Glossary

The most important terms from the world of funds - arranged alphabetically. Click one of the letters to display the relevant terms.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Tax-Saving Product

Investment form or combination of investment forms that take advantage of the statutory tax benefits to create a return advantage.

Term Held

Investment funds do not have a fixed term. Because of differing interest rate and stock market cycles funds are primarily suited to long term financial investment such as for private pension provision. (Exception: near money market funds)

Term of Bonds

Characteristics such as interest rate, term, coupon maturity, creditworthiness, repayment type and creditor protection clauses in the bond conditions.

Tracking Error (% per year)

Measurement for the difference between the fund's yield and the benchmark's yield. The greater the average difference between the fund's performance and the benchmark's performance the greater the tracking error. The tracking error is often used to define the investment style. A high tracking error represents active management; a lower one represents rather passive management. So the TE for an index fund is virtually zero.

Trading

Short-term sale and purchase of securities with the aim of exploiting short-term rate fluctuations.

Transaction Costs

Costs that are incurred in the sale and purchase of securities are called transaction costs. Examples : subscription fee for funds, bank commissions etc.