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 in terms of overall returns.

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.

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.

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 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.

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 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.

Anything having a commercial or exchange value.

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.

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.

see Compound Annual Rate of Return

see Volatility

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.