7 Basic Terms of Mutual Fund – You Must Know

Planning to invest in stock market for good return on your investment, but don’t have time or enough knowledge to manage your portfolio? Mutual Fund is the best option for you to build your wealth for your life.

But, before investing in Mutual Funds you must understand the basic terms of mutual fund.

1. AMC (Asset Management Company):

Asset Management Company is a company that manages the money invests in mutual funds, it is also known as fund house.

Features of AMC

• The Mutual Fund is a trust; it is registered under the Indian Trust Act.
• It is initiated by a sponsor.
• A sponsor is a person.
• A sponsor acts alone or with a corporate to establish a mutual fund.
• The sponsor appoints an AMC to manage the investment, marketing, accounting and other functions related to the fund.

2. NAV (Net Asset Value):

NAV, Net Asset Value is the price of a unit of a fund. It shows the value of a fund’s asset. It helps an investor to determine the fund whether it is undervalued or overvalued.

Mutual Fund calculates its NAV by adding up the current value of all the stocks, bonds and other securities in the portfolio. Subtract the manager’s salary and other operating expenses and divide the final figure by the fund’s total number of shares.

3. Load:

The Load is percentage of the NAV. Load is of two types – entry load and exit load.

When you buy the units of a fund, investor pay the percentage of it as fee, it is known as entry load. Generally, if funds charge entry load, they will not charge an exit load or vice versa. Only one of the loads is charged.

4. Corpus

Suppose you buy 1000 units of mutual fund and each unit is worth Rs. 10..............

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