 Glossary |
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| | AFG-ASFFI : Association Française de la Gestion Financière (French Asset Management Association).
AFG-ASFFI is the professional body for asset management on behalf of third parties (individual, institutional or collective management). It’s members are drawn from all areas of the asset management industry and it has a twofold mission of representing the industry and providing it with permanent assistance. (www.afg-asffi.com).
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| Alpha : indicates the additional performance generated by the fund compared to that of its reference index. A high level of alpha points to a good level of performance for the fund compared to the market.
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| Asset Manager ratings (Refer: Fitch-AMR) : These aim to evaluate the capacity of an asset manager to meet the expectations of institutional investors in relation to the delegation of their asset management. This rating provides an assessment of the control of the risks inherent to the activities of asset management by the asset manager. The ratings produced are mainly qualitative and are based on information provided by the asset manager and its management. The rating process is based on a review, that is not an audit. This review focuses on the organisation, its independence, communication, management processes and risk management. The ratings allocated are measured with the assistance of a scale that comprises 14 ratings, extending from 'aaa' to 'b-'.
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| B | |
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| Benchmark : a reference index used to judge the performance of a security or a portfolio.
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| Benchmarked management : as its name indicates, benchmarked management aims for a performance close to or superior to that of the benchmark chosen and that this should be the process for the selection of securities within the benchmark.
The definition of a benchmark also serves equally well in defining the investment universe as in assessing the performance. The outperformance objective is often accompanied by a "tracking error" that allows for the risk taken compared to the benchmark to be measured.
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| Beta : describes the magnitude of the variation in a fund’s performance compared to that of its reference index. The benchmark (representing the market) will always have a beta of 1 because it varies in line with itself. A fund with a beta higher than 1 indicate a more significant potential for gain, but also a higher degree of risk. If the beta is lower than 1 this indicates a less significant potential for gain but also a lower degree of risk.
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| | Blue chip : indicates the largest companies in terms of market capitalisation on a stock exchange. One often contrasts the term blue chip with small cap.
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| | Bond : Security representative of a loan obligation by an issuer of short, medium or long-term duration.
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| C | |
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| CAC 40 (Cotation Assistée en Continu) : stock index for the Paris stock exchange calculated continuously on a real time basis from a sample of 40 French stocks, chosen from those with the largest market capitalisation (exclusively based on shares). The composition of this index is revised regularly with stocks weighted by the amount of their stock market capitalisation (Base 1000 at 31 December 1987).
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| Capital guarantee fund : UCITS characterised by a management that guarantees a proportion of the initial net asset value on liquidation possibly increased by a percentage of a stock index or a basket of indices.
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| Capital protection fund : This is a UCITS whose performance is linked to the performance of a stock exchange index or to a basket of stocks accompanied by a protection ”cushion” that allows for a fall to be cushioned in the event of a market decline but with no floor.
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| Capitalisation/Distribution : choice made by the UCITS whether to distribute or not the dividends or coupons paid into their portfolio. When income is capitalised it is reinvested in the UCITS. On the other hand when income is distributed the dividends generated by the shares or coupons from the bonds held in the portfolio are paid back to the UCITS unit or share holder.
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| Commercialised fund : a commercialised UCITS is defined as a product that may be freely sold to all types of customer or target market segment. For each of these UCITS EuroPerformance is in a position to collect, verify and pass on all information necessary for them to be monitored (analysis of their assets and their performance). As a consequence this enables their classification. This concept includes UCITS invested in the context of specific management (life insurance contracts, employee savings plans, risk-profiled funds etc.).
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| | Convertible bonds : These are bonds that may be converted into shares. Their prices are indexed to those of the shares in the event of increases, or in the event of decreases, to those of bonds displaying the same characteristics (interest rates, maturity, credit standing, etc.).
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| Coupon : amount of interest received by the holder of a security, equal to the nominal interest rate of the security (fixed or variable) applied to the par value of this security for a given period (for example annually or quarterly).
Prior to dematerialisation, bond holders actually had to cut off a coupon from a security and present it in order to exercise their rights to payment. The expression has remained in use.
For shares one talks about dividends.
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| Currency risk : risk of loss on an unhedged currency position due to an unfavourable currency movement.
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| Custodian : financial institution responsible for the custody of assets included in SICAVs and FCPs. It is responsible among other things for ensuring all receipts and payments in connection with the operation of the fund (unit subscriptions, repurchase of units, review of all transactions undertaken by the manager). It has responsibility for checking the legality of decisions taken by the UCITS and is legally responsible for management compliance.
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| Cut-off times : describes the latest time which it is possible to register buy or sell orders to be taken into account on the same day. After this time orders will be held over and taken into account on the following day.
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| D | |
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| Derivative instruments : Financial instruments based on securities or market indices (futures, interest rate, index and stock options, etc.) that enable either the alleviation of the consequences of unfavourable market movements or the accentuation of the effect of an investment by anticipating an expected variation.
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| Dividend : In the strict sense the dividend is the income from a share representing the portion of profit distributed by a company to its shareholders. It only therefore applies to SICAVs, which are companies. But this term has been extended to all income distributed by UCITS, including FCPs. It thus covers the net dividend, the amount actually received by the client, as well as the total dividend, the net dividend increased by dividend tax credits or other tax credits.
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| Dow Jones Industrial Average : stock index of the New York Stock Exchange, created in 1884. It is comprised of 30 blue chip, mostly industrial, stocks that account for around a quarter of the market value of NYSE stocks. Unlike the CAC 40, the Dow Jones Industrial Average is an index based on trading prices and not weighted by stock market capitalisations.
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| DSK contract : contract originated in 1998, commonly referred to as DSK (Dominique Strauss-Kahn), after the then French finance minister, from an amendment proposed in the tax reforms of life insurance for investments in equities. In this contract at least 50% of the assets are invested in French or European equities, at least 5% being in shares of unlisted companies or those listed on the “nouveau marché”. It is exempt from all capital gains taxes if held for more than eight years.
The DSK UCITS are SICAVs or FCPs constituted in France, or since the new instruction of 9 June 1999, harmonised UCITS approved by the competent authority in one of the EU member states that have adopted the Euro, that may serve as the support to a DSK life insurance contract.
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| Emerging countries : the emerging countries are the following:
South Africa, Argentina, Brazil, Chile, China, Colombia, Egypt, Greece, Hungary, India, Indonesia, Israel, Jordan, South Korea, Morocco, Mexico, Malaysia, Peru, Philippines, Pakistan, Poland, Czech Republic, Russia, Sri Lanka, Thailand, Turkey, Taiwan, Venezuela.
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| Employee investment fund (FCPE) (Fonds Commun de Placement d’Entreprise) : joint ownership vehicle for securities whose purpose to manage employee savings in an employee savings plan or the profit-sharing reserve fund. The FCPE, which is not a separate legal entity, is managed by a management company and is controlled by a supervisory board made up equally of employee representatives and executives of the company. A business may have its own dedicated fund or be a member of a multi-company FCPE. A FCPE may not invest more than 10% of its funds in securities from the same issuer (except if these securities are issued by the business or are government securities or government-guaranteed securities of a member state of the European Union.).
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| Entry /exit fees : (Refer: subscription / repurchase fees).
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| Entry fee : corresponds to the entry fees paid when buying UCITS shares or units. The entry fee may be a fixed amount, proportional, or reduce or increase over time.
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| | Eonia (Euro Over Night Index Average) : This European overnight interest rate replaced the French TMP on 4 January 1999. It is obtained from the amounts and rates applied in overnight transactions undertaken and communicated by a panel of 57 European banks, of which 10 are French. It is calculated by the European Central Bank and published by the European Banking Federation.
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| | ETF : (Refer: Trackers).
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| | Ethical management : this type of management defines funds that select securities in companies clearly demonstrating an awareness of their responsibilities in the following areas: human resources, the environment, customer/supplier relations, shareholders, the community.
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| | Ethical (or socially responsible) management : this new generation of funds seeks to combine returns with the respect of moral, social and ecological criteria. Managers select shares in companies assessed as being responsible in these areas and without compromising stock market performance. Several of these funds exclude shares of companies in industries such as armament, tobacco, alcohol, gambling, etc.
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| | Euroclear : official organisation for the management and listing of stock exchange securities that succeeded Sicovam following the merger of the two entities on 10 January 2001.
Euroclear is a global settlement/delivery system for domestic and international transactions in bonds and equities. It proposes its services to major financial institutions located in more than 80 countries. (www.euroclear.com).
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| | EuroPerformance categories : they take into account the investment policy and allow for comparison of UCITS in accordance with their management objective.
EuroPerformance therefore publishes listings of performance enabling UCITS to be classified following their performance and through these categories.
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| | EuroPerformance index : The EuroPerformance index gives an overall trend, for a given period, of the evolution of a UCITS category.
Each index represents the average general performance for each UCITS making up the category, weighted by the assets at the end of the previous month. These indices are calculated on a weekly basis.
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| | Exit fee : corresponds to the exit fees levied when shares or units in a UCITS are sold. The exit fee may be a fixed amount, proportional, or reduce or increase over time.
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| Fitch-AMR : (Refer: Asset Manager ratings).
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| | Fonds Commun de Placement (FCP) (Unit trust) : unincorporated collective investment scheme for securities that may be diversified or specialised in a particular sector. The investor as unit-holder has none of the rights of a shareholder, unlike the SICAV (UCITS). The FCP has no separate legal personality, its minimum assets are 2.5 million French francs (381,000 euros) and its management is handled by a management company.
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| Fractional units : in order to make the security more easily negotiable fund units may be fractioned into tenths, hundredths, thousandths or ten thousandths of a unit.
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| | FTSE 100 (Financial Times Stock Exchange) : This is a share index updated daily that groups together the 100 companies with the largest capitalisations on the London Stock Exchange. The FTSE 100 is an index weighted by market capitalisations. The base value is 1000 from its inception on 3 January 1984.
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| | Funds eligible for a PEA (Plan d’Epargne Actions) (equities savings plan) : to be eligible for inclusion within the framework of a PEA, a fund must respect certain management constraints. The portfolio of a PEA SICAV must include at least 60% equities of companies whose registered office is located in a member state of the European Union; for a FCP the corresponding figure is at least 75%. Once these rules have been applied, the managers may invest the balance of their portfolio (40% for SICAVs, 25% for FCPs) in investments of their choice. The main attraction of PEA funds is their tax treatment. Income that they distribute as capital gains generated for the benefit of their investors is not subject to tax and tax credits attached to the dividends are paid into a cash account, with the attached tax credit. However, this is conditional on the plan having been open for at least five years. After this the income earned is only subject to CSG And CRDS (French social security taxes) and then only on realisation of the capital gains, in other words when the amounts frozen in the PEA are withdrawn.
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| Fund of fund : this is a UCITS whose assets do not comprise any securities (equities or bonds) but units in other collective investment vehicles (unit trust or open-end fund). The negative feature of fund of funds lies in the accumulation of fees. Unit trusts or open-end funds’ role is to be able to invest at least 5% and up to all of their assets in other UCITS’. In France UCITS fund of funds may invest up to 35% of their assets in the same UCITS.
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| Futures exchanges : are generally speaking, in contrast to physical markets, markets in which the settlement of transactions does not take place immediately, but at a certain time in the future. A position may therefore be taken without physically putting up the securities.
Examples of futures exchanges: MATIF in Paris, LIFFE in London.
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| Futures funds : this type of fund is involved with derivative products and uses futures and options markets. It offers investors a diversification of their securities portfolio because the investment supports may just as readily be stock and bond indices as currencies and commodities. Positions may equally be “buy” or “sell”. These funds, even if open to anyone, remain relatively unknown because their managers are not allowed to promote them. FCIMT are intended more particularly to informed investors because of the impact of gearing that may be high.
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| Gain Frequency : represents the proportion of monthly performances that are positive or zero for the period analysed. Using past results it measures the observed probability of positive performances.
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| Guaranteed fund : A guaranteed UCITS or one accompanied by a protection.
It assures the investor a minimum rate of return (guaranteed rate) or a percentage of a stock index (guaranteed by stocks) or the amount of the liquidation value (capital guarantee), subject to the capital being frozen for a given period.
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| Harmonised funds : funds complying with European Union standards. A UCITS is said to be harmonised when the supervisory authority in its country of origin testifies that that it complies with the European Directive 85/611. Once a UCITS receives the European passport it may be sold in each EU member state after a simplified local registration procedure.
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| | Hedge funds : are speculative investment funds that avoid any form of prudential regulation (in terms of shareholders’ equity ordiversification) and neither are they subject to any regulatory authority.
As a result of their management that is often uncorrelated with traditional financial markets, they offer investors a means of reducing the overall volatility of their portfolio.
One of the determining features of hedges funds is that they tend to be specialised, operate in a niche such as a speciality or a given industry that requires a particular expertise. Hedge funds set out to achieve the best absolute performance possible and to meet this objective they make use of leverage.
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| | Hedging : in contrast to a speculative transaction, a hedging transaction is carried out, in particular, with the objective of protecting against a feared interest rate or currency risk.
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| Index : a basket of securities measuring the performance of an economic sector or group of sectors starting from a base year. The index serves as a support for arbitrage, speculative, hedge or investment transactions. It is obtained by taking the simple or weighted average of a certain number of stock prices. The principal indices are the DAX 30 in Frankfurt, the Nikkei 225 in Tokyo, the Dow Jones Industrial Average in New York and the CAC 40 in Paris.
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| Index (or indexed) management : management technique to obtain a performance equivalent to that of a benchmark index by replicating it or also with the assistance of futures contracts. The "tracking error" is very low.
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| | Interest rate : rate of remuneration of cash according to maturity and set risk.
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| | Interest rate risk : risk that a financial asset reduces in value or that a financial liability increase in value when market interest rates change. Interest rate risk may be defined as the risk sustained by the holder of a current, future or conditional debt, at a fixed or variable rate, to future movements in interest rates resulting from the volatility of rates and/or distortion of the yield curve.
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| | Investment / Repurchase: undertaking to buy /resell shares in a UCITS issued by a company.
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| | Last determined price : an investment or repurchase at a known price is calculated on the last known and published net asset valuation.
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| M | |
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| Management company : is responsible for the administration, accounting and financial management of the UCITS. It must be authorised by the Commission des Opérations de Bourse (COB).
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| Management fees : management fees are the fees ascribable to the net asset value of a UCITS. They remunerate in particular for the management such as for the custodian as well as other administrative costs (personnel costs, supplies, advertising, official journal announcements, COB fees, etc.).
Management fees are set out in the prospectus.
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| Manager: person responsible for the management of a portfolio of securities for the account of third parties.
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| Master and feeder funds : created in France in 1998. In this type of structure one or several UCITS, referred to as a “feeder” and set up under a totally independent legal structures, invests all of its assets permanently in the master fund and incidentally in liquidities.
The feeder fund follows the same investment strategy as the master fund to which it is attached.
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| | MATIF: Marché à Terme des Instruments Financiers. MATIF was established in February 1986 and offers investors a full range of financial instruments enabling active management of risks related to movements in interest rates, share prices, currency exchange rates and the prices of various commodities.
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| Maximum loss : represents the worst performance achieved by an investor if he had entered at the high point and exited at the low point within a period.
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| Maximum return /minimum return : representing the best and worst monthly performances respectively . They are calculated from standardised monthly data (in other words the data has been standardised in terms of duration, as performances may have been recorded over a slightly different number of days). Together, they allow the risks that impact performances to be estimated.
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| | MONEP : Marché des Options Négociables de Paris. Market on which short and long-term equity options, index options and CAC 40 index futures contracts are traded.
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| | Multi-management : multi-management enables the investor to have exposure to equity and bond markets in different regions, several sectors and according to different management styles. Multi-management is more a type of management than a different type of UCITS. This generic term describes the different processes aiming to allow savers access to a selection of skills by investing in a fund of fund or by turning to a mandate fund. Whatever the approach retained multi-management entails the use of external management of pockets of assets. (Refer: Funds of funds).
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| | Multi-management mandate : this type of management describes funds based on delegation through discretionary management mandates. The management company gives a mandate to several selected managers to manage certain portions of asset of the fund directly. One also talks about manager of manager funds.
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| | Multi-manager fund of funds : this type of management defines the funds that invest more than 50% of their assets in other funds and of which a significant part is made up of external funds.
One also talks about fund of fund multi-managers.
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| | Multiple compartment fund: FCPs or SICAVs are divided into several compartments (equities, bonds, money market) grouped together under the same legal entity. Therefore investors have access to several types of investment from the same product. They may arbitrage according to their requirements by spreading their purchases between several compartments or by transferring their assets from one compartment to another without fees or at reduced fees. Such transfers are classed under French tax as disposals and thus the tax treatment in this case is as securities capital gains. They are also referred to as ‘umbrella funds’. These funds are mainly located in Luxembourg. Since 1 January 1999, the creation of these funds has been authorised in France.
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| NASDAQ : the acronym Nasdaq signifies National Association of Securities Dealers Automated Quotations system. In other words it is an electronic quotation system set up by the organisation responsible for the US over-the-counter stock market. In 1971 it became a completely separate regulated market and since then has been independent of the over-the-counter market even though they are both regulated by the same organisation, the NASD (National Association of Securities dealers).
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| Negotiable debt security : financial instrument launched by French minister Jacques Delors as part of the opening up of financial markets in 1985, which consisted mainly, for economic agents, of being able to access the money market without being obliged to go through the banks.
This money market security representative of a short term loan must be for a minimum amount of 1 million French francs (about 150,000 euros) and its maturity can be anything between 10 days and 7 years. It is issued by the French government (in the form of treasury bills), by banks (in the form of a certificate of deposit), by corporations (in the form of commercial paper), or by various specialist financial institutions.
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| | Net asset value : (or value of a unit in a FCP or of a share in a SICAV) is obtained by dividing the total net asset value of the portfolio held by the UCITS (its net assets) by the number of units or shares issued. The portfolio of the UCITS is valued applying the market price of the equities or financial instruments that it is composed of.
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| Net assets : the net assets of a UCITS represents the total value of the securities held in the portfolios. It is arrived at by valuing securities at their market prices and adding the cash and cash equivalents in the portfolio. Management fees are deducted from the figure.
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| | Next available price : an investment or a repurchase where the price is not known is calculated on the next available net asset valuation.
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| Nikkei : Daily Japanese index of 225 leading stocks listed on the Tokyo Stock Exchange. The Nikkei is the sum of the stock prices, unweighted by capitalisation. It therefore gives equal importance to stocks of medium-sized companies as to those of major multinational companies.
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| Nouveau Marche : France’s junior market, the Nouveau Marche, which was officially launched on 14 February 1996, enables recently formed companies with strong growth prospects to find the capital required for their development. The capital gains and losses are in line with the risks incurred.
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| Option : contract that gives its holder the right to buy (this is referred to as a “call option”) or to sell (this is referred to as a “put option”) a certain quantity of the underlying asset at a predetermined price during a given period of time.
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| OST (Opération sur titre) Security Transaction : It represents a modification, at a given time, in the life of the UCITS. Examples of OSTs are a change in the name of the UCITS, split in par value, etc.
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| PEA (Plan d'Epargne en Actions)(Equities saving plan) : Savings plan reserved mainly for French equities, combining a securities account and a cash account and enjoying tax benefits. SICAVs and FCPs, that hold a minimum of 60% and 75% respectively in equities of companies whose registered office is located in a member state of the European Union, may be eligible for a PEA. (Refer: Funds eligible for a PEA) PEA (Plan d'Epargne en Actions)(Equities saving plan): Savings plan reserved mainly for French equities, combining a securities account and a cash account and enjoying tax benefits. SICAVs and FCPs, that hold a minimum of 60% and 75% respectively in equities of companies whose registered office is located in a member state of the European Union, may be eligible for a PEA. (Refer: Funds eligible for a PEA).
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| Pension fund : fund set up by an organisation to ensure the payment of a pension to its employees. These funds, which have their origins in English-speaking countries, are representative of a funded pension system in contrast to a pay-as-you-go (or unfunded) system.
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| PER : The Price/Earnings Ratio is a financial ratio that is calculated by dividing the market capitalisation of a business by its net income or, alternatively, if considered by share unit, by dividing the share price by the earnings per share. The PER therefore indicates the number of years of earnings that are represented by the share price of a company.
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| | Performance : measures the gain or loss in value of an investment over a given period. EuroPerformance calculates the performances of UCITS, with net dividends being reinvested, in order to allow for the comparison of funds by capitalisation and allocation.
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| Placer : is a notion specific to EuroPerformance. This reflects the desire to separate on the one hand the legal notion of the promoter from the financial engineering of the fund manager on the other by use of a more commercial concept. Placer describes any institution of group of institutions selling the same range of UCITS, or those that are broadly similar, and that are marketed under the same brand name.
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| Portfolio : a UCITS portfolio comprises securities or financial products invested in shares, bonds and cash equivalents broken down by type, geographic region, maturity and currency. A portfolio can be either diversified or specialised depending on its composition.
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| Primary market : market on which securities are issued (equity, bond or negotiable debt securities). It enables businesses to raise capital.
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| Promoter : financial institution that is involved in the setting up and marketing of a UCITS. (Refer: Placer).
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| Prospectus : document prepared when a public offering of a SICAV or a FCP is made. Approved by the COB, this document comprises all the features of the UCITS and answers all questions that should be asked by an investor. It must be made available to the public prior to any investment.
The prospectus enables the proposed investment to be analysed and contains details of all the characteristics of the UCITS under a format of standard headings:
- name of the UCITS;
- financial characteristics such as its classification, investment orientation, minimum recommended duration of investment, subscribers concerned, guarantees or protection;
- details of its operation such as the terms and conditions for investment and redemption, management fees.
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| Q | |
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| | Quotation : this is the process that enables the price of a share to be set. Quotations are organised by the comparison of sell and buy orders. It is the law of supply and demand that enables the market price to be determined.
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| Ranking : a ranking is an analytical review that aims to compare UCITS of a given population according to quantitative criteria, such as the performance or the volatility, calculated for a period. The population studied is always divided into standard sub-groups (EuroPerformance categories) in order to compare UCITS having the same type of management. According to the criteria reviewed, a ranking (classification) is allocated to them.
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| Rating : The rating is a method for the evaluation of the default risk of an issuer by an independent organisation (Rating agency). Certain money market UCITS’ may be subject to a rating.
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| Repurchase price : is obtained by allocating the repurchase fee to the net asset value retained for the repurchase multiplied by the number of securities repurchased. It is established on the basis of the last (known) determined price or the next available (unknown) price (Refer: Repurchase fee, Last determined price, Next available price).
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| | Risk-profiled funds : are diversifiedSICAVs or FCPs managed in accordance with the level of risk accepted by investors. EuroPerformance defines three different types of profile: prudent, balanced and dynamic.
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| Secondary market : a market on which securities are bought and sold.
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| Securitisation : technique imported from the United States, in use in France since the 23 December 1988 law, by which a credit institution transfers the customer loans it holds to an entity, known as a securitisation fund, which issues shares in these loans. This technique improves the liquidity of the credit institution as well as various prudential ratios.
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| Security: generic term encompassing equities, bonds, negotiable debt securities and shares and units in UCITS.
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| Sensitivity : indicator that enables the variation in price of a bond or of net asset value of the UCITS to be measured following on from a fluctuation in market interest rates of 1%. Thus a sensitivity of 5 indicates that the net asset value will rise by 5% if market interest rates fall by 1%.
The sensitivity of a UCITS represents the average weighting of the sensitivities of the securities of its portfolio.
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| Share : negotiable securities representing the ownership or a proportion of the capital of an incorporated company.
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| Shared return funds : often incorrectly compared with ethical funds, shared return funds stand out as a result of their specific investment philosophy. The profits from shared return funds (made up of equities, bonds and traditional SICAVs) are paid, wholly or partly to charitable organisations. The investor enjoys a specific tax benefit (a tax benefit corresponding to 50% of the amounts received, up to a limit of 6% of taxable income) but on the other hand the performance is altered.
In other words ethical and shared return are two quite distinct concepts. One is based on the type of management and the other is structured around tax benefits.
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| SICAV (Société d'Investissement à Capital Variable) (open-ended collective investment scheme) : The SICAV is one of the instruments favoured by individuals when they invest in the stock market. The SICAV undertakes purchases and sales on behalf its shareholders but also the management of securities. Its minimum level of assets is 7.6 million euros.
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| | SICOVAM : Société Interprofessionnelle pour la Compensation de Valeurs Mobilières.
This refers to the French central securities depositary for French securities, foreign securities listed on the Paris Bourse, Euro-issues and all other securities. SICOVAM no longer exists following the merger with Euroclear. (Refer to Euroclear).
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| | Small Cap : describes companies with relatively small market capitalisations.
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| | Special purpose vehicle securitisation (SPV): joint ownership without separate legal entity that groups together the loans sold by financial institutions as part of a securitisation operation. (Refer Securitisation).
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| | Specialised ethical management : this type of management defines funds that select shares in businesses according to just one of the five criteria. (Refer: Ethical management).
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| | Spin-off : operation by which the capital of the UCITS is represented by two units or shares (capitalisation and distribution), one already existing and the other to be issued. (Refer: Capitalisation and Distribution).
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| | Subscription price : is obtained by adding the subscription price to the net asset value retained for the subscription to the net asset value retained for the investment multiplied by the number of securities subscribed to. It is established on the basis of the last determined price or the next available price. (Refer: Subscription fees, Last determined price, next available price).
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| T | |
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| | TARGET calendar : during the migration to the Euro, a so-called TARGET calendar was put in place. This indicates the closing days for financial markets in the Euro area. It has been agreed that the closure on any day in one or more countries in the Euro area does not necessarily mean the absence of transactions or settlements in Euros. The TARGET closing days are days where no transaction nor settlement in Euros can take place. All other days are settlement days in the Euro area including during national holidays.
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| Trackers (ETF) : Trackers, or "Exchange Traded Funds (ETF)”, were created in the United States in 1993 following an initiative by fund managers. They are financial products that reproduce the performance of an index or a basket of shares. Unlike traditional index funds they are quoted continuously, which gives them the property of being traded on the stock market in the same way as equities.
As a result of market comparison of offer and demand in the market place, their prices reflect a fraction of the level of the underlying indices. Trackers enable investors to undertake targeted investments, in business sectors or various geographical regions, in a single transaction. The main objective of fund managers is therefore to reflect, in the best way possible, the performance of the index.
The first French ETFs were created in January 2001.
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| Tracking error : expression that describes the risk of deviation (in terms of both risk and performance) compared to an index benchmark.
This represents the maximum variance in the error margin (expressed as a percentage for the reference period) that can exist between the performance of the fund and that of the benchmark with which it is associated.
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| U | |
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| | UCITS (Undertaking for Collective Investment in Transferable Securities) : Term used to describe a SICAV or a FCP. A UCITS is said to be harmonised if it is governed by the provisions of the European directive 85-611 of 20 December 1985. This directive allows them to be sold freely within the member countries of the European Union.
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| | UCITS with a simple-form approval process : these UCITS, intended for qualified investors or other natural persons or legal entities investing at least 500,000 euros initially, are exempted from the requirement for prior approval from the COB. They may operate according to prudential rules that are potentially very flexible. UCITS created under the simple-form approval process do not receive COB accreditation.
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| | Unit-linked contract : life insurance contract comprising several investment supports or compartments, in Euros and/or in units of account, between which premiums may be allocated. This can either be according to the wishes of the investor (free management), or by the insurer in accordance with pre-defined and adjustable management profiles (delegated management). Sums invested in unit-linked contracts are often invested in UCITS.
The investor has the possibility of orienting his selection on several investment supports of his choice. He may arbitrage between them in accordance with the state of the market.
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| V | |
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| | Valuation : operation to calculate the liquidating value of an asset.
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| Valuation frequency : UCITS are required to calculate and publish their net asset value each day that the stock market is open if their assets exceed 80 million euros and at least every fortnight if it is less.
(Refer: net asset value and valuation).
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| Venture capital fund : fund invested to a minimum of at least 50% in unlisted companies with the remaining assets being in listed companies, bonds and monetary products. The role of the venture capital fund is to accompany the development of equity capital.
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| Venture capital unit trust fund : UCITS that is part of the venture capital fund family that raises funds from the public. At least 60% of their assets are in securities issued by unlisted companies considered as being innovative (IT, telecommunications, life sciences, etc.).
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| Volatility : measures the degree of variation in the performances of the UCITs and therefore enables the regularity with which these performances have been obtained to be estimated.
The higher the volatility, the less the performance achieved has the chance of being reproduced in other periods. In statistical terms the volatility is a standard variance that measures the dispersion of the return around the average. It thus reflects the ups and downs, rather than the risk linked to the return of the UCITS; in particular as it takes into account the variances both up and down. However, it is the risk of loss that bothers the investor and not the propensity for gain.
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| W | |
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| Warrants : are option-type securities that first appeared in Switzerland in 1985 with the sophistication of financial instruments. They offer rights to buy or sell various underlying assets (currencies, indices, interest rates, equities, etc.) at a fixed exercise price up until a date specified (maturity). In contrast to share warrants issued by the companies and options traded on a regulated market (such as Monep), the warrant is created by a financial institution who ensures the distribution and the quotation, most often as part of a contract to provide a market. The financial institution must therefore have a significant financial backing.
There are two types of warrant. They are the call warrant that confers the right to buy the underlying asset (and therefore to bet on the increase) and the put warrant that confers the right to sell. Unlike an option, the investor does not have the right to short sell a warrant.
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