| Absolute
Return Strategy |
An absolute return
strategy aims to achieve positive returns,
regardless of the overall market conditions.
Thus, unlike a relative return strategy,
which measures its performance alongside
a market benchmark, such as the Dow Jones,
an absolute return strategy only measures
itself it terms of overall returns. |
| Administration
Fee / Management Fee |
The administration
fee and management fee are both indirect
fees associated with investment funds. These
fees are deducted from the fund’s
assets – similar to the safe-custody
fees charged by banks. As a result, the
growth of a fund is influenced by this deduction.
However, investors should note that all
published data is reported after all indirect
fees have been deducted. |
| Admission
For Sale |
Before an investment
company can offer its shares to the public
in a European country, it must apply and
receive an admission for sale or an acceptance
for trading by the respective regulatory
authority. |
| Advisory
Fee |
The advisory
fee is an “indirect” fee associated
with investment funds; the advisory fee
reflects the commission given to a fund’s
Trading Advisor. Similar to the administration
fee, the advisory fee is deducted from the
fund assets; all published performance data
reflects this deduction. |
| Alternative
Investments |
Alternative
investments are investments in hedge funds,
managed funds and private equity funds.
Alternative investments aim to achieve a
positive result each year – independent
of the economic environment. Traditional
mutual funds, on the other hand, aim to
achieve returns greater than benchmark market
indices.
The terms 'alternative investment' and 'hedge
fund' often get used interchangeably as
hedge funds are an important and growing
part of the alternative investment arena,
which also includes private equity and debt,
venture capital and real estate. In the
field of asset management, the essential
defining features of alternative investments
are: the pursuit of absolute return that
is:
- the quest to achieve a positive return
regardless of whether asset prices are rising
or falling.
- freedom to trade in a wide range of assets
and instruments employing a variety of styles
and investment techniques in diverse markets
- reliance on the investment manager's skill
and application of a clear investment process
to exploit market inefficiencies and opportunities
with identifiable and understandable causes
and origins
Alternative investment managers may take
advantage of pricing anomalies between related
securities, engage in 'momentum' investing
to capture market trends, or utilize their
expert knowledge of markets and industries
to capture profit opportunities that arise
from special situations. The ability to
use derivatives, arbitrage techniques and,
importantly, short selling - selling assets
that one does not own in the expectation
of buying them back at a lower price - affords
alternative investment managers rich possibilities
to generate growth in falling, rising and
unstable markets. |
| Annual
Report |
An annual report
is an audited document reporting a company’s
financial results for the year (including
the balance sheet, income sheet, cash flow
statement and description of company operations)
and commenting on any other relevant information.
All incorporated companies are obliged to
publish an annual report at the end of each
fiscal year; the annual report must be sent
to all investors. |
| Asset
Allocation |
Asset allocation
is the process of selecting different asset
classes, currencies, geographical regions,
etc. in order to achieve a portfolio’s
overall objective. The gain of a portfolio
depends on the choice as well as the weighting
of the securities. Asset Allocation aims
to optimise the return and risk in a portfolio. |
| Asset |
Anything having
a commercial or exchange value |
| Asset
Class |
An asset class
is a kind or group of assets with similar
investment characteristics. The most important
classes are as follows: stock market, bond
market and real estate and cash markets.
Additional classes are e.g. asset classes
based on countries such as stocks Germany,
stocks Europe, stocks Japan etc. |
| Alpha |
Widely considered
to be a measure of the 'value added' by
an investment manager. It is therefore regarded
as a proxy for manager or strategy skill.
Alpha is sometimes described as out-performance
of a benchmark or the return generated by
an investment independent of the market
- what an investment would hypothetically
achieve if the market return was zero. More
specifically, alpha is sometimes described
as the return of an investment less the
risk-free interest rate, or the return of
the portfolio less the return on the S&P
500 index or some other relevant benchmark
index. |
| Annualized
Return |
see
Compound Annual Rate of
Return |
| Annualized
Volatility |
see Volatility |
| Arbitrage |
The technique
of exploiting pricing anomalies between
related securities within and between markets
with the aim of producing positive returns
independent of the direction of broad market
prices. By establishing long positions in
under-valued assets and short positions
in over-valued assets, arbitrageurs aim
to capture profit opportunities that arise
from the changing price relationship between
the assets concerned. Specific investment
styles that apply arbitrage techniques include
convertible bond arbitrage, fixed income
arbitrage, statistical arbitrage, and merger
or risk arbitrage. |
