Glossary
Plain-language definitions of the mutual fund terms you will meet on this site and in a scheme document. No jargon, no scheme names, and no numbers we cannot source. Where a term has a fuller explainer, it links to it.
AMC (Asset Management Company) / fund house
The SEBI-registered company that runs a mutual fund’s schemes and manages the portfolio. On this site we describe fund houses generically and never name one.
CAGR and XIRR
Two ways of expressing a rate of return over time. CAGR describes a single lump sum growing over a period; XIRR handles many cash flows on different dates, which is why it is the measure that fits an SIP. We define what they measure but publish no return figure for any scheme.
Direct plan
A version of a scheme bought straight from the fund house, with a lower expense ratio because it carries no distributor commission. How we work explains the difference.
ELSS (Equity Linked Savings Scheme)
An equity mutual fund category that qualifies for a deduction under section 80C of the old tax regime and carries a three-year lock-in. ELSS and 80C goes into it.
Equity, debt and hybrid
Broad categories describing what a scheme mainly holds: shares (equity), bonds and similar instruments (debt), or a mix of the two (hybrid). Equity, debt and hybrid compares them.
Exit load
A charge some schemes apply if you redeem within a stated period after investing, expressed as a percentage of the amount withdrawn.
Expense ratio
The annual cost of running a scheme, expressed as a percentage of its assets and deducted before the NAV is struck — so you never pay it as a separate bill. A regular plan’s expense ratio includes the distributor commission; a direct plan’s does not.
Folio
Your account number with a fund house, under which your holdings in its schemes are recorded. What a folio is covers it.
KRA (KYC Registration Agency)
A SEBI-regulated body that holds and shares your verified KYC record so it can be used across fund houses.
KYC (Know Your Customer)
The one-time identity verification required across the mutual fund industry before you can invest, completed and validated with a KRA. Completing your KYC walks through it.
Lump sum
Investing a single amount in one go, rather than spreading it across dates as an SIP does. SIP or lump sum compares the two.
Mutual fund
A pooled investment that collects money from many investors and invests it, to a stated objective, in a portfolio run by a fund house; you hold units for your share. What a mutual fund is starts from the top.
NAV (Net Asset Value)
The per-unit price of a scheme on a given day: the value of its holdings less liabilities, divided by units in issue. A high NAV is not expensive and a low NAV is not cheap. NAV, explained takes it apart, and the NAV lookup shows the published figure.
Redemption
Selling your units back to the scheme to withdraw money. The amount is the number of units multiplied by the applicable-day NAV, less any exit load. Gains are taxable: for residents the tax is paid by you rather than deducted at redemption, while for NRIs tax is deducted at source.
Regular plan
The same scheme as its direct plan, bought through a distributor; its expense ratio includes the distributor’s commission. These are the plans we transact. How we work sets out the arrangement.
Riskometer
The standard six-level graphic every scheme must display, indicating its risk from Low to Very High.
Scheme document (SID / KIM)
The official documents setting out a scheme’s objective, strategy, costs and risks; the primary source to read before investing. How to read a scheme document shows you where to look.
SIP (Systematic Investment Plan)
Investing a fixed amount at regular intervals, usually monthly, instead of all at once, so your purchase price averages across many dates. SIP or lump sum explains the trade-off.
STP (Systematic Transfer Plan)
Moving a fixed amount from one scheme to another at regular intervals. The STP calculator illustrates it.
SWP (Systematic Withdrawal Plan)
Withdrawing a fixed amount from a scheme at regular intervals while the rest stays invested. The SWP calculator illustrates it.
Units
The shares of a scheme’s portfolio that your money buys, priced at the NAV; owning more units means a larger share of the same portfolio.
These are definitions, not advice
This page explains what terms mean. It does not name a scheme, rank anything or tell you what to buy. H2 Investment is an AMFI-registered mutual fund distributor (ARN-200996), not a SEBI-registered investment adviser. Tax treatment depends on your own circumstances and the rules change — confirm your position with a qualified tax adviser.