Glossary of Investment Terms

Alpha

A measure of the performance which the fund manager adds above and beyond the performance of the underyling assets without his or her intervention.

Annual performance

Performance measured over an individual calendar year

Basket

Your basket acts as a place where you can store any funds you are interested in, for use in the portfolio, or interactive charting tools, or simply so you can examine them at a later time at your leisure.

Benchmark

A benchmark is used to determine how badly, or how well, a fund is performing. A fund which invests in natural resources, for example, might use an oil price indicator like Brent Crude GBP, against which to compare its own performance. Most funds also use a 'peer-group' benchmark which allows you to see how well a fund is doing in comparison with other funds investing in the same area.

Beta

A measure of the correlation of a stock to the performance of its underlying index.

Bid

Bid price represents the price at which you can sell a fund to a buyer who is 'bidding' for the unit. Where a value appears between the bid and offer prices this represents the 'mid' price - meaning there is only one price which is applicable to buyers and sellers.

Offer

Offer price presents the price at which you can buy a fund from a seller who is 'offering' the unit for sale. Where a value appears between the bid and offer prices this represents the 'mid' price - meaning there is only one price which is applicable to buyers and sellers.

Chart

Where you see the word 'chart' in a table you can add the fund it relates to a charting tool to compare its performance with other funds.

Currency

Currency refers to the currency in which a fund is denominated

Discrete Performance

Unlike cumulative performance, discrete performance considers each period within a time series separately so a period of weak performance cannot be masked by a period of strong performance elsewhere in the same series.

Domicile

The legal jurisdiction in which a fund is based. Different domiciles have different rules and regulations which may affect the transparency of a fund's workings.

Duration

In the context of the investment calculator on FE Trustnet Hong Kong, duration is referring to the amount of time you would like to invest your money for. It is best to give an honest estimate for your maximum investment term, because the length of time an investment lasts has a major impact on the amount of money it can produce.

Equity

Equity refers to shares in listed companies which are traded on international stock exchanges, usually on a daily basis.

Estimated Growth rate

The estimated growth rate given by the FE Trustnet Hong Kong investment calculator is an estimate of the returns you can expect based on the information on duration, regular savings, and frequency of investments you have provided. Please be aware that this is purely an estimate and absolutely no guarantee is provided.

Fixed Income

Fixed income refers to bonds, sometimes referred to as stock, issued by companies, institutions and governments, promising to pay a set income over a fixed period, usually a number of years. Bonds, like equities are subject to risk, although the characteristics of that risk are different.

Fund Comparison

Obtain immediate side-by-side overviews of key performance statistics and fund fundamentals, including cumulative and discrete rolling performance figures, asset allocation and holdings by geography, and all key statistical data including Alpha, Beta, Sharpe and information ratios.

Fund Factsheet

A fund factsheet in this context is a page on the site allowing you to see a wealth of information about how a fund operates including charges, fund manager information, asset allocation details, and information about the individual stocks and shares in which it invests.

Fund manager

The individual who makes decisions on which stocks to buy, hold or sell on a day to day basis is known as the fund manager.

Fund Objective

The stated aim of the fund, which must be included in various pieces of legal documentation by law.

Fund Ratings

Fund ratings are designed to provide a mathematical or qualitative indication of a fund's quality based upon its past performance.

Focus

Focus refers to the asset class or asset classes within which a fund concentrates its investments.

Group

Where you see the word 'group' on a table this refers to the management group which controls the fund it is associated with.

Group Factsheet

A group factsheet on FE Trustnet Hong Kong allows you to see all of the funds which a group manages, and details of how to contact that group by telephone, online or by post.

Hedge

Hedge refers to funds which use derivative contracts to achieve returns including short positions, futures, options and arbitrage strategies.

Hong Kong MPF

A Hong Kong Mandatory Provident fund, often abbreviated to MPF, is a compulsory savings scheme or pension fund for residents in Hong Kong, through which you can invest in the stock market.

Hong Kong Mutual Fund

A Hong Kong Mutual fund is a pooled investment fund allowing investors to gain exposure to stocks and shares in the international stock market.

Index

An index is a mathematical performance indicator, usually based upon the performance of more than one asset or instrument. An index demonstrating the performance of the natural resources sector, for example, would provide a composite performance figure based upon the performance of share prices of companies involved in the extraction of natural resources.

Interactive Charting

Interactive charting on FE Trustnet Hong Kong allows you to chart the performance of any instrument, index or sector available within the site - giving you the ability to see which has performed best over any period you choose.

Information Ratio

So called because it assesses the degree to which a manager uses skill and knowledge to enhance returns, this is a versatile and useful risk-adjusted measure of actively-managed fund performance. It is calculated by deducting the returns of the fund's benchmark from the fund's overall returns, then dividing the result by its Tracking Error (which is a measure of the volatility of those excess returns). In this way, we arrive at the value, per unit of extra risk assumed, that the managers decisions have added to what the market would have delivered anyway.

Money Market

The money market is a component of the financial markets for assets involved in short-term borrowing and lending with original maturities of one year or shorter time frames.

Multi-Asset / Mixed Asset

This term refers to funds which invest across several asset classes and/or fund managers, which means investors are not exposed to the market gains or losses of just one asset class.

Negative Periods

Periods, usually months, during which a fund lost money during a given timeframe.

Performance

Performance refers to the share price performance of a given instrument, whether that be an equity, a fund or a fixed interest (bond) stock.

Positive Periods

Periods, usually months, during which a fund made money during a given timeframe.

Portfolio

A portfolio in this context refers to the collection of investments you hold and manage through FE Trustnet Hong Kong.

Primary Asset Class

The asset class in which the majority of a fund's assets are held.

Property

Property is an asset class which includes both direct investments in buildings - sometimes referred to as 'bricks and mortar' - as well as investments in companies involved in the property industry; the return characteristics of these two types of property investment can be very different and should be taken into account.

Quartile

Quartiles are used to identify performance. Each quartile represents one fourth (25%) of the total population of funds described. A fund which is in the fourth quartile, therefore, is among the bottom 25% in terms of performance while a fund in the top quartile, or first quartile, is among the 25% of funds with the highest performance records.

R-Squared

A measure that represents the percentage of a fund's returns which can be explained by movements in the underlying benchmark index.

Rank

Rank refers to the position of a fund in the table you are viewing based on the order in which it is sorted. A higher rank does not necessarily indicate superiority.

Regular Savings

Regular savings describes the act of investing on a regular basis into a given product. Regular savings can have a major impact on the volatility of an investment - and most authorities believe that by investing regularly, rather than in large amounts at single points, returns can be smoothed out over time.

Sector

A sector is a group of funds which share a common investment goal or theme, and in many cases are officially recognised as belonging to the same 'sector' by the local authority - for example the HKSFC.

Sharpe

A measure of the relationship between risk and reward showing the level of return per unit of risk.

volatility

A measure which describes the fluctuation of a fund's price over time. Higher volatility is generally considered to equate to higher risk.

Watchlist

Your watchlist is a list of funds which you have added to your basket and then placed into this section of the site. Use the watchlist to keep an eye on funds which you do not actually have any investments in - this will help you to monitor their performance easily.

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