Beginner's guide: some terms to know

• Diversified: Schemes that invest in companies across all industry sectors.
• Index: Schemes in which the portfolios are constructed to mirror a specific market index. Securities are purchased in the same proportions as in the selected Index. Index funds are expected to provide a rate of return over time that will approximate or match that of the underlying index.
• Tax Planning/ ELSS: Some mutual fund schemes offer tax benefit u/s 80C wherein investments upto 1.5 lakh a year can be claimed as deduction. These schemes come with three year lock - in and under the new regulation, any new tax planning mutual fund scheme will have to be a 10 year close ended scheme.
• Hybrid : Equity-oriented: Hybrid funds are those which invest in more than one asset class, such as only equity or only debt.
• Debt-oriented: These hybrid funds invest a large part of their corpus in debt instruments and a smaller part in equities.
• NAV: Net asset value is the investment value of each unit of a scheme net of all fund management and administration related expenses.
• Entry Load: Fees an investor has to pay while purchasing units of a scheme.
• Exit Load: Fees an investor has to pay to exit the scheme.