% POSITIVE MONTHS: The percentage of months since inception where the Fund has delivered positive return.
ALPHA: Denoted the outperformance of the Fund over the benchmark.
ANNUALISED PERFORMANCE: Annualised performance show longer term performance rescaled to a 1 year period. Annualised performance is the average return per year over the period. Actual annual figures are available to the investor on request.
ASSET CLASSES: Refers to different types of assets such as shares (equity), bonds, cash, property, inflation linked bonds, etc. Each asset class has different risk and returns characteristics.
AVERAGE CREDIT QUALITY: The weighted average credit quality of all the underlying interest bearing instruments in the Fund (internally calculated).
AVERAGE DURATION: The weighted average duration of all the underlying interest bearing instruments in the Fund.
BASIS POINT: Used to express yield or percentage, where 1 basis point is equal to one hundredth of a percent (0.01%). Therefore, 1.0% equals 100 basis points, 0.25% equals 25 basis points and 0.10% equals 10 basis points, etc.
BENCHMARK: Is a set and relevant measure, like a market index, that can be used to evaluate a Fund’s performance.
BOND: A debt instrument where the investor loans money to an entity (corporate, SOE or government) which borrows the funds for a defined period and pays interest on the loan.
CALL OPTION: Gives the buyer the right, but not the obligation, to purchase an agreed amount of the underlying security, i.e. a share, index or bond at an agreed price and on the specified date. The seller of the call option is obliged to sell the security if the option is exercised (called).
CREDIT QUALITY: A measure of a debt instrument’s creditworthiness or ability to repay principal and interest, it is also called risk of default. Credit quality is often, but not always, measured by credit rating agencies who assign a rating, i.e. AAA, AA, etc.
CURRENT YIELD: Annual income (interest or dividends) divided by the current price of the security.
DEFAULT: In interest bearing markets this is where a borrower is unable to pay interest, capital or both interest and capital on outstanding debt.
DERIVATIVE: Is a security with a price that is dependent or derived from the price of an underlying security. Derivatives are most often used to gain exposure to a certain asset without purchasing that asset, or to hedge against negative price movements in the underlying asset.
DIVERSIFICATION: Spreading the investment of a portfolio across a number of asset classes, generally to lower the overall risk of a portfolio by including assets with different risk and return characteristics.
DIVIDEND YIELD: The dividend yield of each company is the dividends per share divided by the price. For a Fund, this will be the weighted average dividend yield of all the underlying equity in the Fund.
DIVIDENDS: A portion of a company’s earnings that have been declared and will be paid to shareholders.
DURATION: Measures the sensitivity of the price or value of a debt instrument to a change in interest rates. As interest rates rise the value will reduce and as interest rates fall, the value will increase.
EQUITY / SHARE: A stock or security representing an ownership interest in a company.
FUTURES CONTRACT: A legal agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.
HIGH WATER MARK: The highest cumulative level of outperformance achieved over a benchmark since inception of the Fund.
HIGHEST & LOWEST RETURN: The highest and lowest returns for any 1 year over the period since inception of the Fund.
INFLATION LINKED BOND: A bond where the interest payments and the capital repayment is adjusted by inflation.
INTEREST RATE: The amount charged, expressed as a percentage of principal, by a lender to a borrower on the outstanding amount of a loan.
LONG POSITION: This is a position where the asset has been purchased, i.e. you have gone long the asset. This position is taken when you expect the price of the asset to rise and therefore you will gain from owning the asset.
MAX DRAWDOWN: The maximum peak to trough loss suffered by the Fund since inception.
MAX MONTHLY GAIN: Largest increase in a Fund's value or price in any single month.
MULTI-ASSET FUND/PORTFOLIO: A multi-asset portfolio is often also called a balanced fund and is a fund that holds a combination of asset classes such as equity, bonds, cash and property.
NET ASSET VALUE (NAV): The net asset value represents the assets of a Fund less its liabilities.
OVER THE COUNTER (OTC): Includes securities that are not traded on an official exchange and are less formal and often less transparent agreements between two parties.
PE RATIO: The price earnings ratio of each company is the price divided by the earnings per share and is an indication whether the company's shares are expensive or cheap. For a Fund, this will be the weighted average price earnings ratio of all the underlying equity in the Fund.
PERFORMANCE FEE: Is a fee paid to the manager based on a set level of outperformance of the benchmark. The manager will share in a set percentage of the outperformance, call the participation rate. Performance fees can be capped or uncapped.
PUT OPTION: Gives the buyer of the put option the right, but not the obligation, to sell an agreed amount of the underlying security, i.e. a share, index or bond at an agreed price and on the specified date. The seller of the put option is obliged to buy the security if the option is exercised (put).
REPO RATE: The official rate at which the South African Reserve Bank lends to other banks.
SHARPE RATIO: The Sharpe ratio is used to indicate the excess return the Fund delivers over the risk free rate per unit of risk taken by the Fund.
SHORT POSITION: This is a position where the asset has been sold that has not previously been bought, i.e. you have gone short the asset. This position is taken when you expect the price of the asset to fall and you will be able to buy it back at a cheaper price in future, gaining from the difference between the higher selling price versus the lower buying price.
STANDARD DEVIATION: The deviation of the return stream relative to its own average.
TOTAL EXPENSE RATIO (TER): Is a measure of the annualized percentage of a Fund’s average assets that have been paid away as expenses to manage the Fund. This includes asset management fees, performance fees, trustee fees, custody charges, audit fees and other expenses that are allowed deductions.
TRANSACTION COST: Are expenses incurred when trading securities such as broker commissions, exchange fees and statutory charges like Securities Transfer Tax.
UNIT TRUST OR COLLECTIVE INVESTMENT SCHEME: Unit Trusts or Collective Investment Schemes (CIS) are Funds where the money from many investors are pooled together and invested in assets like shares, bonds, property and cash. Investors hold equally priced units where the price of the unit is based on the value of the underlying investments held in the fund. In South Africa, CIS's are highly regulated.
YIELD: Generally refers to the income percentage returns an asset or fund generates, as opposed to returns of a capital nature.
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