Financial Glossary

An IPO is when a private company offers its shares to the public for the first time on a stock exchange (BSE/NSE). Investors can apply during the subscription window.

GMP is the unofficial price at which IPO shares trade in the grey market before official listing. It indicates investor demand but is NOT official, not regulated, and not guaranteed.

Kostak is a flat, unconditional grey-market price paid for your IPO application itself, before allotment is known — the buyer pays regardless of whether allotment actually comes through. Different from Sauda, which is paid only if allotted.

Sauda (or "Subject to Sauda") is a grey-market price paid for your IPO application, but only if you're actually allotted shares — no allotment means no payment. Different from Kostak, which pays out regardless of allotment.

SIP is a method to invest a fixed amount in a mutual fund at regular intervals (monthly). It uses rupee cost averaging to reduce market timing risk.

NAV is the per-unit value of a mutual fund scheme, calculated by the fund/AMC according to applicable regulations and published daily through AMFI and other industry data channels. When you invest in a fund, you buy units at the current NAV.

CAGR measures investment growth rate over time, assuming profits are reinvested. Formula: (Ending Value / Beginning Value)^(1/Years) - 1. It's the standard metric for a single lump-sum investment's growth; for a SIP's staggered cash flows, XIRR is the more accurate measure.

AUM is the total market value of all investments managed by a mutual fund. A larger AUM isn't automatically better or worse — it can reflect a fund's track record and investor base, but very large AUM can also make it harder for some strategies (especially small/mid cap) to move in and out of positions without affecting prices.

ELSS is a tax-saving mutual fund under Section 80C. It has a 3-year lock-in period (shortest among 80C options) and invests primarily in equities.

NFO is the launch period of a new mutual fund scheme when you can buy units at ₹10 (face value). Similar to an IPO but for mutual funds.

AMFI is the industry body representing mutual fund houses in India. It publishes daily NAVs, AUM data, and fund information used by platforms like TopFund.

SEBI is India's capital market regulator. It regulates stock exchanges (BSE, NSE), mutual funds, IPOs, and investment advisors. TopFund is NOT SEBI registered.

The expense ratio is the annual fee charged by a mutual fund as a % of AUM. All else equal, a lower expense ratio leaves more of the fund's return for investors. A scheme's Direct plan typically has a lower expense ratio than its Regular plan, since no distributor commission is built in — the exact difference varies by scheme.

Direct plans let you invest in mutual funds without a distributor/agent. They typically carry a lower expense ratio than the same scheme's Regular plan, since no distributor commission is built in — the exact difference varies by scheme, so check each fund's factsheet.

FD is a bank instrument offering a fixed interest rate for a fixed tenure, insured up to ₹5 lakh per depositor per bank under DICGC. Rates vary by bank and tenure — check current FD rates rather than relying on a fixed figure. Interest is taxable at your income slab rate.

SGB is a government-issued bond denominated in grams of gold. It tracks gold price movements and additionally pays 2.5% annual interest, with no making charges — unlike physical gold, which typically involves making charges and storage considerations. Each has different liquidity and tax treatment; compare against your own needs.

Gold ETF is a mutual fund that tracks gold prices, traded on stock exchanges. Each Gold ETF has its own unit structure and the underlying gold exposure varies by scheme — check the scheme's own documents rather than assuming a fixed gram-per-unit figure.

Index funds replicate a market index (like Nifty 50 or Sensex) by holding its constituent stocks in matching proportions, rather than actively selecting stocks. They typically carry a lower expense ratio than actively managed funds in the same category — actual performance versus active funds varies by category, time period and market conditions, so compare specific funds rather than assuming one style always wins.

Lumpsum means investing a large amount at once (vs monthly SIP). Because the entire amount enters the market at a single price point, its outcome depends more heavily on the entry timing than a SIP's does — that timing risk is the main trade-off against SIP's averaged entry.

Exit load is a fee charged when you redeem (sell) mutual fund units before a specified period (usually 1 year). Typically 1% of redemption value. Nil after the lock-in period.