Learning outcomes

After this module you should be able to:

1. Describe the Indian mutual fund as a trust (sponsor, trustee, AMC, custodian, registrar, auditor) and explain why an AMC's failure does not take the investors' assets.
2. Compute a NAV from a balance sheet with accrued fees, apply the cut-off and realisation rules to find the NAV a transaction gets, and derive the wealth transfer when units are dealt at a stale NAV (Proposition 6B.2.1) and why swing pricing removes the transfer caused by trading costs (Proposition 6B.2.2).
3. Read the 2026 expense structure (base expense ratio, brokerage, transaction costs, statutory levies), and derive the terminal-wealth cost of a fee gap for a lump sum and for a SIP, with tight bounds (Propositions 6B.3.1–6B.3.2).
4. Read a scheme information document, a factsheet and the riskometer, and place a scheme in SEBI's categories.
5. Build an AMC's P&L from AUM and fee yields, derive the beta of AMC profits to the market from operating leverage (Proposition 6B.5.1), and value a SIP customer as an annuity of fees (Proposition 6B.5.2).
6. Prove that a SIP's average cost is the harmonic mean of prices, and that averaging is not an edge over a lump sum when expected returns exceed the cash rate (Propositions 6B.6.1–6B.6.2).
7. Measure fund performance (Sharpe ratio, Jensen's alpha, information ratio, tracking error, active share), count how many "significant" alphas luck produces, and derive the Berk–Green result that flows compete skill away (Proposition 6B.7.1).
8. Decompose an index fund's tracking difference, derive the no-arbitrage band for an ETF's premium (Proposition 6B.9.1), explain the Indian episodes in which the band broke, and choose between an ETF and an index fund by the crossover horizon (Proposition 6B.9.2).
9. Compute a debt fund's NAV response to yield changes, and derive the first-mover advantage in a run on a fund that ignores liquidation costs (Propositions 6B.10.1–6B.10.2).
10. State the current tax treatment of equity-oriented funds, specified (debt) funds, FoFs and gold and silver ETFs, and build a low-cost fund portfolio by an explicit decision rule.