The highest credit rating for a bond or company. The risk of default (or non-payment) is negligible.
An investment management approach that seeks to outperform the market through the application of informed, independent judgement. The opposite of passive management.
All share index of the South African stock exchange
A charge levied for the management of the mutual fund.
The making of profits from a mis-match of the prices of the same investment in different markets or from a mis-match between the price of an investment and the price of its derivatives.
Deciding what proportion of a fund will be held in different asset classes – cash, bonds and shares.
An annual (or more frequent) payment made by an assurance company to an individual in exchange for a lump sum investment.
A market where prices are influenced by sellers.
The price at which a dealer buys securities or the price paid to holders redeeming their holdings.
The difference between the bid and offer prices expressed either as an amount or as a % of the offer price.
Shares in companies which are highly regarded, usually large and well established.
Interest bearing security that is usually issued by a company or government, with a fixed rate of interest (coupon) and redemption date.
A market where prices are influenced by buyers.
Bottom up management
A method of active portfolio management where securities are selected on their own merits without consideration of the asset class or security sector.
Index of the Paris Stock Exchange.
Capital Protected Annuity
An annuity where the total amount paid is guaranteed to be at least as much as the premium.
The amount of interest payable on a bond. It is usually fixed at the time of issue of the bond but could be variable.
Consumer Price Index
The measurement of retail price inflation, also called Retail Prices Index.
A bond that can be converted into shares of the issuing company on terms specified at the time of issue rather than receiving nominal value on redemption.
For regular savings the average per share or unit paid by the holder can be lower than the average price for the period in which savings are made.
The extent to which the returns of investments move in line with each other.
Index of the German Stock Exchange.
Bond of company acknowledging debt and providing for payment of interest at fixed intervals. Also known as a corporate bond.
An annuity which first becomes payable at a future date.
Shares which are recorded in a central computer system and for which no certificates exist. Transfer is by book entry.
Securities whose values are linked to, or derived from, other securities.
Payments of investment income or realised capital gains to mutual fund share or unit holders.
Spreading investments and risk among a number of securities.
A distribution of profits to the shareholders of a company.
The yield on a share defined as:
|Dividend per share
Current market price per share
Dow Jones index
Index of the New York Stock Exchange.
Shares in a company which are entitled to the balance of profits and assets after all prior charges.
Bond issued across national boundaries outside the regulations of any national market.
The price of one currency expressed in terms of another currency.
Fund of funds
A mutual fund which may only invest in other mutual funds.
FTSE 100 Index
Index of the London Stock Exchange.
The effect of derivatives where a small movement in the price of the underlying asset is turned into a larger percentage increase in the price of the derivative.
UK Government issued bonds. Full name is gilt edged securities.
An annuity which is payable for a minimum period, regardless of whether the annuitant survives.
The process of protecting a fund’s assets from the effects of exposure to currency fluctuations or other investment risks, by the use of derivatives.
A figure calculated from the share prices or market capitalisations of a specific number of shares on a Stock Exchange.
Johannesburg Stock Exchange of South African.
A unit linked policy where the managers decide on the allocation of premiums to different unitised funds
The amount paid to mutual fund managers for their services.
The risk that the market as a whole will fall. Hedging is used to protect against it. This risk is separate from investment specific risk.
An open-ended investment company or trust which combines the contributions of many investors with similar objectives.
An American based stock market which is quote driven. Often also used in the context of the NASDAQ index which refers to an index of the mainly technology stocks quoted on this exchange.
Nikkei Stock Index
Index of the Tokyo Stock Exchange
The minimum price at which a share can be issued. Also called par value.
The investor’s purchase price of units.
A collection of financial assets which is designed to achieve a specific investment objective.
A ratio used by investors in shares that is calculated as:
|Market price per share
Earnings per share
Date on which the nominal value of a bond will be repaid.
A new issue of shares offered to the existing shareholders in proportion to their existing holdings.
The unit of ownership of a company.
The difference between the bid and offer prices.
Standard & Poors 500
Index of the New York Stock Exchange
The facility to move the money invested in a unit linked policy from one fund to another. A discount may be given when an investor switches from one mutual fund to another.
Top down management
A method of active portfolio managed where different classes of security (cash, bonds, shares) are selected; then within each class different sectors are selected; and within each sector individual securities are selected.
Undertaking to support an issue of shares. The procedure by which the proceeds of a new issue are guaranteed to the issuer. Organisations receive a fee in return for which they agree to buy the securities if there is insufficient general demand for them.
Change in the price of a bond in response to a change in interest rates.
The percentage of the quoted offer price that represents the prospective annual income of a mutual fund for its current annual accounting period, after deducting all charges.