 1% change in interest rates. A modified duration of 5 means about a 5% fall if rates rise by 1%. Debt & bonds
Money market fund: A debt fund that invests in money-market instruments with maturities of up to one year. Fund types
Multi-asset allocation fund: A hybrid fund that must invest in at least three asset classes, with at least 10% in each. Fund types
Multi cap fund: An equity fund that must invest at least 25% each in large, mid and small caps. Fund types
Mutual fund: A trust that pools money from many investors and invests it according to a stated objective, managed by an asset management company and regulated by SEBI. Fund types
Mutual fund distributor (MFD): An AMFI-registered intermediary who sells regular plans and is paid commission by the fund house. Accounts & regulation

N

NAV (Net Asset Value): The per-unit value of a scheme: assets minus liabilities, divided by the units outstanding. It is published every business day by the fund house and AMFI. Returns & risk
New tax regime: The default tax structure with lower slab rates but most deductions removed, including the ELSS deduction. Tax
NFO (New Fund Offer): The launch period of a new scheme, when units are usually offered at ₹10. The low NAV does not make an NFO cheaper than an existing fund. Fund types
Nifty 100: The Nifty 50 and Nifty Next 50 combined: India's 100 largest companies on NSE. Compare index funds → Markets & indices
Nifty 50: NSE's flagship index of 50 large companies across sectors. It is the most widely tracked index in Indian index funds. Compare index funds → Markets & indices
Nifty 500: A broad index of 500 companies covering most of India's listed market value. Markets & indices
Nifty Midcap 150: The index of 150 mid-sized companies, ranked 101 to 250 by full market value. Compare index funds → Markets & indices
Nifty Next 50: The 50 companies ranked just below the Nifty 50 by size. They are large companies that could join the Nifty 50. Compare index funds → Markets & indices
Nifty Smallcap 250: The index of 250 small companies, ranked 251 to 500. Compare index funds → Markets & indices
Nominal value: The rupee amount shown on your statement, not adjusted for inflation. SIP & planning
Nominee: The person or people you name to receive your units on your death. Up to 10 nominees are allowed under SEBI's 2025 rules. Accounts & regulation

O

Old tax regime: The optional tax structure that keeps deductions such as ELSS, PPF and home-loan interest, in exchange for higher slab rates. Tax
Open-ended fund: A scheme that accepts purchases and redemptions on every business day at NAV. Most SIPs are in open-ended funds. Fund types
Overnight fund: A debt fund that invests in securities maturing the next business day. It carries almost no interest-rate or credit risk. Fund types

P

PAN (Permanent Account Number): The 10-character tax identifier that is mandatory for mutual fund investments and used to link all your folios. Accounts & regulation
Passive fund: A fund, such as an index fund or ETF, that copies an index instead of picking stocks. Fund types
P/B ratio: Share price divided by book value per share. It is common for valuing banks and asset-heavy businesses. Markets & indices
P/E ratio: Share price divided by earnings per share. It shows how much investors pay for each rupee of profit. Markets & indices
Perpetual SIP: A SIP with no end date. It runs until you cancel it. SIP & planning
PMS (Portfolio Management Services): A service in which a manager runs a separate portfolio in your name. SEBI requires a minimum investment of ₹50 lakh. Fund types
Point-to-point return: The return between two specific dates, such as 1, 3 or 5 years to today. It depends heavily on the end date chosen. Returns & risk
Portfolio disclosure: The regular public listing of every holding in a scheme, required by SEBI. Accounts & regulation
Portfolio turnover ratio: How much of a portfolio is bought and sold in a year. High turnover means more trading costs. Returns & risk
Post-tax return: The return left after capital gains tax. It is what you actually keep. Returns & risk
Potential Risk Class (PRC) matrix: A grid that debt funds must disclose, showing the maximum interest-rate risk and credit risk the scheme can take. Returns & risk
Present value: What a future amount is worth in today's money once you discount it at a given rate. SIP & planning
PRI (Price Return Index): An index that tracks price changes only, without dividends. It understates the market's true return. Returns & risk
Purchasing power: The quantity of goods and services a sum of money can buy. Inflation reduces it. SIP & planning

Q

Quartile ranking: Where a fund ranks within its category: the first quartile is the top 25%, the fourth quartile the bottom 25%. Returns & risk

R

Real return: Return after inflation. A 12% return with 6% inflation is roughly a 5.7% real return. Returns & risk
Real value: A future amount expressed in today's purchasing power, after adjusting for inflation. Every calculator on this site shows it next to the nominal figure. SIP & planning
Rebalancing: Bringing a portfolio back to its target asset allocation, for example by moving money from equity to debt after a strong rally. SIP & planning
Recovery period: The time an investment takes to climb back to its previous peak after a drawdown. Returns & risk
Redemption: Selling units back to the fund at the applicable NAV, minus any exit load. Equity fund proceeds usually reach your bank within a few working days. Accounts & regulation
Regular plan: A version of a scheme bought through a distributor. It includes commission in its expense ratio. Read the guide → Fund types
Repo rate: The rate at which the RBI lends short-term to banks. Its main policy tool, it influences all other interest rates. Debt & bonds
RIA (Registered Investment Adviser): A SEBI-registered adviser who charges you a fee for advice and recommends direct plans, without taking commissions. Accounts & regulation
Riskometer: SEBI's six-level risk label (from Low to Very High) that every scheme must display and update monthly based on its portfolio. Returns & risk
Risk profile: How much loss you can tolerate, financially and emotionally, without abandoning your plan. It shapes how much equity you should hold. SIP & planning
Rolling returns: Returns over every possible window of a given length (for example, every 5-year period). They show how consistent a fund or index has been. Rolling returns → Returns & risk
R-squared: How much of a fund's movement is explained by its benchmark, from 0 to 100. A very high value means the fund behaves almost like the index. Returns & risk
RTA (Registrar and Transfer Agent): The firm that keeps investor records and processes transactions for fund houses. CAMS and KFintech are the main RTAs in India. Accounts & regulation
Rule of 72: A shortcut: 72 divided by the annual return gives the approximate years to double a lump sum. At 12%, that is about 6 years. Returns & risk
Rupee-cost averaging: The effect of investing a fixed amount regularly: you buy more units when prices are low and fewer when they are high, which smooths your average purchase price. SIP & planning

S

Scheme: A specific fund offered by a fund house, with its own objective, portfolio, plans and options. Fund types
SEBI (Securities and Exchange Board of India): The regulator of India's securities markets, including mutual funds, distributors, advisers and fund categories. Accounts & regulation
Section 123 (earlier 80C): The deduction of up to ₹1.5 lakh for ELSS, PPF, EPF and similar investments, available only under the old tax regime. Tax
Section 196 (earlier 111A): The section of the Income-tax Act, 2025 that taxes short-term gains on equity shares and equity-oriented funds at 20%. Tax
Section 198 (earlier 112A): The section of the Income-tax Act, 2025 that taxes long-term gains on equity shares and equity-oriented funds at 12.5% above ₹1.25 lakh. Tax
Sectoral fund: An equity fund that invests in a single sector, such as banking, IT or pharma. Its returns are concentrated and depend heavily on timing. Fund types
Segregated portfolio: A 'side pocket' a debt fund can create to separate a defaulted or downgraded bond from the rest of its portfolio, so new investors don't benefit from, and existing ones aren't diluted by, its recovery. Fund types
Sensex: The BSE's index of 30 large, well-established companies. It is India's oldest stock index. Compare index funds → Markets & indices
Sequence of returns risk: The risk that poor returns arrive early in your withdrawals (or late in your SIP), which hurts more than the same returns in a different order. Returns & risk
Set-off of losses: Using capital losses to reduce gains. Short-term losses can offset any capital gain; long-term losses can offset only long-term gains. Tax
Sharpe ratio: Return above the risk-free rate per unit of total volatility. Higher means more return for the risk taken. Returns & risk
SID (Scheme Information Document): The full legal document of a scheme: its objective, asset allocation, risks, costs and terms. Accounts & regulation
Silver ETF: An exchange-traded fund that holds physical silver and tracks its domestic price. Fund types
SIP mandate: Your authorisation for the fund house to debit your bank account on SIP dates, set up through e-NACH, a physical form or UPI AutoPay. SIP & planning
SIP pause: A facility many fund houses offer to skip SIP instalments for a few months without cancelling the SIP. SIP & planning
SIP (Systematic Investment Plan): A way of investing a fixed amount in a mutual fund at regular intervals, usually monthly, by automatic debit. A SIP is a method of investing, not a product. SIP calculator → SIP & planning
Slab rate: Your normal income-tax rate based on total income. It applies to debt fund gains and IDCW payouts. Tax
Small cap fund: An equity fund that must invest at least 65% in small-cap stocks, companies ranked 251 and below by market value. See these funds → Fund types
Smart beta fund: A passive fund that tracks a rules-based factor index, such as momentum, quality, low volatility or value, instead of a market-cap index. Fund types
Solution-oriented scheme: The former SEBI category of retirement and children's funds, with a 5-year lock-in. It was replaced by life cycle funds in SEBI's February 2026 circular. Fund types
Sortino ratio: Like the Sharpe ratio, but it counts only downside volatility. It suits investors who mind losses more than upswings. Returns & risk
Specialised Investment Fund (SIF): A SEBI-regulated product between mutual funds and portfolio management services. It allows strategies such as limited short selling, with a ₹10 lakh minimum investment per investor. Fund types
Specified mutual fund: For tax purposes, a fund with more than 65% in debt and money-market instruments. Gains on units bought on or after 1 April 2023 are taxed at slab rates, however long they are held. Tax
Stamp duty: A 0.005% duty on every mutual fund purchase, including SIP instalments and switch-ins, since 1 July 2020. Costs & charges
Standard deviation: A measure of how widely returns swing around their average. Higher means more volatile. Returns & risk
Star rating: A score that research firms give funds based on past risk-adjusted returns. It looks backwards and can change quickly. Returns & risk
Statement of Account (SoA): The fund house's record of your transactions and units in a folio. Units held this way don't need a demat account. Accounts & regulation
STCG (Short-Term Capital Gain): A gain on units held up to the threshold: 12 months for equity funds, taxed at 20%. Tax
Step-up SIP: A SIP whose instalment rises every year by a fixed percentage or amount, usually in line with income growth. Try the calculator → SIP & planning
STP (Systematic Transfer Plan): A regular transfer of a fixed amount from one scheme, usually a liquid or debt fund, into another, usually equity. It is used to stagger a lump sum into the market. Try the calculator → SIP & planning
STT (Securities Transaction Tax): A tax of 0.001% of the redemption value when you sell units of an equity-oriented fund. Costs & charges
Surcharge and cess: Additions to income tax: surcharge for high incomes and a 4% health and education cess on tax. They apply on top of capital gains rates. Tax
Survivorship bias: The distortion that comes from studying only funds that still exist. Closed or merged poor performers drop out, which makes averages look better than they really were. Methodology → Returns & risk
Switch: Moving money from one scheme or plan to another within the same fund house. For tax, it is a redemption plus a purchase. Accounts & regulation
SWP (Systematic Withdrawal Plan): A regular withdrawal of a fixed amount from a mutual fund, often used for retirement income. Each withdrawal is a redemption and can be taxed. Try the calculator → SIP & planning

T

Target maturity fund: A passive debt fund that holds bonds maturing around a fixed date, so returns are fairly predictable if you hold it to maturity. Fund types
Tax-gain harvesting: Booking long-term gains up to the ₹1.25 lakh yearly exemption and reinvesting, to raise your cost base tax-free. Tax harvesting calculator → Tax
Tax-loss harvesting: Selling investments at a loss to set the loss against taxable gains, then reinvesting. Tax
Tax year: The term the Income-tax Act, 2025 uses for the April-to-March year in which income is earned. It replaces the old 'previous year' and 'assessment year' pair. Tax
T-bill (Treasury Bill): Short-term central government debt maturing in up to one year, issued at a discount. Debt & bonds
TDS (Tax Deducted at Source): Tax withheld by the payer. For residents, mutual funds deduct 10% TDS on IDCW above ₹10,000 a year but none on redemption gains. Tax
Thematic fund: An equity fund built around a theme that spans sectors, such as consumption, manufacturing or ESG. Fund types
Time value of money: The idea that a rupee today is worth more than a rupee later, because it can be invested and earn returns in the meantime. SIP & planning
Total return: The price change plus dividends or interest received or reinvested. Returns & risk
Tracking difference: The gap between an index fund's return and its index's return, mostly from costs. Smaller is better. Index funds compared → Costs & charges
Tracking error: The volatility of the difference between a fund's returns and its index's returns. For index funds, lower is better. Index funds compared → Returns & risk
Trailing returns: Returns for periods ending today (1, 3, 5 and 10 years), as shown on factsheets. They change every day as the window moves. Returns & risk
Transaction charge: A small charge that some distributors may deduct from large purchases. It does not apply to direct plans. Costs & charges
Transmission: The transfer of units to a nominee or legal heir after the investor's death. Accounts & regulation
Treynor ratio: Return above the risk-free rate per unit of beta (market risk). Returns & risk
Trigger SIP: A SIP or purchase that starts, stops or redeems when a set condition is met, such as an index level or a target gain. SIP & planning
TRI (Total Return Index): An index version that includes reinvested dividends. SEBI requires mutual funds to benchmark against TRI, not the price-only index. Returns & risk
Trustee: The board that holds a mutual fund's assets in trust for unitholders and oversees the fund house. Accounts & regulation

U

Unclaimed amount: Redemption or IDCW money that could not be paid out to an investor. It can be claimed back from the fund house with proof. Accounts & regulation
Unitholder: An investor who owns units of a mutual fund scheme. Accounts & regulation
Units: The shares of a mutual fund scheme that you own. Your investment value is the number of units multiplied by the NAV. SIP & planning
UPI AutoPay: A recurring-payment mandate set up and managed in a UPI app, which can be used to pay SIP instalments. SIP & planning
Upside capture ratio: How much of the benchmark's gains a fund captured in rising months. 110% means it rose 10% more than the index. Returns & risk

V

Valuation: How expensive a market or stock is relative to earnings, book value or other fundamentals. It influences future returns more than the near future does. Markets & indices
Value fund: An equity fund that follows a value strategy, buying stocks that look cheap relative to their fundamentals. Fund types
Volatility: The size and frequency of price swings. Equity is volatile in the short run, which is why it needs a long horizon. Returns & risk

X

XIRR: The annualised return on a series of cash flows at irregular dates. It is the correct measure for SIPs, top-ups and withdrawals. XIRR calculator → Returns & risk

Y

Yield curve: A chart of bond yields across maturities. Its shape reflects expectations about interest rates and growth. Debt & bonds
YTM (Yield to Maturity): The annual return a bond portfolio would earn if every bond were held to maturity and paid as promised, before expenses. Debt & bonds

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₹1.25 lakh LTCG exemption: The first ₹1.25 lakh of long-term gains on equity shares and equity funds each financial year is tax-free. The limit is per person, not per fund. Tax harvesting calculator → Tax