Investment Terms

Alpha

It is a measure of extra returns provided by the fund compared to the benchmark. Investors should prefer high alpha funds which can generate higher returns. One should use Alpha and Beta together which goes hand in hand when comparing between risk and returns.

Beta

It is a measure of fund’s sensitivity to the market movement. Beta of less than 1 indicate that fund would have lower swing compared to ups and downs of the benchmark. Beta of more than 1 indicate that fund would have wider swings compared to benchmark. Investors should prefer lower beta funds which can have lesser swings compared to benchmark.

Types of MF Plans

• refs: https://www.indiainfoline.com/knowledge-center/mutual-funds/difference-between-direct-and-growth-mutual-funds
• You buy Direct MF plans from the company directly instead of a broker; regular plans are available from brokerage portals like ICICI direct. This reflects in NAV, expense ratio, and returns. ⇒ direct plans will always have higher returns. Direct plans can have 1% - 1.5% per year higher returns than regular plans.
• Growth plans reinvest the returns; dividends pay back on a regular frequency. Dividend plans are good for those who expect regular income.
• ⇒ invest in direct growth plans and let the fund compound. Whenever (post retirement), withdraw a certain percentage like 4%
• You can buy direct funds via Zeroha since it is 0-commission brokerage