Financial Glossary

These funds invests in fixed income instruments, such as Corporate and Government bonds, Government securities, Commercial Papers and Debentures, Bank certificates of  Deposits and money Market instruments like Treasury bills etc. These are less volatile, relatively safer investments and are suitable for Income Generation. Debt Funds are categorized into different types based on the kind of securities they invest in and the maturity (time horizon) of these securities. Overnight Funds, Liquid Funds, Ultra-Short Duration Funds, Corporate Bond Funds are examples of debt funds.

ELSS (Equity Linked Savings Scheme) is a diversified equity mutual fund. It is one such investment option that provides tax saving benefits along with higher growth potential over time compared to other tax saving options. Being an Equity Oriented investment product it is susceptible to market volatility and carry similar risk-return profile as equity funds.

Rolling return, also known as “rolling period returns” or “rolling time periods,” is the annualized average return for the selected period beginning at a given start date and advancing one day sequentially till the last available date. Rolling returns, measures the fund’s performance across all timescales. It helps investor gauge performance across
blocks of time, capturing market behavior over multiple periods. Thus, rolling returns are useful for examining the behavior of returns for holding periods, similar to those actually experienced by investors.

SIP works on the principle of rupee cost averaging. What this means is that the average costs of units bought is always lower than the average market price of units. Since, our monthly investment amount is fixed, we automatically buy more units when prices are low and buy fewer units when prices are high. This automatically brings down our average costs than the average market price during the period. So, eventually when unit price soar, investors get dual benefit of higher unit prices and lower average cost.

Sharp ratio is  a measure of risk adjusted returns generated  by mutual funds.

Systematic Investment Plan. It is a smart mode of investing in mutual fund schemes. Through SIP we can invest a pre-determined amount (as low as 500 rupees per month) , on a particular date of every month, into mutual funds, by giving standing instructions to debit our bank accounts. When we invest through SIP, we buy units regularly (every month) which helps to average out our costs in volatile market conditions.

Systematic Transfer Plan is a way of transferring part amounts at regular intervals from one scheme to another scheme of the same mutual fund house. Most fund houses have a daily, weekly, monthly and quarterly interval options to transfer amount. For e.g. a lumpsum amount invested in a short term debt fund or a liquid fund can be systematically transferred to an equity fund to gain benefit of market volatility.