SIP Glossary: A-Z Financial Terms

An investor who meets SEBI’s income/net-worth thresholds and is formally accredited. For SIFs, accredited investors may be exempt from the ₹10 lakh minimum (a lower floor, around ₹1 lakh, can apply).

A SIF strategy with an all-weather mandate that dynamically shifts across asset classes — equity, debt, gold and derivatives — to adapt to changing market conditions.

Alternative Investment Fund — a SEBI-regulated pooled vehicle (Categories I, II, III) for sophisticated investors, typically with a ₹1 crore minimum and lower liquidity. SIFs offer some AIF-like flexibility (e.g. long-short) at a far lower ₹10 lakh ticket within the mutual-fund framework.

Asset Management Company — the entity that manages mutual fund schemes. Examples: HDFC AMC, SBI Mutual Fund, ICICI Prudential.

Association of Mutual Funds in India — the self-regulatory body for mutual funds in India. Regulates distributors and promotes investor education.

AMFI Registration Number — a unique ID assigned to registered mutual fund distributors. Required to distribute mutual fund products in India.

Assets Under Management — the total market value of all investments managed by a mutual fund scheme or AMC.

A hybrid mutual fund that invests in both equity and debt instruments, providing a balance of growth and income with moderate risk.

A standard index (like Nifty 50, Sensex) against which a mutual fund's performance is compared to evaluate the fund manager's effectiveness.

Compound Annual Growth Rate — the annualized rate of return that smooths out year-to-year fluctuations. Used to compare fund performance over different periods.

The total accumulated value of your mutual fund investment at any given point. Also refers to the target amount in goal-based investing.

A mutual fund that invests primarily in fixed-income securities like bonds, government securities, and corporate deposits. Lower risk and lower returns than equity funds.

The layer of futures and options a SIF uses on top of its cash holdings to create short exposure, hedge risk, or take tactical positions — the engine that makes long-short and sector-rotation strategies possible.

Now called IDCW (Income Distribution cum Capital Withdrawal) — a fund option where profits are distributed to investors periodically instead of being reinvested.

The peak-to-trough fall in a fund’s value before it recovers. A key measure for judging long-short SIFs, whose pitch is often about cushioning drawdowns in falling markets relative to a long-only fund.

Equity Linked Savings Scheme — a type of equity mutual fund that qualifies for tax deduction under Section 80C (up to ₹1.5L/year). Has a mandatory 3-year lock-in period.

A fee charged when purchasing mutual fund units. SEBI abolished entry load in August 2009. No mutual fund in India charges entry load today.

A SIF strategy focused on mid- and small-cap companies outside the top 100 by market capitalisation, combined with a long-short overlay — higher return potential and higher volatility.

A mutual fund that invests primarily (minimum 65%) in stocks/shares of companies. Categories include large cap, mid cap, small cap, flexi cap, and sector funds.

A SIF strategy category that holds a core equity portfolio (long) and shorts overvalued stocks or the index through derivatives, aiming to generate returns in both rising and falling markets while managing downside.

A fee charged when redeeming mutual fund units before a specified period (usually 1 year for equity funds). Typically 1% if redeemed within 12 months.

The annual fee charged by a mutual fund for managing the fund, expressed as a percentage of AUM. Includes fund management fees, administrative costs, and distribution expenses.

First In, First Out — the method used for calculating capital gains tax on mutual fund redemptions. Units purchased first are considered sold first.

A mutual fund that can invest across all market capitalizations (large, mid, small) without any fixed allocation mandate, giving the fund manager maximum flexibility.

A unique account number assigned to each mutual fund investor by the AMC. Used to identify and track all transactions and holdings.

The sum of a fund’s long and short positions as a percentage of assets. It indicates how much total market exposure (and leverage) a long-short SIF is running, regardless of direction.

A fund option where all profits are reinvested back into the fund, compounding the investment over time. Preferred for long-term wealth creation via SIP.

A mutual fund that invests in a mix of equity and debt instruments. Types include Aggressive Hybrid, Balanced Advantage, Conservative Hybrid, and Multi-Asset.

A SIF strategy category that blends equity, debt and a long-short overlay. The most popular early SIF type, attracting the largest share of category assets for its relatively smoother risk profile.

A mutual fund that replicates a specific market index (like Nifty 50). Passively managed with lower expense ratios than actively managed funds.

Investment Strategy Information Document — the SIF equivalent of a mutual fund’s Scheme Information Document. It discloses each SIF strategy’s objective, approach, risk factors and limits. Always read the ISID, SID, SAI and KIM before investing in a SIF.

A mutual fund that invests minimum 80% in the top 100 companies by market capitalization. Lower risk and moderate returns compared to mid/small cap.

An investment strategy that holds some securities long (betting they rise) while simultaneously taking short positions on others (betting they fall, via derivatives). SIFs are the first pooled, retail-accessible vehicle in India permitted to run long-short strategies.

Long Term Capital Gains — gains from selling equity funds held for more than 12 months. Taxed at 12.5% above ₹1.25 Lakh annual exemption.

A one-time investment of a large amount in a mutual fund, as opposed to SIP which invests small amounts regularly.

A mutual fund investing minimum 65% in companies ranked 101st to 250th by market capitalization. Higher growth potential but more volatile than large cap.

A professionally managed investment vehicle that pools money from many investors to invest in securities like stocks, bonds, and other assets.

National Automated Clearing House — the payment system used for SIP auto-debit from bank accounts. Replaced the older ECS system.

Net Asset Value — the per-unit price of a mutual fund, calculated by dividing total net assets by the number of units outstanding. NAV changes daily based on market value of holdings.

In a long-short fund, the long equity exposure minus the short equity exposure. A lower net exposure means the fund is more hedged against a market fall; a higher net means it behaves more like a normal equity fund.

India's benchmark stock market index comprising the top 50 companies listed on the National Stock Exchange (NSE), representing about 66% of free-float market capitalization.

One Time Mandate — a bank authorization for SIP auto-debit. OTM allows the mutual fund to debit a specified maximum amount from your bank account periodically.

The rule that the ₹10 lakh SIF minimum is measured per investor (PAN) per AMC, aggregated across all that AMC’s SIF strategies — so you cannot split ₹10 lakh into smaller amounts across an AMC’s SIF schemes to get below the threshold.

Portfolio Management Services — a SEBI-regulated offering where a manager runs a personalised portfolio held in your own demat account. Minimum ₹50 lakh. SIFs sit one rung below PMS: pooled, more transparent, and accessible from ₹10 lakh.

The collection of all your investments across different mutual funds, stocks, and other assets. Diversification across your portfolio reduces risk.

The process of selling (withdrawing) mutual fund units. Units are redeemed at the prevailing NAV, and proceeds are credited to your bank account.

The SEBI-mandated risk label shown on every SIF strategy. Because SIFs use derivatives and short positions, most carry a High to Very High riskometer reading — always check it, and note that most SIFs have under one year of track record.

The annualized returns calculated for every possible period of a given duration. For example, 5-year rolling returns show every possible 5-year return from the fund's inception.

The investment principle behind SIP — investing a fixed amount regularly results in buying more units when prices are low and fewer when high, lowering the average cost per unit.

Securities and Exchange Board of India — the regulatory authority for the Indian securities market, including mutual funds. SEBI protects investor interests and regulates market participants.

A SIF strategy that tactically rotates exposure between market sectors based on momentum and macro signals, using short positions to hedge or express negative views on out-of-favour sectors.

S&P BSE Sensex — India's oldest stock market index comprising 30 leading companies listed on the Bombay Stock Exchange (BSE).

A position that profits when a security or index falls in price. In a SIF, short exposure is taken through derivatives (futures/options) within SEBI-prescribed limits — not by borrowing and selling physical shares.

Specialized Investment Fund — a SEBI category introduced on 1 April 2025 that bridges mutual funds and PMS. It is run within the mutual-fund framework (AMC, custodian, daily/periodic NAV) but can use advanced strategies like long-short and sector rotation. Minimum investment is ₹10 lakh per AMC.

Systematic Investment Plan — a method of investing a fixed amount at regular intervals (monthly) in a mutual fund. It enables disciplined investing and benefits from Rupee Cost Averaging.

A mutual fund investing minimum 65% in companies ranked 251st and below by market capitalization. Highest growth potential but highest volatility and risk.

Short Term Capital Gains — gains from selling equity funds held for 12 months or less. Taxed at 20% flat rate for equity funds.

A SIP variant where the monthly investment amount is automatically increased by a fixed percentage or amount at regular intervals (usually annually), mirroring income growth.

Systematic Transfer Plan — transferring a fixed amount from one mutual fund to another at regular intervals. Used to stagger lump sum investments from debt to equity.

Systematic Withdrawal Plan — withdrawing a fixed amount from a mutual fund at regular intervals. Used during retirement for regular income generation.

Actively shifting a portfolio’s mix across asset classes to exploit shorter-term opportunities, rather than holding fixed weights. The core idea behind Active Asset Allocator SIFs and many hybrid long-short strategies.

The measurement of your holding in a mutual fund. When you invest, you receive units at the prevailing NAV. Total value = Number of units × Current NAV.

Extended Internal Rate of Return — the most accurate method to calculate SIP returns as it accounts for the timing and amount of each cash flow (installment). Standard for SIP return calculation.