Mutual Fund FAQs — SIP, NAV, XIRR & More

Quick answers to the questions Indian mutual fund investors ask most — about SIPs, NAV, XIRR, costs, taxes and how Dhanik itself works. For full guides, visit Learn; for term definitions, see the glossary.

What is a mutual fund?

A mutual fund pools money from many investors and invests it in stocks, bonds, or other securities managed by a professional fund manager. Returns are proportional to each investor's units held.

What is NAV and how is it calculated?

NAV (Net Asset Value) is the per-unit price of a mutual fund scheme. It is calculated daily as: (Total assets − Liabilities) ÷ Total units outstanding. You buy and redeem mutual fund units at the prevailing NAV.

What is a SIP?

A Systematic Investment Plan (SIP) lets you invest a fixed amount in a mutual fund at regular intervals (weekly, monthly, etc.). SIPs automate investing, average your purchase cost over time (rupee-cost averaging), and reduce the impact of market volatility.

What is the expense ratio?

The expense ratio is the annual fee a fund charges to cover management and operational costs, expressed as a percentage of AUM. A 1% expense ratio on a ₹1 lakh investment means ₹1,000 is deducted per year. Lower is generally better, especially for index funds.

What is XIRR?

XIRR (Extended Internal Rate of Return) is the annualised return that accounts for irregular cash flows — multiple SIP installments or lumpsum investments made on different dates. It is the most accurate way to measure real mutual fund returns.

What is an exit load?

Exit load is a fee charged when you redeem (sell) your mutual fund units before a specified holding period (e.g. 1 year). It is typically 1% of the redemption amount. Most funds waive the exit load after the lock-in period.

What is ELSS and how does it save tax?

ELSS (Equity Linked Savings Scheme) is a mutual fund that invests primarily in equities with a 3-year lock-in period. Investments up to ₹1.5 lakh per year qualify for deduction under Section 80C of the Income Tax Act, potentially saving up to ₹46,800 in taxes annually.

What is the difference between Direct and Regular plans?

Direct plans are bought directly from the AMC — no distributor commission, so the expense ratio is lower and returns are higher over time. Regular plans are bought via brokers or distributors who earn a commission, resulting in a slightly higher expense ratio. Dhanik displays both plan types.

What is the Dhanik Score?

The Dhanik Score is our composite fund-ranking metric that combines trailing returns, consistency, risk-adjusted performance (Sharpe ratio), expense ratio and other factors. A higher score means the fund has historically performed better on a risk-adjusted basis relative to its peers. See How We Rank for the full methodology.

How does Dhanik source its data?

NAV and fund data are sourced from AMFI (Association of Mutual Funds in India) and updated daily. Portfolio holdings are from monthly AMFI disclosures. Index prices use Yahoo Finance. All data is for informational purposes and may occasionally be delayed.

Is Dhanik free to use?

Yes. Dhanik is completely free. You can screen 14,000+ funds, track your portfolio, run SIP/SWP/goal calculators, and backtest historical returns — all without paying anything. We run non-intrusive ads to keep the lights on.

Does Dhanik provide investment advice?

No. Dhanik is an information and tracking tool, not SEBI-registered investment advice. All data, rankings and scores are for research purposes only. Please consult a qualified financial advisor before investing. Mutual fund investments are subject to market risks.

How do I track my portfolio on Dhanik?

Go to Portfolio, create a free account, and add your mutual fund holdings (fund name, units, average purchase price and date). Dhanik will show you live NAV, current value, gain/loss and XIRR in real time.

What is AUM?

AUM (Assets Under Management) is the total market value of assets a fund manages on behalf of its investors. Larger AUM indicates more investor trust but can sometimes affect a fund's ability to invest nimbly, especially in mid/small-cap schemes.

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