February 28, 2021

Some very important terms used in Mutual fund investment

Many people are there who want to invest in the mutual fund but don’t know it’s terminology properly. Just like the Stock quotes, share price, dividend, portfolio, etc, there are some very important terms in Mutual funds too which you need to know. To fulfill this purpose, today we have brought some of the very important terms used in Mutual Funds.

AMC

AMC stands for Asset management company.  This AMC is any company that takes some money from us and invests that in many projects. The whole management of that investment is solely looked after by the company. Investors just can not do anything except depositing the money to the AMC.

NAV

The full form of NAV is Net assets value. The actual meaning of it may look different from what it should be. NAV is the price of a unit of funds in a mutual fund. You can also say that if the stock price is the price of one share in the share market, NAV is the price of One unit in a Mutual fund.

Benchmark index

It is a type of comparison tool which is used to check whether the performance of the mutual fund has been good over time or bad. To compare we usually choose the return percent of Nifty or Sensex. If the return percent of a mutual fund is more than or equal to the return percent of Nifty or Sensex, it is said to be good but if it is less than, it is said to be performing badly.

Dividend

Just like in the stock market, dividend also has the same meaning almost in Mutual Funds. Therefore, it is the profit that the company gives to the investor when the units of funds value increases. For example, if the fund value increases from 20 to 23, the company will give the investors 2.5 rupees as dividends and the new increased value of the fund unit would be 20.5. If the investors want, he can adjust this dividend by purchasing some new units which will be added to his account.

SIP

The full form of SIP is a systematic investment plan. Here the investors do not pay all the investing amount altogether but instead, he chooses the monthly or quarterly plan to deposit one fixed value of money each time.

STP

It is also somewhat like SIP. The full form of STP is a systematic transfer plan. Here, in this case, the investors deposit all the money together but the investment from his entire money is done gradually by and by.  You can check more stock information at https://www.webull.com/hc before stock trading.