Definitions
Terms relating to funds
Accumulation/Income
Choice made by a fund as to whether or not to distribute the income earned on the portfolio. When income is accumulated (capitalised), it increases the NAV of the fund shares or units. However, tax credits attached to any dividends capitalised cannot be reclaimed.
Annualised performance
Performance measurement used to compare performances recorded over periods of different durations. The actual performance over the period is adjusted to reflect the annual growth rate.
Benchmark
A standard or point of reference by which an investment can be measured. Investment funds are usually measured against a broad market or market segment index.
Custodian
Service provider responsible for holding the securities and ensuring the legality of the investment decisions taken on behalf of the fund.
Entry/exit fees
Also known as subscription/redemption commissions, these fees are payable for the purchase/sale of units or shares in a fund. A portion of these fees may be due to the fund itself.
Euribor
This European money market interest rate is equal to the arithmetic mean of the interest rates offered on the European interbank market for a given maturity (ranging from 1 week to 12 months). It is published by the European Central Bank based on listed prices supplied daily by 64 European banks.
FCP (Fonds Commun de Placement)
An FCP is a collection of jointly held securities that is not a separate legal person. It issues units and is managed by an asset management company. An FCP is an investment fund under French law regulated by the AMF.
Futures
This financial product allows a buyer and a seller to undertake to buy and sell respectively on a fixed date a financial instrument at a price determined on the day the commitment is made.
Hedging
A market transaction, or series of such transactions, whose objective is to hedge, or offset, fully or partially, the risk of a movement in an asset or liability, this risk stemming from a movement in the price of a security, currency, interest rate or commodity.
High water mark
A high-water mark is often applied to a performance fee calculation. This means that the manager receives performance fees only on increases in the Net Asset Value (NAV) of the fund in excess of the highest net asset value it has previously achieved.
Investment horizon
The recommended investment period is determined based on the investment objective and the financial instruments in which the fund is invested.
Management fees
Total of the various fees and commissions calculated as a percentage of the fund’s net assets. These include both fixed costs (fund operating costs and management fees) and variable costs (outperformance fees).
MSCI (Morgan Stanley Capital International)
Index representing equity performance by region (France, Europe, World, etc.).
Net assets
Total net amount of a fund’s assets valued at market price less any liabilities.
Net asset value (NAV)
Price of fund units/shares, published on each fund valuation date.
Net equity exposure
The effective exposure to equities of a fund as calculated by taking the amount invested in equities (long position) deducted by the future obligation to sell equities (short position).
OPCVM (Organisme de Placement Collectif en Valeurs Mobilières)
Savings product approved or authorised by the Autorité des Marchés Financiers (the French Regulator for financial markets) that is managed by an asset management company and is aimed at retail and intuitional investors. This is the French equivalent of a UCITS (undertaking for collective investment in transferable securities).
Rating
Fund ratings are generally expressed in terms of stars (from 1 to 5) and are published by independent bodies. Depending on the body concerned, the ratings reflect, based on an analysis of actual performances and risk levels, the fund’s relative ranking within a sample of similar funds.
Sharpe ratio
Measures the excess return delivered by an investment in relation to a risk-free asset compared with the risk taken. The higher the ratio, the greater the return on the risk taken. For ratios below zero, the order of importance is not significant. In this publication, the calculation is based on performances in Euro compared with compounded Eonia. The sharpe ratio is calculated based on past performances, which may differ from future performances.
S&P 500
US stock market index covering the top 500 listed securities. It is calculated by Standard and Poor’s.
Tracking error
Measures the volatility of performance differences between the fund and a benchmark index. The higher the tracking error, the greater the positions taken by the investment team. The tracking error is calculated based on past performances, which may differ from future performances.
Volatility
Measures the historical dispersion of performances. The higher the indicator, the greater the risk statistically. Volatility is calculated based on past performances, which may differ from future performances.
For further information, please refer to the AMF lexicon: www.amf-france.org