The measure of the absolute appreciation an investment achieves over a given period of time.
The active return describes the distance to the benchmark.
Allocation (also Asset Allocation)
The distribution of investment assets across various asset classes, such as bonds, shares, and currencies, etc. The decision-making criteria include the assets’ characteristics, the respective fund strategy, and the preferences and financial situation of the investor.
Bonds (also Annuities or Debentures)
A generic term for all debt securities with a specific fixed or variable interest yield (coupons); they are used for medium-to-long term debt financing. The issuer is obliged to make regular interest payments as agreed and repay the borrowed amount at the end of the term.
Debt securities issued by a bank in its own name for the procurement of external financing. They are used to refinance the bank's lending business.
Vergleichsmaßstab für die Beurteilung des Anlageerfolges von Fonds. Oft dient der maßgebliche Index der jeweiligen Anlagekategorie als Bewertungsgrundlage.
Debt securities issued by the Federal Republic of Germany with terms of 10 or 30 years.
Bund Future (also Euro-BUND-Future)
Future contracts (see “Futures” below) on ideal-typical bonds issued by the Federal Republic of Germany.
A financial instrument with a value derived from the price fluctuations or price expectations of other assets. Derivatives are designed to follow the price fluctuations of these assets disproportionately. As a result, they are used both to hedge against depreciation and to speculate on the underlying asset’s price gains. The most important derivatives include certificates, options, futures, and swaps.
The portion of profits distributed by a public limited company that is attributable to a share. The distribution does not correspond to the net profit. It may be lower due to provisions made prior to the dividend payments. The amount of the dividend and its payment are determined by the shareholders at the Annual General Meeting.
An indicator (or risk indicator) for the assessment of a bond’s sensitivity to changes in interest rates. It corresponds to the average capital commitment period of the capital employed. The higher the duration, the more volatile the bond.
An issuer of securities: In the case of shares, this is a company. In the case of bonds, this is a company, a public entity, a country, or other institutions.
Issuergroup of securities, devided in Corporates, Financial, Government Bond and SSA (Supra, Sub-Sovereign, Agency).
Bonds issued by companies from the financial sector (such as financial institutions or insurance companies).
Fixed-income securities are bonds for which interest is agreed as a fixed percentage of the nominal value payable on defined dates.
Futures (also futures contracts)
Exchange-traded, unconditional futures contracts which both the buyers and the sellers are obliged to fulfil. The obligation includes the delivery/acceptance of an underlying value at a particular point in time. These contracts may be based on securities (“financial futures”) or commodities (“commodity futures”). Futures are often used to hedge against exchange risk. If the value of a security hedged via futures falls, the value of the hedging contracts rises.
Bond with a lower credit rating.
Bonds with features of both equity and debt. These are fixed-income bonds initially, but their interest may change in the course of their very-long-to-indefinite maturity according to the terms and conditions of the bond. Interest payments may be suspended, providing that no dividends are paid and no shares bought back. Hybrid bonds are subordinated to traditional bonds in the event of insolvency. They are not repaid until all other obligations are fulfilled. Equities are the only obligations subordinate to hybrid bonds in the event of insolvency.
Measurement of the strength of the statistical relationship between two variables. It may be either positive (variable “A" increases as variable “B” increases) or negative (variable “A” increases as variable “B” decreases). The strength of the statistical relationship is shown by the correlation coefficient. Its value ranges between -1 and +1. Correlations also exist between securities, commodities, and the respective indices. They do not provide any information about which variable depends on the other and which causality chain is caused by the correlation.
Specific fixed or variable interest yield.
A fund can be managed using different investment approaches. Usually, a distinction is made between top-down approaches and bottom-up approaches. For the top-down approach, top-down fund management starts with macro-economic data, defines weightings for the various host countries and then picks securities. By contrast, bottom-up fund management approach selects individual securities without regard to any country quotas.
The performance of a security (e.g. a fund) is measured as a percentage and derived from the price trend, and – depending on the type of security – from the dividends or interest received excluding expenses and taxes.
These are the economically weaker countries of the Eurozone, as opposed to the central, economically strong countries. These are mostly Southern European states at this point in time.
This is a debt security that is issued by a mortgage bank (Pfandbriefbank). Covered bonds are a particularly secure investment option because they have so-called cover assets. This consists of mortgage bank loan receivables vis-à-vis the public sector (for public covered bonds) or consists of loan receivables that are secured against mortgages (for mortgage bonds) or ship mortgages (for ship mortgage bonds).
Mit Hilfe von Ratings wird die Wahrscheinlichkeit bewertet, dass ein Schuldner die mit den von ihm emittierten Wertpapieren verbundenen Zins- und Tilgungszahlungen erfüllen wird.
A participation right or claim which evidences co ownership in the assets of a public limited company. Holders of ordinary shares are entitled to all legal and statutory rights. Preference shares often do not have voting rights, but their holders have a right to preferential treatment regarding dividends.
The difference in yield between various corporate or government bonds (e.g. Bunds with a 10-year term vs. 10-year bonds issued by another member of the euro area).
Debt securities issued by a country (e.g. Bunds).
This is an investment strategy that aims to buy stocks that are likely to perform better than the market overall. The stock selection takes place after a detailed analysis of the companies and their earnings performance. This makes stock picking different to strategies that are geared purely towards particular countries or sectors.
Bonds that are issued by companies in the commercial, industrial, or service sectors, but not companies in the financial sector.
Volatility is a measure of risk and shows the intensity of fluctuation in the price of an underlying instrument over a certain period. The higher the volatility, the greater the price upward and downward price fluctuations and therefore the riskier it is to invest in the underlying instrument.
The yield on a bond corresponds to its percentage return on investment after deduction of all charges and other ancillary costs (effective interest rate). It serves as a key benchmark to asset the overall success of a bond investment. It is composed of the coupon and any price gain. The yield on a stock investment is used to assess the success of the corresponding investment. It is composed of the share price performance and the dividends received over the period under review.
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