1. Net Asset Value (NAV): The per-unit price of a mutual fund, calculated by dividing the difference between total assets and liabilities by the number of units. NAV fluctuates daily based on asset value.
2. Assets Under Management: The total value of assets managed by a fund, calculated by subtracting liabilities from assets at a given time.
3. Benchmark: A standard reference point for evaluating mutual fund performance. Selected at launch, the benchmark aligns with the fund’s investment objective, allowing investors to assess performance in context.
Understanding Mutual Fund Fees and Options
Fees:
1. Entry Load: A fee previously charged when investing in a mutual fund (no longer applicable in India).
2. Exit Load: A fee charged when withdrawing investment before a specified period.
3. Expense Ratio: An annual fee for managing investments, expressed as a percentage of Assets Under Management (AUM).
Investment Options:
1. Growth vs. Dividend:
– Growth: Reinvests profits, increasing NAV over time.
– Dividend: Distributes profits as dividends at regular intervals.
2. Direct vs. Regular Mutual Funds:
– Direct: Bought directly from Asset Management Company (AMC), offering lower expense ratio and higher returns.
– Regular: Bought through brokers, including commission and higher expense ratio.
