Glossary

A
Active Share	The active share measures the extent to which the holdings of an equity portfolio differ from the benchmark. The ratio can take values between 0 and 1, where 0 is a complete match between the portfolio and the benchmark and 1 where is no overlap between the portfolio and the benchmark. The higher the Active Share, the more active the fund manager.
Accumulating	Accumulating funds reinvest the income generated, i.e. they keep it permanently in the fund assets. They thus increase the unit value.
Annual/semi annual report	A asset management company must publish two reports on each investment fund each year: a semi-annual report and an annual report. There are clear legal requirements in this regard. Annual reports must contain, for example, the following: Activity report Statement of assets Statement of income and expenditure appropriation of income The annual report must be published within four months of the end of the financial year, the half-yearly report within two months of the half-year reporting date.
B
Benchmark	A benchmark is a comparative standard for measuring the investment performance of a fund. Usually, a market-relevant stock or bond index serves as a benchmark.
Beta	The beta measures the volatility of a fund in relation to the benchmark. A beta of 0 means that there is no dependency. If the beta fluctuates between 0 and 1, the price change of the share is on average less than that of the benchmark. A beta greater than 1 indicates that the price change of the security is on average higher than that of the benchmark.
BVI method	The BVI method is a method of calculating the performance of investment funds. The performance is the percentage change between the assets at the beginning of the investment period and their value at the end of the investment period. Distributions are mathematically invested immediately in new fund units. This makes the performance of distributing and accumulating funds comparable.
C
Custodian fees	Custody fees are charged by banks or fund companies for managing an investor's securities account.
D
Distribution	Distributing funds pay out the income generated to investors as a so-called distribution. Opposite: Accumulation
Drawdown	Drawdown measures the loss of an investment from its historical high.
E
Exchange Traded Funds (ETFs)	Exchange traded funds (ETFs) are traded on the stock exchange. As a rule, they replicate the composition of a specific index in full or with a high degree of consistency (index funds). The aim is to follow the performance of the underlying index as closely as possible. Basic information on funds: see Investment funds.
Equity fund	Equity funds invest primarily in equities, i.e. shares in listed companies. Basic information on funds: see Investment funds.
F
Fund of Funds	Funds of funds invest their assets in other funds, the so-called "target funds". For basic information on funds, see Investment funds.
G
H
I
Information Ratio	The information ratio expresses the ratio of additional returns generated to the extra risk involved. The over or underperformance of the fund relative to its performance comparison index is divided by the tracking error.
Investment fund	Investors receive fund units in line with their deposit and do not have to make any further investment decisions themselves. They become co-owners of the fund's assets and are entitled to the fund's profits, for example dividends, interest or price gains. Investment funds differ in terms of the investor group (see mutual funds, special funds) tradability (see open-end funds, closed-end funds) the assets contained (see equity funds, alternative investment funds, funds of funds, money market funds, hedge funds, hybrid funds, index funds, mixed funds, open-ended real estate funds, bond funds) the use of income (distributing and accumulating, i.e. reinvesting funds) the investment focus (see country funds, sector funds) a possibly stated return target (see capital protected funds, target return funds) a possibly given maturity (see maturity funds, life cycle funds) the possibility of trading them on the stock exchange (see index funds) their cost structure (see no-load funds)
Investment level	The investment level is calculated from the fund assets less the fund's cash reserve. It corresponds to the proportion of fund assets invested in securities, real estate or derivatives.
ISIN	The international securities identification number ISIN uniquely identifies each exchange-traded security. In Germany, it is used alongside the national securities identification number WKN. The ISIN has twelve digits, the structure of which is defined in ISO 6166. ISIN numbers assigned in Germany, for example, begin with the letters DE. This is followed by a national identification number and a check digit.
J
Jensen's Alpha	Jensen’s alpha is a risk adjusted measure of a fund's performance r elative to its performance comparison benchmark. Beta: A measure of the volatility of a fund relative to its performance comparison index, i.e. how sensitive the fund is to movements.
K
L
M
Modified Duration	Simplification / modification of the duration formula. The modified duration indicates the percentage change in a bond price due to a 1 percent change in market interest rates.
N
Net asset value	The net asset value of an investment fund is the sum of all valued assets less all liabilities.
O
Ombudsman for investment funds	The ombudsman's office for investment funds offers consumers an out-of-court, neutral arbitration procedure in the event of a dispute with a capital management company. The procedure is free of charge for consumers.
P
P/B ratio	The price/book ratio is a key figure for the valuation of shares. The price-to-book ratio puts the market price of a share in relation to the book value of the share. The price-to-book ratio is a substance-oriented indicator that shows how expensive a share is on the stock market compared to its book value.
P/CF ratio	This indicator shows the ratio of the share price to the cash flow per share. The price/cash flow is used to assess the development of a company's earning power in the future and to compare different companies with each other.
Performance	The performance is the arithmetical result of an investment over a certain period of time. The performance of investment funds is generally calculated on the basis of the unit value. Distributions are usually regarded as reinvested, i.e. they are used to calculate the purchase of fund units. This makes it possible to compare the performance of distributing and reinvesting funds. Annualized performance: average annual performance according to the BVI method. Cumulative performance: total absolute performance calculated according to the BVI method.
Performance fee	A fund manager may receive additional performance-based compensation if the investment fund it manages meets or exceeds certain targets.
Q
R
Rankings	Rankings sort investment funds with the same or very similar investment focus according to mathematical criteria and thus put them in an orderly sequence. This is based on historical data. In the case of investment funds, these are often performance or volatility.
Rating	A rating is a forward-looking forecast of the quality and reliability of a company, borrower or investment vehicle, such as a bank, government, private borrower or investment fund.
Redemption price	The redemption price is the value of a share class. It is calculated by dividing the fund assets by the number of share classes issued.
Risk/return profile	The risk-return profile is the ratio of the expected capital gain to the risk of the investment.
S
Share class	An investment fund may issue different types of share classes with different ISIN/securities identification numbers. The share classes may differ, for example, in the fee structure or the currency of the unit.
Sharpe Ratio	Sharpe ratio is the measure of risk-adjusted return of an investment. It is the return achieved of the fund above the risk-free interest rate divided by the volatility of the returns.
T
TER	The total expense ratio describes the total costs and fees of a fund as a percentage of the average fund assets within a fiscal year. All costs charged to the fund assets are taken into account, with the exception of transaction costs.
Tracking Error	A measure of how much a fund’s returns deviate from those of its performance comparison index. The lower the number the closer the fund’s historic performance has followed that of its performance comparison index.
U
UCITS	In the European area, UCITS stands for "Undertakings for Collective Investment in Transferable Securities". These are investment funds that invest in legally defined types of securities and other financial instruments. UCITS are allowed to invest in the following assets within respective defined limits and ratios: Securities Money market instruments Bank deposits Derivatis Money market instruments
V
Volatility	Volatility is the degree of variation of a security price or index around its mean over a fixed period of time. A security is referred to as volatile when its price fluctuates sharply.
W
WKN	The securities identification number is a six-digit unique identifier for securities in Germany. It is used alongside the international identification number ISIN.
X
Y
Yield To Worst (YTW)	YTW is a ratio of callable bonds. It is usually used when the market interest rate is lower than the coupon and the issuer can terminate the bond because it can obtain financing on the market at a lower price. In such cases, YTW indicates the worst expected yield, i.e. the yield of the worst case.
Z