Glossary/finances/hedge fund

6 November 2012

Finances

Glossary/finances

 

A 

Accumulation

A term indicating that a fund does not give dividends. The opposite is an income fund.

Accumulative return

Performance figures that cover a rolling period, whether annually, monthly, weekly, or daily. For example, on 14 March 2001, the 1-year trailing return would cover the period from 14 March 2000 through 14 March 2001 and the 1-week trailing return would cover the period from 7 March to 14 March 2001.

Active management

When a fund manager uses his own judgement to decide what shares to buy or sell rather than following an index. The opposite is known as passive management or index tracking.

Additional

The smallest amount permitted to top up an existing fund investment.

Administrator

The overseer of the policies and operations of a fund management company.

Alpha

The amount by which a fund has out-performed its benchmark, taking into account the fund´s exposure to market risk (as measured by Beta). Alpha is also known as the residual return.

Alternative Investment Market (AIM)

A stockmarket launched in June 1995 in London for smaller growing companies which would not normally qualify for listing on the main market.

American Depository Receipts (ADRs)

Negotiable certificates held in an American bank representing title to a certain number of foreign shares. Non-American companies wishing to list on the US exchange must offer ADRs.

American Stock Exchange (AMEX)

The second largest floor-based exchange in America. AMEX focuses on the shares of small to medium-sized companies and has a strong presence in common shares, index shares and equity derivative securities.

Amount

Enter the currency amount invested in the fund. The Portfolio Tool will then find the price and number of shares automatically.

Amsterdam Exchange (AEX)

The Amsterdam Exchange is the exchange that comprises the AEX-Effectenbeurs, the AEX-Optiebeurs (formerly the European Options Exchange or EOE) and the AEX-Agrarische Termijnmarkt. AEX is part of Euronext, which is the combination of the exchanges of Amsterdam, Brussels and Paris.

Annual General Meeting (AGM)

An annual forum for a company where shareholders can exercise their voting rights.

Annual management charge

For annual management charge, please see Management Charge.

Annual report

A legally-required document filed each year by each fund that includes a description of how the fund has invested its assets. It provides investors with an overview of the fund with financial details such as a company and consolidated balance sheets, a statement of total return, an auditor´s report and includes information on the managers, the directors and the chairman of the fund. The chairman´s statement reflects the past year and the report should also mention any upcoming issues and meetings relating to the fund.

Annual return

Comparison of the performance of the fund, its category and the category index over calendar year periods.

Annual returns %

The performance of a fund over calendar year periods.

Annualised return

Refers to the conversion of the return on an investment into a yearly rate. For example, if Fund A returned 5% over six months and Fund B returned 4% over four months, Fund A´s annualised return is 10,25% and Fund B´s is 12,49%.

Asia 4Tigers

Proportion of portfolio invested in Hong Kong, Singapore, South Korea and Taiwan. This term is gradually going out of use as China becomes more important as a market.

Asset allocation

Deciding how to spread an investment between categories of financial assets (including shares, bonds, cash) and tangible assets (including real estate, commodities, precious metals and collectibles). Asset allocation is generally driven by the desire to optimise the risk-return trade-off according to an investor’s time frame and investment objectives.

Asset Allocation

By selecting this box, the user can take more active control of the asset allocation targets, by entering the chosen weights in the relevant fields. The users should note that a minimum cash allocation of 2% is always recommended because investment funds themselves always hold some cash.

Asset classes

Broad investment categories that offer differing levels of risk and return, such as shares, bonds, property and cash. Shares tend to provide the best potential for capital growth but with relatively high levels of risk. Bonds offer income with a moderate degree of risk. Property offers capital growth but with the potential for illiquidity. Cash presents the lowest level of expected return but ensures liquidity and the safety of the original investment.

Asset management

A general term for management of a portfolio of a pre-determined group of asset classes, such as shares, bonds or cash.

Assets in Top 10 Holdings

The percentage of the fund´s portfolio which is invested in its biggest ten holdings.

Australasia

Proportion of portfolio invested in Australia and New Zealand.

Austrian WKN

Austrian WertpapierKennNummer. An Austrian system for numbering financial instruments.

Authorised

An authorised investment business is one that adheres to the Financial Services Act which states that all investment businesses operating in Britain are required to be a member of one of the regulatory bodies established under the Act.

AUTIF

The old name for the Investment Management Association (IMA), the trade body which represents the management groups which run open ended investment companies and unit trusts.

Average

This Average row shows the average of the different data points of the funds that have met search criteria. The data points include management fees, all the return figures [that is one day, one year, three years etc] where applicable, Morningstar ratings, Style Box details, and standard deviation.

 

 

B

 

Balanced fund

A fund with substantial holdings in both bonds and shares. A balanced fund will typically perform better than a share-only fund in a bear market but not as well in a bull market. Different balanced funds may hold different share to bond percentages which will affect risk levels and performance.

Bank of England

The central bank for the United Kingdom. The Monetary Policy Committee of the Bank is responsible for setting interest rates.

Basis point

One one-hundredth of 1% (0.01%). Used to measure changes in interest rates. For example, a change in interest rates from 6.25% to 6.75% would be an increase of 50 basis points.

Bears

Market pessimists. The opposite of bulls.

Benchmark

An index against which a fund measures its performance. Funds typically compare their performance against indices such as the FTSE 100 or the S&P 500.

Beta

A measure of a fund’s sensitivity to market movements. The beta of the market is 1.00 by definition. A beta of 1.10 shows that the fund has performed 10% better than its benchmark index in up markets and 10% worse in down markets, assuming all other factors remain constant. Conversely, a beta of 0.85 indicates that the fund is expected to perform 15% worse than the market´s excess return during up markets and 15% better during down markets.

Bid Price

The price at which the unit-holder of a unit trust can sell shares.

Bid-offer spread (fund)

The difference between the bid price – the price at which units or shares are sold back to the fund manager – and the offer price – the price at which they are bought from the manager. Fund management companies use this difference to pay dealing costs, stamp duty and for their profit margin.

Big Bang

The deregulation of the City of London in 1986.

Biography

A brief summary of the fund manager’s career history.

Blue Chip

Blue chips are shares in a large, reliable well-managed company with a strong credit rating. In the UK many blue-chips are listed on the FTSE 100.

Bond

An IOU issed by a company or the government. During the life of the bond, the bondholder receives regular interest payments based on the coupon rate. On maturity the loan is repaid. Certain exceptions apply such as zero coupon bonds, which provide no interest payments, but are issued at a discount.

Bond Funds

A portfolio which invests mainly in bonds with the aim of providing a steady stream of income to investors. The value of bond funds tends to be inversely linked to interest rate changes.

Bonds

The proportion of a fund invested in bonds.

Broker

A firm or individual that acts as an intermediary between a buyer and a seller of securities, thereby earning a commission on the transaction. Unlike a broker-dealer a broker does not own the securities that he or she sells.

Bulls

Market optimists. The opposite of bears.

Business Services

Proportion of portfolio invested in advertising, printing, publishing, business, support, consultants, employment, engineering and construction, security services, waste management, distributors and transport companies. Examples include Bouygues, WPP and Easyjet.

Buy and hold strategy

A method of investment which involves purchasing shares and keeping them for a relatively long period. By definition it entails a low turnover. The opposite technique is sometimes known as a trading strategy.


 

CAC 40 index

An index containing forty major French companies listed on the Paris Bourse.

Calendar Year Total Returns

The performance of a fund over calendar year periods.

Callable bond

A callable bond is a bond that can be repaid early, at the issuer´s discretion. A callable bond allows an issuer to refinance debt at a lower rate, should interest rates drop below the coupon rate on the bond. If interest rates have dropped significantly since the date of issue, a callable bond will trade as though its maturity were shortened to the call date, which is the earliest time at which the bond can be redeemed.

Capital Asset Pricing Model (CAPM)

A mathematical model used to help price a security by determining the relationship between risk and expected return. CAPM is a key element in portfolio theory, in which the expected rate of return (E) on an investment is expressed in terms of the expected rate of return on the market portfolio (rm) and the Beta coefficient ((beta)), E = R + (beta)(rm – R), where R is the risk-free rate of return.

Capital gain

The profit made on the sale of an investment, i.e. unit trust shares. The loss on a sale is a capital loss.

Capital gains tax (CGT)

The tax paid on profit from the sale of an indivdual´s investments, payable at their highest rate of income tax.

Capital structure

Refers to the way in which a company is financed by investors. The basic financing choice is between equity (shares) and debt (bonds). The ratio between debt and total capital, which combines debt and equity, is the most commonly cited summary of capital structure.

Cash

The proportion of the fund invested in cash.

CAT Standard

CAT standard indicates whether or not this fund has followed the government guidelines to receive a CAT-mark. CAT standards are voluntary government standards setting out acceptable Charges, Access and Terms on ISAs. Overall, CAT marked ISAs (Individual Savings Accounts) must treat customers honestly and fairly, using simple language to explain financial terms, must not bundle the ISAs with other products, and need to give assurances to uphold the standards after the sale of the product. For more details including the government´s requirements for each ISA type, please see Morningstar´s ISA Funds section.

CAT Standards/CAT-Marking

CAT standards are voluntary government standards setting out acceptable Charges, Access and Terms on ISAs. Overall, CAT marked ISAs (Individual Savings Accounts) must treat customers honestly and fairly, using simple language to explain financial terms, must not bundle the ISAs with other products, and need to give assurances to uphold the standards after the sale of the product. For more details including the government´s requirements for each ISA type, please see Morningstar´s ISA Funds section.

Central & Latin America

Proportion of portfolio invested in Argentina, Aruba, Bahamas, Barbados, Belize, Bermuda, Bolivia, Brazil, Cayman Islands, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Suriname, Trinidad and Tobago, Uruguay and Venezuela.

Closed-ended funds

Closed-ended funds, such as investment trusts, are divided into a finite number of shares. The shares trade on the London Stock Exchange with prices rising or falling based on investor sentiment. Investors buy shares at a Premium to NAV or a Discount to NAV of the net asset value (NAV) of the fund.

Commission

The charge levied by a broker for buying or selling shares on your behalf. The fee can vary depending on the size of the order and the degree of advice you received.

Consumer Goods

Proportion of portfolio invested in companies that manufacture or provide food, beverages, household and personal products, apparel, shoes, textiles, autos and auto parts, consumer electronics, luxury goods, packaging and tobacco. Examples include Benetton, BMW and Clarins.

Consumer Services

Includes retail stores, personal services, home builders, home supply, travel and entertainment companies, and educational providers. Examples include Metro, Tesco and Hennes & Mauritz.

Contact details

Information on the fund management firm.

Convertible bond

A company issued bond that may be converted into shares in that company during the life of the bond for a pre-stated price. The decision to convert may rest with either the issuer of the bond or the investor but is not obligatory.

Corporate bond

A bond issued by a corporation to an investor as a means of raising money. The par value, otherwise known as face value, of the bond is repaid when the bond matures. In addition, interest is paid at set intervals and the bonds can be traded on major exchanges. Because bonds are taxable, they are also offered in tax wrappers such as ISAs (Individual Savings Accounts).

Cost adjusted performance

Refers to the inclusion of each fund´s charges in their return to accurately compare the fund performance of the different companies.

Countries of registration

The countries in which a fund can be sold or marketed.

Country

The company’s country of registration for legal purposes.

Coupon

The fixed percentage that is paid out on a regular basis on a fixed-income security.

Coupon bond

With a coupon bond, the interest and principal due are paid to the holder of the bond, who is not necessarily the one to whom it was initially issued. In return for a coupon attached to the bond being surrendered at regular intervals, an interest payment is issued.

Credit quality

The assessment of a bond based on its financial condition to establish its quality and safety.

Credit Quality

By selecting this box, the user can override the default settings whereby the optimiser targets middle-credit, investment-grade bond investments. The user can tilt the target to achieve a greater exposure to high yield bonds or, conversely, to focus on government bond-type high credit quality investments.

Credit rating

Assess the probability and likelihood that a company will default on a bond. Many ratings companies offer their own ratings systems including Moody´s, Standard & Poor´s and Fitch. Bonds with ratings from AAA to BBB- are deemed to be ´investment grade´ while BB+ and below are known as ´speculative grade´.

Currency

The currency of the transaction.

Currency depreciation

A fall in the value of one currency in relation to another. A movement in floating exchange rates results in one unit of a currency buying fewer units of another currency, thus the value of the first currency has depreciated. For example, with a floating exchange rate, if last week £1 bought $1.50 and this week £1 buys $1.45, the value of the pound has depreciated relative to the dollar because you get less dollars for the same amount of pounds.

Currency devaluation

The decrease in the value of a currency in comparison to another, often the result of a government announcement.

Custodian

The organisation such as a bank or trust company responsible for the safekeeping, and sometimes settlement, of investments owned by a fund.

Cyclicals

Proportion of portfolio invested in companies operating in areas which are sensitive to the economic cycle. These include aerospace and aerospace industries, building supplies, industrial-building products, business equipment, chemicals, machinery (both light and industrial), metals fabrication (iron, steel, coal, and rare metals), paper and packaging, and photo equipment. Some examples of companies in this sector include BAE Systems, Boeing, Canon, Rio Tinto, Rolls Royce and Travis Perkins.

Cyclicals

Companies whose performance moves in line with the general health of the economy. Share prices are strong when growth is good but suffer severely during a recession. Examples are automobiles, construction, and manufacturing companies.

 

Data as of

Data as of is the date of the portfolio in the Morningstar database.

Date

Date refers to the latest reported NAV

Date for rating

The date the fund was awarded its current rating.

Date of inception

The date the fund was launched.

Dax 30

An index containing the 30 largest German companies. They are ranked on the basis of free float market capitalisation (how much of the company is available to be traded on the market).

Defensives

Shares in companies which are not generally sensitive to the economic cycle. For example, food producers or utilities.

Deferred charge

For Deferred Charge, please see Exit Charge.

Defined benefit pension scheme

A company pension scheme which pays former employees an income which is a proportion of their final salary. Also known as final salary schemes.

Derivative

A generic expression for securities whose prices are based on the prices of another underlying investment. Types of derivatives include futures, options, swaps and warrants.

Discount rate

A way of converting the future value of an investment into its present value. For example, this can help an investor decide what is a fair price to pay for a bond that will pay £50 in interest each year and £1000 at maturity by determining how much the cash streams in the future are worth today.

Discount to NAV

The difference between the value of the underlying assets of an investment trust and the value indicated by its share price. Usually expressed as a percentage. Investment trusts can also trade at a premium to their net asset value (NAV) but it is rare.

Distributor

A person or company responsible for selling and marketing funds to investors. The distributor is also responsible for sending fund documentation, such as prospectuses, reports and statements of additional information.

Diversification

Spreading risk by investing in assets with different characteristics. For instance, an individual might invest in a combination of bonds, property and shares. Or share-based funds might invest in a variety of countries or market sectors. Investors can also diversify by investing in a range of different types of funds.

Dividend

An after-tax distribution of a company’s or fund´s profits to shareholders, normally specified in pence per share in Britain. Dividends are usually paid twice a year – interim and final.

Dividend Frequency

Frequency with which Dividends are paid by the Fund.

Dividend yield

A percentage that is calculated by dividing total dividends by the current price and multiplying by 100. For example, if a fund distributed a 10p dividend and the current share price is 210p the dividend yield is 4.76%.

Domicile

The country of residence of a person, fund or company. It can have important tax implications.

Dow Jones Industrial Average

A stockmarket index which tracks the performance of 30 of America´s largest companies. Often shortened to “the Dow”.

Durables

Proportion of portfolio invested in companies operating in areas such as automotives, household goods, multi-industry firms, recreation (luxury goods), rubber/plastic, shoes and leather, textiles, and textile manufacturers.

Duration

The average time to payment. Also a measure of the effect of interest rate changes on the price of a fixed income asset or portfolio. Duration is defined in years (that is a three year duration means the value of the bond could rise about 3% if interest rates fall by 1%).

 

 

Earnings

A company’s income during a certain period. The cost of sales, operating expenses, depreciation, taxes and other expenses are subtracted from revenue.

Earnings Per Share (EPS)

A company’s total earnings divided by the current number of shares outstanding. EPS gauges the profitability of the company from the view of the shareholders. It is used to calculate the price-to-earnings ratio P/E.

Economic cycle

Consists of alternating periods of economic expansion and contraction typified by changing interest rates, employment levels and productivity, combining to form a long-term overview. The current economic period (that is growth, recession) will affect the performance of investment sectors.

Emerging Asia – Ex 4Tigers

Proportion of portfolio invested in emerging Asia which includes the Near East, Middle East and Far East but excludes Hong Kong, Singapore, South Korea and Taiwan.

Emerging Europe

Proportion of portfolio invested in the countries that were formerly part of the Eastern bloc such as Albania, the Czech Republic, Russia and Yugoslavia.

Emerging market

The financial markets of a developing country. Some consider this a higher–risk investment sector because of potential political and economic instability, short investment history and illiquidity.

Energy

Proportion of portfolio invested in companies operating in areas such as oil and natural gas services. Some examples of companies in this sector include BP Amoco, Edinburgh Oil & Gas, Pennzoil and Total Fina.

Energy

Proportion of portfolio invested in companies that produce or refine oil and gas, oilfield services and equipment companies, and pipeline operators. Examples include Repsol, YPF, OMV and Statoil.

Enhanced index fund

Funds which combine the techniques of passive fund management – tracking stockmarket indexes – with a degree of stock selection usually done by computer models.

Environmental fund

Another term for a green fund – one which invests on the basis of environmental as well as financial criteria.

Equities

An alternative term for shares.

Equity fund

A fund investing primarily in shares. It can be based on any number of investment strategies.

Equity portfolio

Investment valuation statistics refer to the portion of the portfolio invested in shares.

Equity risk premium

The additional reward an investor can expect to receive for taking the risk of investing in shares rather than cash or government bonds. It can be expressed both in historical terms or as an expectation of future rewards.

Equity Sector

By selecting this box, the user can override the sector weight defaults. The default weights are aiming to maintain a high level of diversification and have been established by reference to the US and European equity markets, with a further reduction in the large weight of financial stocks in both markets. The user can act either on the sectors themselves, or on the super sectors, using the relevant buttons. When the user acts on super sectors, the respective weights of the sectors inside each super sector retain their original relative weights for maximum diversification.

Equity Style

By selecting this box, the user can target a style tilt, either in terms of growth vs value or in terms of large stocks vs. smaller stocks, or both. By default, the optimiser is set on a neutral style (growth = value) and normal capitalisation weights (70% large stocks, 20% medium stocks, 10% small stocks). A growth tilt will target a 60% weight for growth stocks, 40% for value stocks, and vice versa. A large cap tilt will raise the target to 85% in large stocks (from the normal 70%) at the expense of medium and small stocks. A smaller cap tilt will reduce the large cap target to 55%, with a corresponding increase in medium and small stocks.

Estimated NAV

The value of a fund’s investments and cash less its liabilities (prior charges such as loans, debenture stock and preference shares at their Fair value).

Ethical fund

A fund which uses moral as well as financial criteria when selecting assets for its portfolio. Sometimes used to refer to funds that screen out stocks on the basis of negative criteria. For example, ethical funds might screen out companies that produce alcohol or arms.

Ethical investment

Investment which takes into account ethical principles rather than just investment performance. An increasing number of funds have ethical or socially responsible remits.

Eurobond

A form of debt in which the currency is different from that of the country in which it is issued. For example, a dollar-denominated bond issued in the UK.

Euronext

The combination of the exchanges of Amsterdam (Amsterdam Exchanges), Brussels (Brussels Exchanges) and Paris (Paris Bourse).

European Central Bank

The body that sets interest rates for the euro-zone economies.

European Union (EU)

Originally founded as a common market for six nations in 1957 by the Treaty of Rome, the EU was formerly known as the European Community. A common currency – the euro, the aim of a single market for goods and services and a political alliance throughout its member countries are the uniting principles behind the union.

Euro-zone

The region which has adopted the euro as its currency. Current members: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

Exchange-trade fund (ETF)

ETFs are hybrid instruments combining aspects of investment trusts and unit trusts and offering many the benefits of both. ETFs are products that trade like shares on the London Stock Exchange. They mimic stockmarket indices and are passively managed just like an index fund.

Ex-Dividend / Ex-Coupon

Refers to a share sold without the right to the dividend – the seller retains the declared dividend. Ex-dividends are normally sold in the period between the announcement and payment of the dividend.

Exit charge

A fee or sales charge imposed when investors sell shares in certain unit trusts or other investment vehicles. The amount tends to decrease the longer you hold the shares, often to nothing after a set period of time, i.e. three or five years. This is typically designed to discourage investors from withdrawing their money too soon.


 

Federal funds rate

The most widely quoted American interest rate. This rate, determined by the Federal Reserve´s Federal Open Market Committee (FOMC), determines how much American banks charge one another to borrow Federal Funds – the money they have previously deposited into Federal Reserve banks to make up their reserve requirement. The system aims to facilitate those with excess reserves lending to those which have fallen short.

Federal Open Market Committee (FOMC)

The body that sets American interest rates. It consists of seven members of the board of governors of the Federal Reserve and five of the 12 Reserve Bank presidents. The FOMC oversees open market operations – the primary tool of monetary policy – establishes ranges for the growth of monetary aggregates and directs operations undertaken by the Federal Reserve in foreign exchange markets.

Fees & Expenses

The average fees and expenses for all funds in the portfolio.

Fettered

A term usually used in relation to a fund of funds. It means the fund of funds is restricted to investing only in the internal funds run by the same fund management group. The opposite is anunfettered fund of funds.

Financial adviser

An individual or firm that offers advice on investments and other financial products, either on a commission basis or for a flat fee. The current system, known as polarisation, allows two distinct types: Independent financial advisers (IFAs) who base their recommendations on all products in the particular market, and those tied to the products of a single company. This system of advice is currently under review.

Financial Services

Proportion of portfolio invested in banks, finance companies, asset management firms, securities brokers and insurance companies. Examples include Egg, ING and BSCH.

Financial Services Authority (FSA)

The the City’s leading financial regulator. It is responsible for policing the financial services industry to protect investors´ interests. The FSA regulates the financial services industry and has four stated objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

Financial Year

A 12-month accounting period over which a company reports its profits. It is not aligned with the calendar or tax year.

Financials

Proportion of portfolio invested in companies operating in areas such as banking, insurance, investments and property investment. Some examples of companies in this sector include Amvescap, Aviva, HSBC and Lloyds TSB.

Fixed Income Fund (Bond Fund)

A fund which invests primarily in bonds. Its assets can include corporate debt, government debt or a combination of the two types.

Flagship Fund

Typically the oldest of a group´s products or the one that boasts the largest assets under management. Such funds often bear the management group´s name.

FT 30

An index based on the share price performance of 30 of the largest British companies. Largely superseded by the FTSE 100.

FTSE

FTSE, also pronounced “Footsie”, is named for the Financial Times (FT) and the London Stock Exchange (SE), who are its joint owners. The FTSE family has numerous indexes including the FTSE 100, 200, and techMARK, but most commonly, Footsie refers to the FTSE 100. This is a common abbreviation for the FTSE 100, a stockmarket index based on Britain’s 100 biggest companies. Other indices in the FTSE family include the 350 and the All-Share.

FTSE 100

An index comprised of the 100 largest companies by market capitalisation on the London Stock Exchange.

FTSE 250

An index that measures the share price performance of medium-sized British companies. The next 250 largest firms after those in the FTSE 100.

FTSE 350

An index that measures the share price performance of the 350 largest British companies. A combination of the FTSE 100 and FTSE 250.

FTSE All Share Index

An index the measures the share price performance of the 900 largest companies on the London Stock Exchange.

Fund

A portfolio of assets such as bonds or shares.

Fund Company

An investment group offering a range of funds to investors.

Fund Currency

The currency in which a portfolio trades.

Fund Family

A group of funds, with various investment strategies, available from the same fund group. Fund families may offer investors the opportunity to shift funds between the company’s funds for a reduced fee or waive the fee entirely.

Fund Manager

An individual, employed by a fund group, who is responsible for managing a fund´s portfolio.

Fund News

The latest news stories published by the Morningstar editorial team.

Fund of Funds

A fund that specialises in buying shares in other funds rather than individual securities.

Fund Quickrank

The Quickrank tool enables users to order funds according to a wide range of criteria including: * Returns over several time periods * Morningstar rating * Stylebox. * Volatility * Fees The tool can be applied to the whole universe of funds or alternatively it can be narrowed down to examine the funds within a selected category or fund group.

Fund Search

Enter partial or full fund or company name and click to search Morningstar fund database.

Fund Selector

The Fund Selector enables users to create a shortlist of funds which meet their specified criteria. These can include returns, risk characteristics and the nature of the portfolio. It is also possible to select funds which are available in Individual Savings Accounts or conform to the CAT standard.

Fund supermarket

A company that sells funds over the internet. Fund groups and stockbrokers have both set up fund supermarkets.

Fund switching

The transfer of money from one fund to another within a fund family.

 

G7 (Group of 7)

Refers to the seven leading industrial countries whose finance ministers meet to discuss economic and political issues affecting the group. The G7 consists of Britain, America, Canada, Japan, Germany, France and Italy. G8 includes Russia.

GARP

Stands for Growth At a Reasonable Price. An investment strategy which involves trying to find fast growing companies trading at attractive stockmarket valuations.

GBX

GBX stands for Great British Pence.

GDR (Global Depositary Receipt)

A GDR is comparable to an ADRsB131. This negotiable certificate is held in a country’s local banks representing title to a certain number of foreign shares. Non-domestic companies wishing to list on the local exchange must offer GDRs.

Gilts

A UK government issued bond. Because a gilt is guaranteed by the government it is generally one of the safest investments in the UK.

Global fund

A fund that invests in UK and international shares or bonds.

Greater China

An investment region which consists of China, Hong Kong and Taiwan.

Green fund

A fund which invests in companies which are deemed to be friendly to the environment.

Gross Gearing

The ratio of estimated Gross Assets to the Net Assets, expressed as a percentage

Growth

Refers to an investment strategy that selects shares with a record of past growth and the potential for future increases in capital value. Usually, that means companies with high growth in earnings or expected earnings, and hence the potential for big increases in the stock price. Shares in growth companies are usually expensive, relative to the internal or fundamental value of the company. If the company fails to deliver growth, the price can fall dramatically. Growth investing is usually considered more risky than value investing.

Growth & income fund

A fund where the fund manager seeks to identify investments in shares that will provide both long-term growth and dividend income.

 

Hang Seng

The main index of the largest companies on the Hong Kong stockmarket.

Hardware

Proportion of portfolio invested in manufacturers of computer equipment, communication equipment, semiconductors and components. Examples Include Siemens, Cisco and Ericsson.

Health

Proportion of portfolio invested in companies operating in areas such as pharmaceutical manufacturing, medical-instruments makers and pharmaceutical wholesalers. An example of a company in this sector is GlaxoSmithKline.

Healthcare

Proportion of portfolio invested in biotechnology, pharmaceuticals, research, services, home health, hospitals, medical equipment and supplies, and assested living companies. Examples include Fresenius, Aventis and GlaxoSmithKline.

Hedge fund

A portfolio which makes extensive use of unconventional investment tools such as derivatives.

Hex

A Finnish system for numbering financial instruments.

High yield bond

Corporate debt with a relatively high risk of default. Also known as a junk bond.

High yield fund

A bond fund investing primarily in securities with lower investment grade or “junk” ratings.

H-shares

Mainland Chinese companies listed on the Hong Kong Stock Exchange.


 

IMA Sectors

Funds principally targeting income – Immediate Income

UK Gilts

Funds which invest at least 95% of their assets in sterling denominated (or hedged back to Sterling) Triple AAA rated, government backed securities, with at least 75% invested in UK government securities (Gilts).

Income ratio

The percentage of current income earned per share. It is calculated by dividing the fund´s net investment income by its average NAV. (The net investment income is the total income of the fund, less operating expenses.) The income ratio indicates how much of the fund´s total return comes from income. A high income ratio suggests that the underlying fund depends on dividend distributions or coupon payments to fill out its total return while a low income ratio suggests that capital appreciation is very likely responsible for the fund´s total return.

Income units

A holding in a unit trust that pays out income on a regular basis via dividends.

Independent financial adviser

An adviser who is legally obliged to advise investors on funds from the full range of management groups. The opposite is a tied agent who can only advise on the funds of one group. This system of advice is currently under review by the Financial Services Authority.

Index

A collection of securities chosen to attempt to represent a specific investment area. Common ones include the Dow Jones Industrial Average, the S&P 500 and the FTSE 100. Many funds choose to benchmark themselves against an index as a performance measure.

Index

Risk statistics for the fund´s benchmark as defined by Morningstar. Note that it is not necessarily the same index that the fund manager may have chosen to benchmark the fund.

Index fund

A fund that tracks a particular index and attempts to match the returns of that index. The fund manager typically studies the index´s movements to ensure the fund´s securities are representative of the index with the sectors matched proportionally. Sometimes called a Trackerfund.

Individual savings account (ISA)

A form of tax shelter which can protect fund investors from capital gains tax and income tax within certain annual allowances.

Industrial Materials

Proportion of portfolio invested in aerospace and defence firms, and companies that provide or manufacture chemicals, machinery, building materials and commodities. Examples include ABB, Air Liquide and EADS.

Inflation

The level at which wages and prices increase over a certain period of time, usually a year. In the UK, this is measured by the Retail Price Index (RPI) and the index of National Average Earnings (NAE).

Initial

The smallest amount permitted to start an investment in the fund.

Initial charge

The fee payable to a management company upon the purchase of units to pay for administration, marketing of the fund and commission to the adviser(where applicable).

Initial public offering (IPO)

The initial offering of shares to the public by a company which is listing itself on a recognised exchange, such as the London Stock Exchange, for the first time.

Inland Revenue

The UK government department which assesses and collects taxes on income, profits, gains and inheritance.

Institutional investor

A generic term for an organisation that invests large sums of money, often other people’s savings in securities and funds. Examples of institutional investors include pension funds, insurance companies, investment companies and endowment funds.

Instruments %

The percentage breakdown by type of issuer of bond holdings.

Investment Management Association

The trade body that represents the groups which run open ended investment companies and unit trusts. Formerly known as the Association of Unit Trusts and Investment Funds.

Investment objective

The investment strategy of the fund as set out by the fund management firm.

Investment objective

A fund manager´s stated goal for the money invested in his fund, such as capital growth or steady income flows to investors.

Investment trust

A collective investment that invests in shares of companies or fixed income securities. Its own share price does not necessarily reflect the value of its assets. When the net asset value (NAV) per share exceeds the share price, it is trading at a discount and when the NAV/share falls below the share price, it is trading at a premium.

ISA

Individual Savings Account. A form of tax shelter which can protect fund investors from capital gains tax and income tax subject to various annual allowances.

ISIN

Stands for International Securities Identification Number (ISIN). A coding system used to distinguish securities.

Italian Stock Exchange (ISE)

The Italian Stock Exchange is the result of the unification of Italy’s 10 national exchanges in 1991 led to the formation of this exchange. Based in Milan, the main indexes are the MIB, MIBTEL, and the MIB 30.


Japan

Proportion of portfolio invested in Japan.

Johannesburg Stock Exchange (JSE)

South Africa’s only stock exchange, heavily focused on gold and mining stocks. Many South African companies are listed on the London Stock Exchange.

Junk bond

Corporate debt that offers investors a high rate of interest because of the perceived higher risk of default. Also known as high yield bonds.

 

Lagging economic indicators

Statistical measues that tend to follow the general pattern of economic activity in a country. For example, the unemployment rate tends to fall once an economic recovery is under way.

Large cap

The proportion of a fund invested in larger companies [large caps]. Large cap companies are defined as those in the top 5% of capitalisation within their global region.

Largest region

The geographic area making up the biggest proportion of a fund such as Japan, North America or the UK.

Largest sector

The stockmarket sector making up the biggest proportion of a fund such as financials, services or technology.

Last actual NAV

Most recent NAV published by the Company.

Leading economic indicators

Statistical measures that give some indication of the likely future movement of an economy. For example, advertising spending tends to give an indication of future trends.

Legal type

The structure of a fund based on the law in which it is domiciled. For example, these can include Fonds Commun de Placement (FCP) in Luxembourg, Open-Ended Investment Companies (OEICs) in the UK and Société d’Investissement à Capital Variable (SICAVs) in continental Europe.

Life cycle fund

Funds which are designed to modify their holdings as the investor ages so that they are appropriate to different life stages. For example, an older person is likely to want a more conservative asset allocation than a younger one.

Liquidity

A measure of how easy it is to buy and sell shares without notably moving the share price.

List Transactions

Chose the fund holding from the drop down menu to choose which ones are displayed.

London Interbank Offered Rate (LIBOR)

The interest rate that the largest most creditworthy international banks charge each other for loans. The LIBOR rate is typically 12.5 basis points above LIBID (London Interbank Bid Rate).

London Stock Exchange (LSE)

One of the largest stock exchanges in the world. The most frequently quoted index on the LSE is the FTSE 100.

Lump sum investment

Investing a sum in one go rather than spreading it over monthly payments. The opposite of regular saving.


 

Management charge

A fee, usually expressed as a percentage, charged by the investment manager to cover the costs of running the fund. It is deducted from the net assets of the fund.

Management Fee

Management fee charged as a percentage of Assets.

Manager information

Details on the fund´s manager.

Manager name

Name of lead manager.

Manager start date

Date the manager began running the fund.

Market Capitalization

Average Market Cap (Funds): The average market capitalization of a fund’s equity portfolio gives you a measure of the size of the companies in which the fund invests. Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its price per share.

For Open Ended Investment Company’s: At Morningstar we calculate this figure by taking the geometric mean of the market capitalizations of the stocks a fund owns. For the capitalization breakdown, giant-cap stocks are defined as those that account for the top 40% of the capitalization of each style zone; large-cap stocks represent the next 30%; mid-cap stocks represent the next 20%; small-cap stocks represent the next 7% and micro-cap stocks represent the smallest 3%. For value-growth scoring, giant-cap stocks are included with the large-cap group for that style zone, and micro-caps are scored against the small-cap group for that style zone.

Market timing

An investment strategy in which investors switch in and out of securities or between types of funds in the hopes of benefiting from various economic and technical indicators that are thought to presage market moves.

Maturity

The date on which the principal of a debt instrument, i.e. a bond, is due to be paid. For example, the maturity date for a five-year bond issued on 1 November 2000 would be 1 November 2005.

Maxi-ISA

An ISAs (Individual Savings Accounts) in which you are allowed to place your maximum ISA allowance (currently £7000) with one ISA plan manager. For example, rather than splitting your savings between a cash mini-ISA, an mini-insurance ISA and/or a stock-and-shares mini-ISA, you choose one fund that will receive your entire allowance. For more details, please see Morningstar´s ISA Funds section.

Mean Return

The annualised perfomance of a fund over three years.

Media

Proportion of portfolio invested in companies that own and operate broadcast networks and those that create content or provide it to other media companies, Examples include Time Warner, Pearson and TF1.

Median Mkt Cap $Mil

To determine median market capitalisation of a fund, the companies in which it is invested are ranked from biggest to smallest. The median is size of the company in the middle of the list if the number of companies is odd. If the number of companies is even then the median is the average of the market capitalisation of the two middle firms.

Median Value

The middle value of a group of values. For example, in the series 1, 4, 7, 8, 10, 11, 23, 45, and 52, 10 is the median.

MEX

The Financial Times’ coding system for investment funds.

Mid cap

The proportion of the fund invested in companies categorised as middle capitalisation companies [mid caps]. A determination of large, mid or small cap is made by separating all of the shares into 10 global regions. The largest 5% are large caps, the next 15% are mid caps and the bottom 80% are small caps.

Middle East and Africa

Proportion of portfolio invested in African and Middle Eastern countries such as Egypt, Morocco, Nigeria, South Africa and Turkey.

Mini-ISA

An ISAs (Individual Savings Accounts) which focuses on only one of the ISA´s three elements (shares, cash, or insurance). Individuals are allowed to put £3000 in a mini-cash ISA, £1000 in a mini-insurance ISA and the remainder in a mini-shares ISA but purchase of a mini ISA prevents purchase of a maxi-ISA in that same tax year. For more details, please see Morningstar´s ISA Funds section.

Minimum additional investment

The smallest lump sum amount that a new investor can put into a fund.

Minimum initial investment

The smallest lump sum amount that a new investor can put into a fund.

Minimum lump sum investment

The smallest amount of money an investor can put into a fund. Typically, this can either be to open the account or for topping up the account.

Minimum purchase

The smallest amount that can be invested in the fund.

Minimum savings plan

The smallest sum that a regular investor can put into a fund.

Modern Portfolio Theory (MPT)

Refers to the body of innovations in portfolio management from the 1950s. The central plank of MPT is the concept of diversification – the fact that a well chosen group of assets can achieve a higher rate of return with a lower level of risk than any asset taken in isolation. Another important concept is that of Market Risk. A fund´s risk can be split into two parts: on the one hand, variations due to movements in the stockmarket as a whole (described by Beta), on the other hand, variations independent of broad market movements (specific risk). AlphaBetaR-squared, Correlation, Volatility are statistics usually associated with MPT.

Modified duration

A measure of the sensitivity of bond prices to small changes in yield.

Monetary Policy Committee

The committee of the Bank of England that sets UK interest rates.

Morningstar Bond Fund Style Box

A graphical depiction of the two essential risk factors in any bond fund – interest rate exposure and credit exposure. The Style Box combines two dimensions, interest rate sensitivity and credit quality, which are measured as either high, medium or low, resulting in nine possible style combinations. The Style Box gives an immediate picture of a fund´s focus and enables investors to perform simple but essential portfolio allocation decisions. For further details and an explanation of the calculation, please refer to the Morningstar Style Box section of Our Methodology on the About Us page.

Morningstar Category

Funds are grouped into categories according to their actual investment style, not merely their stated investment objectives, nor their ability to generate a certain level of income. To ensure homogeneous groupings, Morningstar normally allocates funds to categories on the basis of their portfolio holdings. Several portfolios are taken into account to ensure that the fund´s real investment stance is taken into account.

Morningstar class code

A Morningstar code which identifies whether a fund class is for accumulation or income.

Morningstar Equity Style Box

A graphical depiction of an equity [share] fund’s dominant investment style at a given point in time. The Style Box combines two dimensions: size (large shares, medium-sized shares, small shares) and valuation (growth, blend, value), resulting in nine possible style combinations. The Style Box gives an immediate picture of a fund’s focus and enables investors to perform simple but essential portfolio allocation decisions. For further details and an explanation of the calculation, please refer to the Morningstar Style Box section of Our Methodology on the About Us page.

Morningstar fund code

An identification code assigned to funds by Morningstar.

Morningstar Rating

Morningstar rates investments from one to five stars based on how well they’ve performed in comparison to similar investments, after adjusting for risk and accounting for all relevant sales charges. Within each Morningstar Category, the top 10% of investments receive five stars, the next 22.5% four stars, the middle 35% three stars, the next 22.5% two stars, and the bottom 10% receive one star. Investments are rated for up to three time periods – 3, 5, and 10 years, and these ratings are combined to produce an overall rating. Investments with less than three years of history are not rated. Ratings are objective, based entirely on a mathematical evaluation of past performance. They’re a useful tool for identifying investments worthy of further research, but shouldn’t be considered buy or sell recommendations.

For additional information, please see: Morningstar Fund Rating Methodology

Morningstar Rating for Stocks

The Morningstar Rating for Stocks is calculated by comparing a stock´s current market price with Morningstar´s estimate of the stock´s fair value. Our rating system also includes a risk adjustment, so that it´s more difficult for a company with above-average business risk to earn a 5-star rating.

The margin of safety we demand before giving a stock 5 stars is determined by our assessment of business risk. Our analysts assign stocks to one of three business risk ratings. We make it tougher for stocks with above-average business risk ratings to earn 5 stars.

Each of the five star-rating levels is defined based on expected returns, which assume that the stock´s market price and fair value eventually converge. Under our system, 3-star stocks are those that should offer a “fair return,” one that adequately compensates for the riskiness of the stock. Three-star stocks should offer investors a return that´s roughly comparable to the stock´s cost of equity. (The cost of equity is often called a “required return” because it represents the return an investor requires for taking on the risk of owning the stock.)

Five-star stocks, of course, should offer an investor a return that´s well above the company´s cost of equity, and high-risk 5-star stocks should offer a better expected return than low-risk 5-star stocks. On average, we expect 5-star stocks with below-average risk to return at least 15.5% annualized over the next three years. Because the hurdle rate for stocks with above-average risk is higher, we´d expect a 30.5% annualized return for a 5-star stock with above-average risk. Conversely, low-rated stocks have significantly lower expected returns. If a stock drops to 1 star, that means we expect it to lose money for investors over the next three years, based on our assessment of the stock´s fair value.

The Morningstar Rating for Stocks also includes a small buffer around the cutoff between each rating, to reduce the number of rating changes produced by random market “noise.” If a $50 stock moves up and down by $0.25 each day over a few days, the buffer will prevent the star rating from changing each day based on this insignificant change.

Morningstar Regions

Region Breakdown
Morningstar divides countries of the world into 10 different geographic regions. These regions serve as the basis for the region breakdown portfolio calculation. The region breakdown calculation helps investors evaluate their equity exposure in various markets. It also helps investors differentiate between various global funds, which can invest across the world. Region breakdown is based on equity assets only. The 10 regions can also be folded into three super geographic regions: the Americas, Greater Europe and Greater Asia.

Development Status
Morningstar also classifies countries as developed or emerging. These assignments are based on per capita gross national income, as defined by the World Bank. The World Bank classifies countries as low income, middle income, upper middle income, and high income. With very few exceptions, the countries with high income are considered developed markets.

For additional information on which countries are in each region, please see: Morningstar Regions

Morningstar Return

Morningstar return is an assessment of the fund’s excess return over a risk-free rate (the return of the 90-day Treasury bill) in comparison to similar funds, with an emphasis on downward variation. Therefore, if two funds have precisely the same return, the one with greater variations in its return is given the larger risk score. In each Morningstar Category, the top 10% of funds earn a High Morningstar Return, the next 22.5% Above Average, the middle 35% Average, the next 22.5% Below Average, and the bottom 10% Low. Morningstar Return is measured for up to three time periods (three-, five-, and 10-years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated.

For additional information, please see: Gross Returns Methodology

Morningstar Risk

This is a proprietary Morningstar data point. It is an assessment of the variations in a fund’s monthly returns, with an emphasis on downside variations, in comparison to similar funds. In each Morningstar Category, the 10% of funds with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund. Funds with less than three years of performance history are not rated.

Morningstar Risk Rating

An annualized measure of a fund’s downside volatility over a three-, five-, or ten-year period. This is a component of the Morningstar Risk-Adjusted Return.

Morningstar Risk Rating is derived directly from Morningstar Risk. In each Morningstar Category, the top 10% of investments earn a High rating, the next 22.5% Above Average, the middle 35% Average, the next 22.5% Below Average, and the bottom 10% Low. Investments with less than three years of performance history are not rated.

Morningstar Sectors

Sectors help investors and investment professionals more easily compare and understand the sector exposures of mutual funds and portfolios. At Morningstar, the stock market is divided into twelve specific industry sectors. Sectors are based on what companies actually do. That is, unlike some other sector classification systems, sectors aren’t based on expected behavior of the stocks of these companies.

Morningstar Style Box

This is a proprietary Morningstar data point. The Morningstar Style Box is a nine-square grid that provides a graphical representation of the “investment style” of stocks and mutual funds. For stocks and stock funds, it classifies securities according to market capitalization (the vertical axis) and growth and value factors (the horizontal axis). Fixed income funds are classified according to credit quality (the vertical axis) and sensitivity to changes in interest rates (the horizontal axis).

By providing an easy-to-understand visual representation of stock and fund characteristics, the Morningstar Style Box allows for informed comparisons and portfolio construction based on actual holdings, as opposed to assumptions based on a fund’s name or how it is marketed. The Style Box also forms the basis for Morningstar’s style-based fund categories and market indexes.

Morningstar tools

The newest selection of the features available as investment tools.

Mutual fund

A general term for a unit trust, OEIC or any other collective investment scheme.

 

Name

The equity or bond holding.

NASDAQ

An American stockmarket which is best known for its technology companies. NASDAQ (National Association of Securities Dealers Automated Quotations) is the second largest market in America and was the world’s first electronic stockmarket. Listed companies include Cisco, Dell, Intel and Microsoft.

NAV Frequency

Frequency with which NAVs are published by the Fund.

Net Asset Value (NAV)

The value of the investments in a fund. In the case of a unit trust or OEIC the net asset value per share normally corresponds to the fund´s market price, subject to any sales or exit charge. However, the market price and the net asset value may vary noticeably for an investment trust. (See Discount to NAV and Premium to NAV.)

Net Assets

Total Assets of fund less current liabilities.

Net Assets (Fund)

For Net Assets (Fund), please seeTotal Net Assets.

Net Currency Exposure

The percentage breakdown by national currency of bond holdings.

Net Gearing

The ratio of estimated Gross Assets minus cash and fixed interest to the Net Assets, expressed as a percentage. Cash and fixed interest represents non-equity exposure.

New York Stock Exchange (NYSE)

The largest and oldest stock stockmarket in America. Based on Wall Street. Its most widely quoted indices are the Dow Jones Industrial Average and the S&P 500.

News Radar

Morningstar´s daily summary of key news stories.

Nikkei

A stockmarket index which measures the performance of Japan´s largest companies.

No load fund

A fund with no initial charge. However, the annual management charge is likely to be higher and there may be an exit charge for investors who only stay in the fund for a short period.

North America

Proportion of portfolio invested in the United States and Canada.

Number of Funds in Category

The number of funds classified in the same category as this fund.


OEIC

An OEIC (Open-Ended Investment Company) is a collective investment that takes its structure from both a unit trust and an investment trust. An OEIC is single-priced and issues shares like an investment trust. However, rather than buying and selling shares on a stock exchange, the investors transacts with the fund company. Several UK fund management companies have converted their unit trusts to OEICs.

Of portfolio

The percentage breakdown by company size of the fund´s investments.

Offer price

The price at which an investor can buy units from the fund management company.

Olso Bors code

A Norwegian system for numbering financial instruments.

Optimiser settings

By selecting this box, the user can make the optimiser behave in a more conservative manner without affecting any of the fundamental targets set above. By default, the funds’ performance score receives a weight of 40%, the risk score 30% and the cost score 30%. The user can emphasise the risk score (raised to 40% at the expense of performance) or the cost score (raised to 40% at the expense of performance).

Ordinary shares

Units of ownership in a company. They possess a greater element of risk to the investor as the investment in the company is affected by market forces and there is no guarantee that the original investment will be returned when they are sold. Ordinary shares entitle the holder to vote on measures at the company’s AGM and to receive dividends but they are the last creditors to receive anything if a company goes bankrupt.

Other

The proportion of the fund invested in other securities such as property or other financial instruments.


Paris bourse

The French national stockmarket and part of Euronext which is the combination of the exchanges of Amsterdam, Brussels and Paris.

Passive funds

Another name for funds which track market indices such as the FTSE 100 or the S&P 500. Also called index funds and tracker funds.

Penny shares

Typically a volatile, high-risk share of a company with generally low market capitalisation. Share price used to be less than 10 pence but can be higher now.

PEP

A Personal Equity Plan. New investment in PEPs stopped in April 1999 when the government brought in ISAs.

PEP transfer

Funds with this facility accept the proceeds of investment in a Personal Equity Plan.

Percentile Rank in Category

Measures, on a scale from 1-100 – with 1 as the top score and 100 as the worst – a fund´s performance compared to the rest of the funds in the same category.

Performance

How an investment has grown [or fallen] over a set period of time. Investors may compare the performance of funds with similar investment strategies to compare funds.

Performance evaluation

A two-step process of appraising a fund manager’s results. First, it examines whether the manager outperformed the chosen benchmark [that is the investment objective of the fund was to return 2% more than the FTSE 250 - has this been done?]. Second, it assesses the methods employed to realise this return [that is did they follow the original investment plan?].

Performance fee

A payment awarded to a fund manager if certain performance levels are attained in a set period of time. Often, it refers to the achievement of a return on a fund over and above the investment objective. Funds with performance fees are relatively rare and are usually offshore funds or hedge funds.

Performance fee index

A benchmark against which the performance fee for a fund is calculated.

PIA

The Personal Investment Authority (PIA). Now subsumed under the Financial Services Authority.

Polarisation

The system of advice that divides advisers between those tied to one management group and independent financial advisers (IFAs). This distinction is currently under review by the Financial Services Authority.

Portfolio

A collection of different types of investments. See Diversification.

Portfolio

Holdings data for the individual fund.

Portfolio Profile

An overview of the investment portfolio of the fund.

Portfolio tool

A tool devised by Morningstar which allows investors to examine the characteristics of a combined portfolio of different funds.

Portfolio Tool

Enables users to aggregate their fund holdings and examine the characteristics of their entire portfolio. It includes a Portfolio X-Ray facility which allows users to break down their total fund holdings by numerous criteria including investment style, stockmarket sector and geographic regions.

Portfolio Types

There are two types of portfolios: quick and transaction portfolio. A quick portfolio is the easiest way to create a portfolio. A transaction portfolio offers full-fledged portfolio tracking including buys, sells, splits and dividends.

Pound-cost averaging

A mathematical feature of regular savings schemes which enables them to reduce investment risk. If a fund’s unit (or share) price falls then more units can be bought for a given amount of money. As a result the volatility of the investment is lower.

Preference shares

Shares that pay dividends at a specific rate while the dividends of ordinary shares fluctuate or may not be given at all. They do not normally carry a vote unless dividends fall into arrears. Represents a claim prior to common shareholders on the earnings of a company and on the assets in the event of liquidation.

Premium to NAV

When an investment trust is trading at a premium to NAV, it means that the underlying assets in the investment trust are worth less than the net asset value of the fund. Premium to NAV is normally expressed as a percentage and an investor will be paying more for the shares that than the shares themselves are worth.

Previous analyses

The most recent analysis pieces.

Previous commentaries

The most recent commentaries.

Previous fund news

The most recent news stories.

Previous interviews

The most recent interviews.

Price (Optional)

Enter the price paid for the shares or units.

Price-to-Book (P/B)

A financial ratio calculated as current share price divided by book value per share. It compares how the market values a company to the value on the company’s books. For example a company trading at several times its book value tends to indicate a growth stock where investors believe the book value will rise in the future. Typically a company with a low P/B means that investors think that the firm´s assets have been too highly valued on its financial statements.

Price-to-Cash Flow (P/CF)

A financial ratio calculated as current share price divided by cash flow per share – where cash flow is the spending and receiving of cash in a business. For example, a P/CF of 10 indicates that for each £1 that flows through that company, the stock price is £10. Optimal P/CF ratios differ from industry to industry. P/CF ratios will be much lower in capital-intensive industries than in ones such as software.

Price-to-Earnings (P/E)

PA financial ratio calculated as current share price divided by current earnings per share (EPS= earnings for the last 12 months divided by the number of common shares outstanding). Also known as the multiple as in the multiple of earnings at which a stock is priced. Companies that investors expect to see grow strongly tend to have high P/E ratios while mature companies may often relatively low P/Es. For example, a share selling at £16 per share with projected earnings next year of £4 has a P/E ratio of 4 while that same stock with projected earnings next year of £6 has a P/E ratio of 2.67. The reverse ratio of P/E calculates earnings yield and is calculated as 1 divided by the P/E ratio. For example, if you had a P/E Ratio of 20, the earnings yield ratio would be 1/20, which equals 0.05. Therefore, an investor would typically expect to receive a 5% yield on an investment with a company with a P/E of 20.

Primarily Invests In

The size of companies making up the biggest proportion of a fund.

Prospectus

A fund´s formal written statement, issued before it issues shares to the public. In this statement the fund sets forth its proposed purposes and goals, and other facts (for example, history and investment objective) that an investor should know to make an informed decision.

Protected fund

A fund which is structured to limit its losses to a certain amount within a certain period. For example, it may be able to lose a maximum of 5% of its value over three months.

 


q ratio

A measure of stockmarket valuation devised by James Tobin. Takes the total value of the stockmarket and divides it by corporate net worth. A high q shows that the market is overvalued and a low q shows that it is cheap. Andrew Smithers, an adviser to fund managers, is a leading exponent of q in the UK.

Quarter 1

The performance of the fund from January to March inclusive.

Quarter 2

The performance of the fund from April to June inclusive.

Quarter 3

The performance of the fund from July to September inclusive.

Quarter 4

The performance of the fund from October to December inclusive.

Quarterly returns

How the fund has performed on a quarterly basis.

Quick portfolio

The simple type of portfolio tool. Only percent of total holding is entered, only current holdings can be analyzed.

Quick stats

Overview of key data for a fund.

Quicktake

The Quicktake report provides a detailed standardised factsheet on all the funds in the Morningstar universe. Its standard format makes it easy to use and to make comparisons with other funds. Quicktake reports consist of four detailed sections: * Overview * Rating and risk * Portfolio * Management

Redemption fee

A charge that some fund groups levy if an investor exits a fund before a certain time. Also called a back-end load or a deferred sales charge.

Redemption fee

For Redemption Fee, please see Exit Charge.

Region

Geographical area of the world.

Regional breakdown

The percentage of the fund invested in each geographical area with the largest listed first.

Regular savings

A scheme that allows investors to invest a regular sum into a fund every month. The minimum is normally £50.

Related articles

A link, designated by a keyword, to editorial pieces covering a similar topic.

Related links

Connections to relevant web pages. Includes internal links such as Category, Fund Companies and Funds information and external links such as company websites or additional reports.

Relative Category

The breakdown by asset type of the portfolio compared to the average of all of the funds in its Morningstar Category. Looking for example, at the Cash row: if the Relative Category figure was 0.9 then the fund is 10% less invested in cash relative to the average of its peers, 1.0 means the two are equal and 1.1 means it is 10% more invested in cash than its peer group, 1.2 means 20% more and so on.

Relative Category

The level of the investment ratios of the equity [share] portion of the fund´s portfolio compared to the average of all of the funds in its Morningstar category. For example, 0.9 means the fund´s investment ratio is 10% lower than its peers, 1.0 means the figures are the same and 1.1 means its ratios are 10% higher, 1.2 means 20% higher and so on.

Relative Category

The breakdown by company size of the portfolio compared to the average of all of the funds in its Morningstar category. Looking for example, at the Large Cap row: if the Relative Category figure was 0.9 then the fund is 10% less invested in large caps compared with the average of its peers, 1.0 means the two are equal and 1.1 means it is 10% more invested in large caps than its peer group, 1.2 means 20% more and so on.

Relative Category

The size of the fund´s median market cap relative to the average median market cap of all of the funds in its Morningstar Category. For example, 0.9 means the fund´s median market cap is 10% lower than the category average, 1.0 means the two are the same and 1.1 means the fund´s median market cap is 10% greater than that of the category average.

Relative Category

The breakdown by geographical area of the portfolio compared to the average of all of the funds in its Morningstar Category. Looking for example, at the UK row: if the Relative Category figure was 0.9 then the fund is 10% less invested in the UK relative to the average of its peers, 1.0 means the two are equal and 1.1 means it is 10% more invested in the UK than its peer group, 1.2 means 20% more and so on.

Relative Category

The breakdown by sector of the portfolio compared to the average of all of the funds in its Morningstar Category. Looking for example, at the utilities row: if the Relative Category figure was 0.9 then the fund is 10% less invested in utilities relative to the average of its peers, 1.0 means the two are equal and 1.1 means it is 10% more invested in utilities than its peer group, 1.2 means 20% more and so on.

Relative Category

The breakdown by portfolio holdings of the fund compared to the average of all of the funds in its Morningstar Category. Looking for example, at the Total Number of Equity Holdings row: if the Relative Category figure was 0.9 then the fund has 10% fewer equity [share] holdings relative to the average of its peers, 1.0 means the two are equal and 1.1 means it has 10% more equity holdings in its portfolio than its peer group, 1.2 means 20% more and so on.

Relative Category

This column compares the fund with the average of all of the funds in its Morningstar Category. For example, if the Median Market Cap (Mil) of a fund is 2000 and the Relative Category column says 0.5, the fund’s median market cap is about half that of the category average. A second example looks at the Regional Breakdown of a fund. If in the UK row, the “% of Equity” column for the fund reads 10% and the Relative Category column says 5.0, the fund has approximately five times as much of its assets invested in the UK than does the average fund in its Morningstar category.

Retail

Proportion of portfolio invested in companies operating in areas such as apparel, department stores, food stores, and miscellaneous shops. Some examples of companies in this sector include French Connection, Gap, House of Fraser, Starbucks and Tesco.

Retail Price Index (RPI)

A measure of inflation. This index tracks a basket of the goods and services, such as clothing, food, household goods and medical care, purchased by an average consumer.

Return

The profit that an investor can receive from an investment.

Risk Profile

The optimiser comes with 5 pre-selected asset allocation models, ranging from Preservation to Aggressive. Note for users of Morningstar’s AWS Needs Assessment tool: these 5 allocations are chosen from the 21 mean-variance efficient asset mixes on display. These 5 risk profiles are only distinguished by their allocation to cash, bonds and the 3 classes of equity. They are otherwise similar and assume neutrality/normality for style, capitalisation, economic sectors and credit quality, as long as the user does not override these settings. All default weights and settings appear in the relevant boxes below. The middle allocation ‘Balanced’ always appears when this page is first opened.

Risk Profile – This Fund

The arrow on this risk profile bar shows the risk of the fund as measured by standard deviation. Standard deviation measures the risk of a fund by telling you how, on average, the performance of the fund moves away from the mean. A high standard deviation indicates that the performance varies a lot, whereas a low standard deviation tells you that the performance has been more stable. The funds falling in the Low range have standard deviations between 0 and 13.34, in the Moderate range between 13.34 and 26.67, and in the High range above 26.67.

R-Squared

A measure of the percentage of a fund´s movements that can be accounted for by changes in its benchmark index. An R-squared of 100 indicates that a fund´s movements are perfectly correlated with its benchmark. Thus index funds that invest only in S&P 500 stocks typically could have an R-squared close to 100. Conversely, a low R-squared indicates that little of the fund´s movements can be explained by movements in its benchmark index. An R-squared measure of 35, for example, means that only 35% of the fund´s movements can be explained by movements in the benchmark index. R-squared can be used to ascertain the significance of a particular Beta. Generally, a higher R-squared will indicate a more reliable Beta. If the R-squared is lower, then the beta is less relevant to the fund´s performance.


S&P 500

A stockmarket index which represents the performance of 500 of America’s largest companies.

Sales charge (maximum)

The highest fees a fund group levies for investment in the fund.

Savings

The smallest amount permitted for regular contributions to a savings plan.

Search by word

Enter text to search for articles on that term.

Search in category

Pick an Articles category such as news radar or commentary from the drop down menu to narrow a search

Sector

The sector in which this holding is categorised.

Sector Funds

Funds that invest in one particular sector of the economy such as healthcare, technology, media, biotechnology or financials. Because of their narrow scope sector funds tend to be more volatile than funds with a broader investment objective, since the overall market may alternate between favouring the different sectors.

Securities and Exchange Commission (SEC)

The main American financial regulatory body. The SEC sets the rules and regulations which all companies with registered US share must follow.

SEDOL

SEDOL stands for Stock Exchange Daily Official List (SEDOL) number. It is a seven digit European security identifier number.

Select Holding

Widen or narrow the number of transactions displayed.

Select type of optimisation

The optimiser can rebalance an existing portfolio and create a new one. These activities can be conducted separately or jointly at the same time. Rebalancing will only deliver a result if an existing portfolio is present.

Services

Proportion of portfolio invested in companies operating in areas such as freight, airlines, business services, publishing, railroads, hotels, resorts, restaurants, personal services, recreational services and movies. Some examples of companies in this sector include British Airways, Pearson, Pizza Express, Securicor and Thistle Hotels.

Shares

A unit of ownership in a company or investment fund. The American term is stocks.

Shares (Optional)

Enter the number of shares or units purchased.

Sharpe Ratio

A risk-adjusted measure developed by Nobel Laureate William Sharpe. It is calculated by using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe Ratio, the better the fund´s historical risk-adjusted performance. The Sharpe ratio is calculated for the past 36-month period by dividing a fund´s excess returns by the standard deviation of a fund´s excess returns. Since this ratio uses standard deviation as its risk measure, it is most appropriately applied when analysing a fund that is an investor´s sole holding. The Sharpe Ratio can be used to compare two funds directly on how much risk a fund had to bear to earn excess return over the risk-free rate.

Short (sell shares short)

Betting on a falling price. Being “short” a security means to have sold it without owning it. A fund or individual may sell a security that the fund/individual does not presently own and before settlement of the transaction, the fund/individual will purchase an equivalent amount of that security in order to satisfy the sale. This strategy entails anticipating that the price will fall and it will be possible to buy the securities at a lower price later than they were sold for. The profit made is the spread between the two prices.

SICAV

A SICAV, Sociétés d’investissement à Capital Variable, is an open-ended investment fund, similar to the UK’s unit trust. Luxembourg-domiciled trusts are typically SICAVs.

Sicovam

Societe Interprofessionnelle pour la Compensation des Valeurs Mobilieres. French system for numbering financial instruments which is run by the trade body for French brokers.

Skewness

Skewness reflects the degree of asymmetry of a distribution. If the distribution has a longer left tail, the function has negative skewness. Otherwise, it has positive skewness. A normal distribution is symmetric with skewness 0. In lognormal case, the curve has a long right tail so the skewness is positive.

Small cap

The proportion of the fund invested in companies categorised as small capitalisation companies [small caps]. A determination of large, mid or small cap is made by separating all of the stocks into 10 global regions. The largest 5% are large caps, the next 15% are mid caps and the bottom 80% are small caps.

Socially responsible fund

A fund which uses moral as well as financial criteria when selecting assets for its portfolio. Sometimes used to refer to funds which positively seek to invest in firms which are considered ethical.

Software

Proportion of portfolio invested in companies engaged in the design and marketing of computer operating systems and applications. Examples include Microsoft, SAP and Siebel Systems.

Sortino Ratio

The Sortino Ratio is similar to Sharpe Ratio except it uses downside risk (Downside Deviation) in the denominator. It was developed in early 1980′s by Frank Sortino. Since upside variability is not necessary a bad thing, Sortino ratio is sometimes more preferable than Sharpe ratio.

Split

A split happens when a company increases the number of its outstanding shares without altering the proportionate amount of shares each shareholder owns. Stock splits enable smaller investors access to high-priced shares. For example, a share currently trading at 900p per share could be split and replaced by three 300p shares. Shares in funds can also in the same way, leaving each investor with more shares representing the same monetary investment.

Spread

For Spread, please see Bid-Offer Spread (Fund).

Stability pact

The framework of rules which governs economic behaviour in the euro-zone. For example, budget deficits should not exceed 3% of GDP except in exceptional circumstances. Its full name is the stability and growth pact.

Standard & Poor’s (S&P)

A company which provides fund information and is also known for rating bonds.

Standard deviation

Standard deviation of fund returns measures how much a fund´s total returns have fluctuated in the past. The term volatility is often used to mean standard deviation. This number is useful for two reasons. Firstly, because the more a fund´s return fluctuates, the riskier the fund is likely to be; standard deviation facilitates comparisons across all funds, from cash to emerging market equities. Secondly because funds that have been more volatile in the past tend to be the more volatile in the future. In that sense, standard deviation is a useful warning sign. The standard deviation is expressed in percentage terms, just like the returns. We calculate it based on the fund´s most recent 36 monthly returns. How to use it? The simplest use is to compare funds. Additionally, you can estimate the range of returns that a fund can experience in any given year. This gives a useful estimate of how low returns can go. To perform this simple estimate, you just need two numbers we provide: average return and standard deviation. You can estimate that, 95% of the time, the lowest annual return will be equal to the average return minus twice the standard deviation. Conversely, the maximum typical return, 95% of the time, will be equal to the average return plus twice the standard deviation. Example 1. A money market fund had an annual average return of 6%, with a standard deviation of 1%. The typical maximum annual return you would expect is: 6+1+1= 8%; the typical lowest return you would expect is 6-1-1=4%. In other words, if the fund continues to behave as it has in the past, 95% of the time, its annual returns will be between 4% and 8%. Example 2. An equity fund has experienced an average return of 18%, with standard deviation of 30%. Applying the same calculation, you can see that this fund´s typical annual returns will be between a negative 42% and a positive 78%. So even in good times, you can obtain an estimate of the downside for a given fund. Need a more technical explanation? We are able to estimate extreme returns in such a way, because monthly returns follow more or less what is known as a normal distribution, popularly known as a “bell-shaped” curve. One of the properties of such a distribution is that you know that 95% of the time, returns will be comprised between average +/- 2 standard deviations. 67% of the time, returns will be comprised between average +/- 1 standard deviation.  For detailed calculations, you can go to our “Calculations” page. Of course, past volatility is no perfect predictor of future behaviour, but the information provided by standard deviation is too important to be overlooked. Another limitation of volatility is that, if you hold several funds, you can average the returns, but not the volatility: the aggregate volatility is likely to be lower than the average of the various funds individual volatilities. That is the benefit of diversification.

Staples

Proportion of portfolio invested in companies operating in areas such as cosmetics, grooming supplies, distillers, breweries, food and food production, meats, dairy, confections, and tobacco. Some examples of companies in this sector include British American Tobacco, Body Shop, Boots, Cadbury Schweppes, Coca-Cola, Diageo and Philip Morris.

Stockmarket average

An arithmetic mean return of a collection of stocks chosen to characterize the overall market. Unlike an index, a stock market average is not weighted. The most frequently quoted average is the Dow Jones Industrial Average.

Stocks

The proportion of the fund invested in stocks [shares].

Style Box diversification

The percentage of the entire portfolio of funds invested in each of the nine Style Box sections.

Switching fee

A charge levied by a fund management group when an investor moves money from one fund to another within the same group. For example, the investor moves from Fund Company A´s Asian Growth Fund to its UK Equity Fund. The majority of funds sold in the UK do not levy a switching fee or else they reduce it over time.


Tax Free Savings

The tax shelter schemes through which this fund is available.

Technology

Proportion of portfolio invested in companies operating in areas such as aerospace components, business data processing, computer leasing, electrical equipment, specialised machinery, and precision instruments. Examples of companies in this sector include Apple, BAE Systems and Fujitsu.

Telecommunications

Proportion of portfolio invested in companies that provide communication services using fixed-line networks or those that provide wireless access and services. Examples include Swisscom, Vodaphone and Telefonica.

TER

Total Expenses / Average Total Assets.

Sum of all expenses for the financial year, consisting of management fees, performance fees, directors’ fees, administration fees, custody fees, audit fees, marketing fees, loan interest, tax, restructuring costs and all other expenses given in the Statement of Total Return and notes in the Report and Accounts. We then calculate the average monthly gross assets. We then divide the total expenses by the average monthly Total Assets and multiply the resulting figure by 100 to arrive at this ratio.

TESSAs

Tax-Exempt Special Savings Accounts. A form of savings account which is no longer open to new investors.

The City

London’s financial district. Also known as the square mile.

The Market

Shows the moves of the main global stockmarkets.

This Fund

The risk level of the fund.

Tied agent

An intermediary who can only advise on the funds of one management group. The opposite of an independent financial adviser (IFA) who must offer advice on funds from the full range of groups. This system of advice is currently under review by the Financial Services Authority.

Top 10 Holdings

The ten largest investments in the entire portfolio of funds.

Top 3 Regions

The three largest areas in which the fund invests.

Top 3 Stock Sectors

The three biggest stockmarket sectors in which the fund is invested.

Top 5 Holdings

The five largest holdings in the fund.

Total Assets

Total Assets of Fund including cash and liabilities.

Total Net Assets

The size of a fund. The month-end net assets of the fund. It is recorded in millions of the fund currency denomination (that is millions of pounds for a fund trading in sterling, millions of dollars for a fund trading in the American currency).

Total Number of Bond Holdings

The amount of investments the fund currently has in bonds.

Total Number of Equity Holdings

The amount of investments the fund currently has in equities [shares].

Total Returns

The absolute return of the fund, expressed as a percentage.

Tracker

A fund that matches the returns of a particular index. Also called index funds or passive funds.

Tracking Error

The volatility of the difference in returns between a fund and its benchmark. Also known as active risk. In the context of passive management (tracker fund), tracking error properly describes how well a fund tracks its benchmark. But in relation to active management it is a misnomer: It describes how far the fund manager has strayed from its benchmark, not an error. The measure is nevertheless useful in performance assessment: the higher the active return (outperformance) in relation to the active risk (tracking error) the better.

Trailing Return

Performance figures that cover a rolling period whether annually, monthly, weekly, or daily. For example, on March 14th 2004, the one year trailing return would cover the period from March 14th 2003 till March 14th 2004 and the 1-week trailing return would cover the period from March 7th to March 14th 2004.

Transaction portfolio

The more advanced portfolio tool, that keeps track of all transactions.

Transaction Type

An adjustment to the portfolio such as buying or selling units or shares, receiving a dividend or having the stock split into additional shares.

Transfer agent

A firm engaged by a fund management group to run its shareholder records.

Trasferimento a PEP

L’indicazione PEP (Personal Equity Plan) Transfer spiega se un fondo accetta o meno il deposito proveniente da un piano azionario personale, il PEP, uno schema di investimento in azioni non gravato da tasse. I nuovi investimenti in PEPs sono fermi dall’aprile 1999, quando il Governo ha introdotto gli Individual Savings Accounts (ISAs) che prevedono regole di investimento più leggere. Per ulteriori dettagli, consultare la sezione del sito Morningstar sugli ISAs.

Turnover

A measure of the rate of trading activity for a fund during the previous year. It is shown as a percentage of the average total assets of the fund. For example, a turnover rate of 20% means that the value of trades represented one-fifth of the assets of the fund. However, a turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the proportion of the portfolio´s holdings that have changed over the past year.


UCITS

Undertakings for Collective Investment in Transferable Securities (UCITS) refers to a European Union directive that establishes the terms under which a fund domiciled in one EU member state can be marketed in all EU countries. UCITS aims to simplify investment regulations across EU borders and increase investor protection.

UK

Proportion of portfolio invested in the United Kingdom.

Umbrella

A fund which is divided into several sub-funds or share classes each of which can invest in different assets or markets.

Umbrella fund

A general fund holding a range of sub-funds with separate individual investment strategies. Investors can sometimes move from one fund to another at a reduced cost.

Unfettered

A term usually used in relation to a fund of funds. It means the fund of funds can invest in both internal and external funds. The opposite is a fettered fund of funds.

Unit trust

One of the most common forms of investment funds used by retail investors. Increasingly they are being replaced by Open ended investment companies.

Unit value

The price of a single share in a unit trust.

Unit-Linked

Refers to pension plan contributions used to buy units in an approved investment fund.

Utilities

Proportion of portfolio invested in companies operating in areas such as gas, electricity or water supply.

Utilities

Proportion of portfolio invested in electric, gas and water utilities. Examples include E.ON, Electrabel and Veolia.

 

Valoren

A Swiss system for numbering financial instruments.

Valuation Ratios

Price/Earnings Projected
Price/projected earnings for a stock is the ratio of the company’s most recent month-end share price to the company’s estimated earnings per share (EPS) for the current fiscal year. If a third-party estimate for the current year EPS is not available, Morningstar will calculate an internal estimate based on the most recently reported EPS and average historical earnings growth rates. Price/projected earnings is one of the five value factors used to calculate the Morningstar Style Box. For portfolios, this data point is calculated by taking an asset-weighted average of the earnings yields (E/P) of all the stocks in the portfolio and then taking the reciprocal of the result.

Value

An investment strategy that selects shares that are attractively priced, relative to the earnings or the internal value of the company – or, in some cases, relative to the market. The theory is that the share price of these companies will eventually rise to reflect the true value. Many consider value investing safer than growth investing, since prices of value stocks tend to be less volatile.

Volatility

Volatility is the observed price movement of an asset. Standard deviation is the most widely used measure of volatility. Volatility and standard deviation are generally considered to be a measure of risk. (See standard deviation.)

Western Europe – Euro

Proportion of portfolio invested in the euro-zone which is comprised of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain.

Western Europe – Non Euro

Proportion of portfolio invested in the western European countries outside the euro-zone: Andorra, Denmark, Gibraltar, Greenland, Iceland, Liechtenstein, Malta, Monaco, Norway, San Marino, Sweden, Switzerland and the Vatican City.

Where can I buy this fund?

Links to groups selling this product.

Where can I find more information?

Links to groups selling the fund.

wkn

WertpapierKennNummer. A German system for numbering financial instruments.

Wrap account

An internet-based account that allows investors to aggregate all of their investments, such as personal pensions and unit trusts, onto one platform. They can then buy, sell and manage their investments through this platform.

X-ray

A tool devised by Morningstar which allows investors to breakdown a combined portfolio of funds into constituent elements such as its holdings in stockmarket sectors and geographic regions.

Year to date (YTD)

This figure indicates how well the fund, index or category has performed to this date in the year. For example, if you were looking at the site on March 21st, the YTD figures are from the December 31st to March 20th. They are updated every night, excluding weekends and bank holidays.

Yield

The rate of return, expressed as a percentage, paid on an investment – in the form of dividends for stocks and funds or the coupon rate for bonds. Yield should not be confused with Total Return.

Yield curve

Depicts the relationship between a bond´s maturity and its yield. The yield curve usually refers to this relation for government bonds (gilts). Whilst the curve is often sloping upwards (i.e. higher yields for longer maturities), it is not unusual to observe other shapes (inverted, U-shaped, etc…).

Yield to Maturity

The rate that is used to discount future coupon and principal payments to obtain the market price of the bond. A high yield means a low price – the bond is cheap – and a low yield means a high price – the bond is expensive.

Your Portfolio

The financial statistics for the portfolio of funds as a whole.

ZDP Share

Zero Dividend Preference Share.

Zero Coupon Bond

A fixed income investment that is issued at a discount to its face value but pays no coupons (interest) through its life. For example, an investor could pay £900, receive no annual payments for five years, but get £1000 when the bond matures.

Z-Statistics

Z Statistic shows the dispersion of a fund’s discount values around the mean.

A statistical measure designed to see whether a current observation is close to the mean for a given period. A positive Z-Statistic indicates the current value is higher than the mean and a negative that it is lower.

The magnitude of the Z Statistic indicates whether the difference is statistically significant.

Z = ( Current Discount – Mean ) / Std Dev

For example, if the mean discount for the last year has been -10%, with a standard deviation of 2% and the current discount is -5%, then the Z score will be

Z = ( -5 + 10 ) / 2 = 2.5

Statistically, 66% of the observations (in a normal distribution) should have a Z score with an absolute magnitude less than 1 and 95% less than 2.

Some technicians use the Z statistic coupled with the “mean reversion theory” to say that funds with large negative z statistics will revert to the mean – i.e. the discount must narrow again. It might, but there is no statistical reason why it has to – it might just have found a new level and remain there for the next few years. All the Z statistic proves is that the current discount is higher or lower than the average over the period for which it was computed.

% of Equity

The proportion of the fund’s equity [share] investments invested in each geographical area.

% of Equity

The proportion of the fund’s equity [share] investments invested in each sector.

% of Net Assets

Percentage of the fund’s portfolio invested in cash, stocks, bonds and other financial instruments.

% of Net Assets

Percentage of the fund’s portfolio invested in cash, stocks, bonds and other financial instruments.

+/- Category

+/- Category shows how the fund has performed compared to the average of all of the funds in the same category.

+/- Index

+/- Index shows the fund’s performance level in relation to a proxy index, developed by Morningstar for that specific category. Please note that it is not in relation to an index that the fund manager may have chosen to benchmark the fund.

1 Day

The return over one day.

1 Day Change

The return, measured in currency amounts, of a fund since its last reported price. For example a day change of .01 on fund trading in sterling means the fund price has risen by £0.01 or 10 pence.

1 Month

The return over one month.

1 Week

The return over one week.

1 Year

The return over one year.

3 Months

The return over three months.

3 Year Annualised

The return over three years, expressed in yearly figures. For example a fund that has returned 30% over three years has a 3 year annualised return of 10%.

4Tigers

Hong Kong, Singapore, South Korea and Taiwan.

5 Year Annualised

The return over five years, expressed in yearly figures. For example a fund that has returned 50% over five years has a 5 year annualised return of 10%.

 

 

 

 

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