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Glossary F

Face Value

The original issue price of one unit of a scheme.

Factor Fund

It is a mutual fund that has a core philosophy of investing in a particular factor or style in the market. They are also referred to as Style Funds.

Floating Rate Funds

These are funds which invest in short to medium term interest bearing instruments issued by financial intermediaries and corporates. These bonds carry variable interest rates and adjustments to the interest rate are usually made every 6 months. Generally, the interest rates on these bonds are tied to a money-market index such as MIBOR, the most commonly used index.

FII

Foreign Institutional Investors.

Financial Pyramid

An investment plan in the shape of a pyramid structure where the safest investments are at the base and the riskiest investments at the peak.

Fixed Income Security

A type of security that pays fixed interest at regular intervals. These comprise gilt-edged securities, bonds (taxable and tax-free), preference shares and debentures. Less risky than equity shares and have little scope for capital appreciation.

FPD

Financial Products Distribution

Front-End Load

An initial amount charged by a fund for its administrative expenses or for paying commissions to brokers. If the charge is made at the termination or redemption, it becomes a back-end load.

Fund Category

Classification of a scheme depending on the type of assets in which the mutual fund company invests the corpus. It could be a growth, debt, balanced, gilt or liquid scheme

Fund Family

All the schemes, which are managed by one mutual fund.

Fund Management Costs

The charge levied by an AMC on a mutual fund for managing their funds.

Fund Manager

Appointed by the AMC, he is the person who makes all the final decisions regarding investments of a scheme. A professional manager appointed by the Asset Management Company to invest money in accordance with the objects of the scheme.