What is the Total Expense Ratio (TER) in mutual funds?

A fee charged to cover the fund house's operational costs. A performance-based fee paid to the fund manager. A commission paid to financial advisors for recommending the fund. A one-time charge for purchasing mutual fund units.

What is 'window dressing' in the context of mutual fund management?

Investing in high-performing stocks right before the quarter ends to inflate returns. Disclosing all investment decisions transparently to investors. Regularly rebalancing the portfolio to align with market trends. Conducting due diligence on all potential investments.

How does 'closet indexing' work in mutual fund management?

Creating a portfolio that closely resembles a benchmark index to mimic its returns. Actively selecting stocks based on thorough research and analysis. Investing exclusively in index funds to minimize management fees. Short-selling stocks to profit from market downturns.

What is a potential drawback of asset acquisition-based incentive models for fund managers?

It may prioritize increasing the fund's size over focusing on investment performance. It encourages fund managers to take unnecessary risks to maximize returns. It leads to higher management fees for investors. It restricts fund managers from diversifying the portfolio.