Mutual Funds Cheatsheet Cheatsheet

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Mutual Funds Basics (India)

Core Concepts

A Mutual Fund pools money from many investors and invests in a diversified portfolio of stocks, bonds, or other securities, managed by a professional fund manager.

How Mutual Funds Work

Pool MoneyInvestors buy units at NAV (Net Asset Value). Fund manager pools all investments.

Professional ManagementFund manager and research team decide which securities to buy/sell.

DiversificationSingle investment spreads across 50-500+ stocks/bonds, reducing risk.

LiquidityYou can redeem (sell) units on any business day at current NAV.

TransparencyDaily NAV published. Monthly portfolio disclosure. Quarterly factsheet.

RegulationSEBI regulated. AMFI (Association of Mutual Funds in India) is the industry body.

Key Terminology

Term	Definition	Example
NAV (Net Asset Value)	Market value of fund assets minus liabilities, divided by total units	₹50 per unit = each unit worth ₹50
AUM (Assets Under Mgmt)	Total market value of investments managed by the fund	HDFC MF: ₹5.5 lakh crore AUM
Expense Ratio	Annual fee charged by the fund for management and operations	1% means ₹10 fee per ₹1,000 invested per year
Exit Load	Fee charged when you redeem units before a specified period	1% if redeemed within 12 months
SIP (Systematic Investment)	Fixed amount invested regularly (monthly)	₹5,000/month in a mutual fund
Lump Sum	One-time investment of a large amount	Invest ₹1 lakh in an equity fund
NFO (New Fund Offer)	New mutual fund scheme launched for first-time subscription	Usually offered at ₹10 per unit during NFO period
Benchmark	Index against which fund performance is measured	Nifty 50 for large-cap equity fund

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Types of Mutual Funds

Category	Sub-Type	Risk Level	Returns (Historical)	Best For
Equity	Large Cap	Moderate	12-15% CAGR	Beginners, stable equity returns
Equity	Mid Cap	High	15-18% CAGR	Moderate risk-takers
Equity	Small Cap	Very High	18-25% CAGR	Aggressive investors, 5+ year horizon
Equity	Flexi Cap	High	14-18% CAGR	Dynamic allocation across caps
Equity	ELSS (Tax Saving)	High	12-16% CAGR	Tax saving u/s 80C, 3yr lock-in
Equity	Sectoral/Thematic	Very High	Variable	Banking, IT, pharma sector bets
Debt	Liquid Fund	Very Low	6-7% annualized	Parking money for short term (days-weeks)
Debt	Ultra Short Duration	Low	6.5-7.5% annualized	1-6 month parking
Debt	Short Duration	Low	7-8% annualized	6 months - 2 year investment
Debt	Corporate Bond	Low-Moderate	7.5-9% annualized	2-3 year investment
Debt	Dynamic Bond	Moderate	7-9% annualized	Active debt management
Hybrid	Balanced Advantage	Moderate	10-13% CAGR	Auto equity-debt allocation
Hybrid	Equity Savings	Low-Moderate	8-10% CAGR	Conservative equity exposure
Index	Nifty 50 Index Fund	Moderate	12-14% CAGR	Low-cost passive investing
Index	Sensex Index Fund	Moderate	12-14% CAGR	BSE benchmark tracking

SIP (Systematic Investment Plan)

Regular Investing

SIP is the most popular way to invest in mutual funds in India. You invest a fixed amount every month, benefiting from rupee cost averaging and compounding.

sip_calculator.py

# ── SIP Return Calculator ──
def sip_returns(monthly_investment, expected_return_rate, years):
    """
    Calculate SIP returns.
    monthly_investment: Fixed amount invested monthly
    expected_return_rate: Annual expected return (e.g., 12 for 12%)
    years: Investment duration in years
    """
    n = years * 12  # Total months
    monthly_rate = expected_return_rate / 12 / 100

    if monthly_rate == 0:
        total_invested = monthly_investment * n
        return total_invested, total_invested

    # Future Value of Annuity formula
    fv = monthly_investment * (((1 + monthly_rate) ** n - 1) / monthly_rate)
    fv *= (1 + monthly_rate)  # Compounding for end-of-period investment
    total_invested = monthly_investment * n
    wealth_gained = fv - total_invested

    return round(total_invested), round(fv), round(wealth_gained)

# Example: ₹5,000/month for 20 years at 12% expected returns
invested, final, gains = sip_returns(5000, 12, 20)
print(f"Invested: ₹{invested:,}")
print(f"Final Value: ₹{final:,}")
print(f"Wealth Gained: ₹{gains:,}")

SIP vs Lump Sum

Feature	SIP (₹5K/month)	Lump Sum (₹6L one-time)
Investment Amount	₹60,000/year	₹6,00,000 one-time
Rupee Cost Averaging	Yes - buy more units when market is low	No - timing depends on entry point
Market Timing Risk	Low - averaged over months	High - bad entry point hurts
Discipline	High - automated, forced saving	Requires lump sum availability
Psychological Ease	Easy - small monthly amounts	Harder - large one-time commitment
Best For	Regular income earners, beginners	Those with windfall (bonus, inheritance)
Returns (20yr, 12%)	₹49.95 Lakh from ₹12L invested	₹57.96 Lakh from ₹6L invested

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Power of compounding: Starting a ₹5,000 SIP at age 25 (vs 35) at 12% returns: at age 55 you would have ~₹2.36 crore vs ~₹47 lakh. That 10-year headstart gives you 5x more wealth. Start early, be consistent.

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NAV & Fund Performance

Evaluation

Understanding NAV

NAV FormulaNAV = (Total Market Value of Assets - Liabilities) / Total Outstanding Units

NAV IncreasesWhen value of fund holdings increases (stock prices go up). Good sign.

NAV DecreasesWhen value of fund holdings decreases. Happens during market downturns.

High NAV = Better Fund?NO! A ₹500 NAV fund can be better than a ₹50 NAV fund. What matters is % return, not absolute NAV.

New Fund Offer (NFO)New funds start at ₹10 NAV. Not necessarily better than existing funds with higher NAV.

Fund Performance Metrics

Metric	Description	What to Look For
CAGR	Compound Annual Growth Rate over a period	>12% for equity over 5+ years
Alpha	Excess return over benchmark	Positive alpha = fund beat its benchmark
Beta	Sensitivity to market movements	Beta 1.2 = 20% more volatile than market
Sharpe Ratio	Return per unit of risk	>1 is good, >2 is excellent
Sortino Ratio	Return per unit of downside risk	>1.5 is good
Standard Deviation	Volatility of returns	Lower = more stable fund
Max Drawdown	Largest peak-to-trough decline	Lower = less severe losses
Expense Ratio	Annual fund management fee	<1% for equity, <0.5% for index funds

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ELSS (Tax-Saving Funds)

Section 80C

ELSS Fund Features

Feature	Details
Tax Benefit	Deduction u/s 80C up to ₹1.5 lakh per year
Lock-in Period	3 years (mandatory, shortest among 80C options)
Risk Level	High (equity fund - invests in stocks)
Returns (10yr avg)	12-16% CAGR
Tax on Maturity	LTCG @ 12.5% on gains above ₹1.25 lakh (after 1 year)
Minimum Investment	₹500 per SIP, ₹5,000 lump sum
ELSS vs PPF	Higher returns but higher risk vs PPF (7.1% guaranteed)
ELSS vs NPS	Higher returns, 3yr lock-in vs 60yr in NPS Tier I

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SIP in ELSS: Instead of investing ₹1.5 lakh lump sum in March, start a monthly SIP of ₹12,500 in January. This gives you the full ₹1.5 lakh benefit AND rupee cost averaging. Never wait till March to make 80C investments.

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Taxation on Mutual Funds

Capital Gains Tax

Mutual Fund Taxation (Post Budget 2024)

Fund Type	Holding Period	Tax Rate	Grandfathering
Equity	< 1 year	STCG @ 20%	N/A
Equity	> 1 year	LTCG @ 12.5% (above ₹1.25L)	Investments before Feb 1, 2024: ₹1L exemption
Debt	< 3 years	STCG at slab rate	N/A
Debt	> 3 years	LTCG @ 12.5% (no indexation)	Pre-Feb 2024 investments: LTCG with indexation benefit
Hybrid (equity >65%)	Treated as Equity	Same as equity funds
Hybrid (equity 35-65%)	Treated as Debt	Same as debt funds
ELSS	< 3 years	STCG @ 20%	N/A
ELSS	> 3 years (after lock-in)	LTCG @ 12.5%	Same as equity funds

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Best Platforms & Funds

Practical Guide

Direct vs Regular Plans

Feature	Regular Plan	Direct Plan
Expense Ratio	Higher (includes distributor commission)	Lower (0.5-1% less)
Returns (same fund)	Lower by 0.5-1% annually	Higher by 0.5-1% annually
Where to Buy	Broker (Zerodha, Groww, etc.)	MF website (HDFC, SBI, etc.) or Groww Direct
20yr Difference	₹50L corpus	₹60L corpus (20% more!)
Recommendation	Not recommended for new investors	Always prefer Direct Plan

Top Mutual Fund Houses (India 2025)

AMC	AUM	Top Equity Fund	Top Debt Fund
SBI MF	₹8.5L Cr	SBI Small Cap	SBI Magnum Gilt Fund
HDFC MF	₹7.2L Cr	HDFC Flexi Cap	HDFC Short Term Debt
ICICI Prudential	₹6.8L Cr	ICICI Pru Bluechip	ICICI Pru Corporate Bond
Nippon India	₹4.5L Cr	Nippon India Small Cap	Nippon India Liquid
Kotak MF	₹4.2L Cr	Kotak Emerging Equity	Kotak Bond Fund
Axis MF	₹3.8L Cr	Axis ELSS Tax Saver	Axis Short Term Fund

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Interview Questions

Top 8

Q1: What is NAV and does a lower NAV mean a better fund?

AnswerNAV is the per-unit price of the fund. It reflects the total assets divided by total units. Lower NAV does NOT mean a cheaper or better fund. Two funds with identical portfolios but different NAVs will give the same % returns. A ₹100 investment gets more units in a lower-NAV fund but each unit is worth less. Always compare % returns, not NAV.

Q2: SIP vs Lump Sum - which is better?

AnswerStatistically, lump sum beats SIP if invested at the right time. But SIP wins in practice because of: (1) Rupee cost averaging - buy more units during market dips. (2) No market timing risk. (3) Builds investing discipline. (4) Suitable for salaried individuals. SIP is the recommended approach for 95% of retail investors.

Q3: Explain expense ratio impact

AnswerExpense ratio is the annual fee deducted from fund assets. A 1% expense ratio on a ₹10L investment means ₹10,000 deducted yearly. Over 20 years at 12% returns, 1% expense ratio reduces final corpus from ₹96.46L to ₹81.71L - a loss of ₹14.75L! Index funds have 0.1-0.3% expense ratio, actively managed funds have 1-2.5%. Difference compounds massively.

Q4: ELSS vs PPF vs NPS for 80C?

AnswerELSS: highest returns (12-16%), highest risk, 3yr lock-in. PPF: guaranteed 7.1%, lowest risk, 15yr lock-in (partial withdrawal from yr 7). NPS: moderate returns (8-10%), Tier I has 60yr lock-in. Best strategy: diversify across all three based on risk appetite. Maximize ELSS if you can handle equity risk.

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Term

Definition

Example

NAV (Net Asset Value)

Market value of fund assets minus liabilities, divided by total units

₹50 per unit = each unit worth ₹50

AUM (Assets Under Mgmt)

Total market value of investments managed by the fund

HDFC MF: ₹5.5 lakh crore AUM

Expense Ratio

Annual fee charged by the fund for management and operations

1% means ₹10 fee per ₹1,000 invested per year

Exit Load

Fee charged when you redeem units before a specified period

1% if redeemed within 12 months

SIP (Systematic Investment)

Fixed amount invested regularly (monthly)

₹5,000/month in a mutual fund

Lump Sum

One-time investment of a large amount

Invest ₹1 lakh in an equity fund

NFO (New Fund Offer)

New mutual fund scheme launched for first-time subscription

Usually offered at ₹10 per unit during NFO period

Benchmark

Index against which fund performance is measured

Nifty 50 for large-cap equity fund

Category	Sub-Type	Risk Level	Returns (Historical)	Best For
Equity	Large Cap	Moderate	12-15% CAGR	Beginners, stable equity returns
Equity	Mid Cap	High	15-18% CAGR	Moderate risk-takers
Equity	Small Cap	Very High	18-25% CAGR	Aggressive investors, 5+ year horizon
Equity	Flexi Cap	High	14-18% CAGR	Dynamic allocation across caps
Equity	ELSS (Tax Saving)	High	12-16% CAGR	Tax saving u/s 80C, 3yr lock-in
Equity	Sectoral/Thematic	Very High	Variable	Banking, IT, pharma sector bets
Debt	Liquid Fund	Very Low	6-7% annualized	Parking money for short term (days-weeks)
Debt	Ultra Short Duration	Low	6.5-7.5% annualized	1-6 month parking
Debt	Short Duration	Low	7-8% annualized	6 months - 2 year investment
Debt	Corporate Bond	Low-Moderate	7.5-9% annualized	2-3 year investment
Debt	Dynamic Bond	Moderate	7-9% annualized	Active debt management
Hybrid	Balanced Advantage	Moderate	10-13% CAGR	Auto equity-debt allocation
Hybrid	Equity Savings	Low-Moderate	8-10% CAGR	Conservative equity exposure
Index	Nifty 50 Index Fund	Moderate	12-14% CAGR	Low-cost passive investing
Index	Sensex Index Fund	Moderate	12-14% CAGR	BSE benchmark tracking

Category

Sub-Type

Risk Level

Returns (Historical)

Best For

Equity

Large Cap

Moderate

12-15% CAGR

Beginners, stable equity returns

Equity

Mid Cap

High

15-18% CAGR

Moderate risk-takers

Equity

Small Cap

Very High

18-25% CAGR

Aggressive investors, 5+ year horizon

Equity

Flexi Cap

High

14-18% CAGR

Dynamic allocation across caps

Equity

ELSS (Tax Saving)

High

12-16% CAGR

Tax saving u/s 80C, 3yr lock-in

Equity

Sectoral/Thematic

Very High

Variable

Banking, IT, pharma sector bets

Debt

Liquid Fund

Very Low

6-7% annualized

Parking money for short term (days-weeks)

Debt

Ultra Short Duration

Low

6.5-7.5% annualized

1-6 month parking

Debt

Short Duration

Low

7-8% annualized

6 months - 2 year investment

Debt

Corporate Bond

Low-Moderate

7.5-9% annualized

2-3 year investment

Debt

Dynamic Bond

Moderate

7-9% annualized

Active debt management

Hybrid

Balanced Advantage

Moderate

10-13% CAGR

Auto equity-debt allocation

Hybrid

Equity Savings

Low-Moderate

8-10% CAGR

Conservative equity exposure

Index

Nifty 50 Index Fund

Moderate

12-14% CAGR

Low-cost passive investing

Index

Sensex Index Fund

Moderate

12-14% CAGR

BSE benchmark tracking

# ── SIP Return Calculator ── def sip_returns(monthly_investment, expected_return_rate, years): """ Calculate SIP returns. monthly_investment: Fixed amount invested monthly expected_return_rate: Annual expected return (e.g., 12 for 12%) years: Investment duration in years """ n = years * 12 # Total months monthly_rate = expected_return_rate / 12 / 100 if monthly_rate == 0: total_invested = monthly_investment * n return total_invested, total_invested # Future Value of Annuity formula fv = monthly_investment * (((1 + monthly_rate) ** n - 1) / monthly_rate) fv *= (1 + monthly_rate) # Compounding for end-of-period investment total_invested = monthly_investment * n wealth_gained = fv - total_invested return round(total_invested), round(fv), round(wealth_gained) # Example: ₹5,000/month for 20 years at 12% expected returns invested, final, gains = sip_returns(5000, 12, 20) print(f"Invested: ₹{invested:,}") print(f"Final Value: ₹{final:,}") print(f"Wealth Gained: ₹{gains:,}")

Feature

SIP (₹5K/month)

Lump Sum (₹6L one-time)

Investment Amount

₹60,000/year

₹6,00,000 one-time

Rupee Cost Averaging

Yes - buy more units when market is low

No - timing depends on entry point

Market Timing Risk

Low - averaged over months

High - bad entry point hurts

Discipline

High - automated, forced saving

Requires lump sum availability

Psychological Ease

Easy - small monthly amounts

Harder - large one-time commitment

Best For

Regular income earners, beginners

Those with windfall (bonus, inheritance)

Returns (20yr, 12%)

₹49.95 Lakh from ₹12L invested

₹57.96 Lakh from ₹6L invested

Metric

Description

What to Look For

CAGR

Compound Annual Growth Rate over a period

>12% for equity over 5+ years

Alpha

Excess return over benchmark

Positive alpha = fund beat its benchmark

Beta

Sensitivity to market movements

Beta 1.2 = 20% more volatile than market

Sharpe Ratio

Return per unit of risk

>1 is good, >2 is excellent

Sortino Ratio

Return per unit of downside risk

>1.5 is good

Standard Deviation

Volatility of returns

Lower = more stable fund

Max Drawdown

Largest peak-to-trough decline

Lower = less severe losses

Expense Ratio

Annual fund management fee

<1% for equity, <0.5% for index funds

Feature

Details

Tax Benefit

Deduction u/s 80C up to ₹1.5 lakh per year

Lock-in Period

3 years (mandatory, shortest among 80C options)

Risk Level

High (equity fund - invests in stocks)

Returns (10yr avg)

12-16% CAGR

Tax on Maturity

LTCG @ 12.5% on gains above ₹1.25 lakh (after 1 year)

Minimum Investment

₹500 per SIP, ₹5,000 lump sum

ELSS vs PPF

Higher returns but higher risk vs PPF (7.1% guaranteed)

ELSS vs NPS

Higher returns, 3yr lock-in vs 60yr in NPS Tier I

Fund Type

Holding Period

Tax Rate

Grandfathering

Equity

< 1 year

STCG @ 20%

N/A

Equity

> 1 year

LTCG @ 12.5% (above ₹1.25L)

Investments before Feb 1, 2024: ₹1L exemption

Debt

< 3 years

STCG at slab rate

N/A

Debt

> 3 years

LTCG @ 12.5% (no indexation)

Pre-Feb 2024 investments: LTCG with indexation benefit

Hybrid (equity >65%)

Treated as Equity

Same as equity funds

Hybrid (equity 35-65%)

Treated as Debt

Same as debt funds

ELSS

< 3 years

STCG @ 20%

N/A

ELSS

> 3 years (after lock-in)

LTCG @ 12.5%

Same as equity funds

Feature

Regular Plan

Direct Plan

Expense Ratio

Higher (includes distributor commission)

Lower (0.5-1% less)

Returns (same fund)

Lower by 0.5-1% annually

Higher by 0.5-1% annually

Where to Buy

Broker (Zerodha, Groww, etc.)

MF website (HDFC, SBI, etc.) or Groww Direct

20yr Difference

₹50L corpus

₹60L corpus (20% more!)

Recommendation

Not recommended for new investors

Always prefer Direct Plan

AMC

AUM

Top Equity Fund

Top Debt Fund

SBI MF

₹8.5L Cr

SBI Small Cap

SBI Magnum Gilt Fund

HDFC MF

₹7.2L Cr

HDFC Flexi Cap

HDFC Short Term Debt

ICICI Prudential

₹6.8L Cr

ICICI Pru Bluechip

ICICI Pru Corporate Bond

Nippon India

₹4.5L Cr

Nippon India Small Cap

Nippon India Liquid

Kotak MF

₹4.2L Cr

Kotak Emerging Equity

Kotak Bond Fund

Axis MF

₹3.8L Cr

Axis ELSS Tax Saver

Axis Short Term Fund