A
AAA
Highest assessment by ratings agency (see also: rating) Standard & Poor's for the creditworthiness of securities. As the first pension fund in Germany to invest internationally, the GAMAX FUNDS - MAXI-BOND was granted this mark of security and creditworthiness because only bonds with premium-rated debtors are managed in the portfolio.
A share => share class
AS fund => retirement income fund
Availability
In principle, investors in investment funds can access their money at any time by selling shares. The company may halt the redemption of shares only under properly justified exceptional circumstances, such as if the trading of shares in a fund portfolio is temporarily suspended.
B
Balanced fund
Fund which, depending on the investment policy, may invest in both shares and bonds as well as in risk management instruments; also known as a mixed fund. A special form of balanced fund is the retirement income fund which is also permitted to invest part of its assets in property.
Bank rate
Rate of interest at which the Federal Bank lends money to the merchant banks. => prime rate; replaced by the European Central Bank reference rates under the European Monetary Union.
Bearer share
Fund share(s) in guaranteed form, also known as certificate. Bearer shares thus count as a so-called actual security. They are, unlike registered shares, transferable by passing on the bond, and not tied to the individual. The share certificate consists of a so-called cover, the actual certificate itself and the official sheet. The official sheet includes the dividend coupon on presentation of which dividend payments are paid out, and a renewal coupon.
Benchmark
Basis of comparison in reviewing the growth in value of a fund. Indices are generally used (=> index).
Blue Chip
Shares in a particularly substantial company with high earnings, high market capitalisation and a major presence in the market; also known as default value. Examples of Blue Chips include DaimlerChrysler, Bayer or McDonalds.
Bond
Debenture against a loan, also known as a fixed interest security. => fixed interest security
Bottom up approach
Management strategy also known as single value analysis. Fund managers first look for individual securities which promise to be successful. Only then are sectors, countries and currency risks included in the assessment. Opposite: top-down approach.
B share => share class
BVI
Bundesverband Investment und Asset Management e.V. This organisation was founded on 25.03.1970 as the Association of German Fund Management Companies. Initially, foreign fund management companies such as GAMAX, Fidelity, Templeton and Pioneer were not admitted as full members.
BVI method
The formula established by BVI for calculating the growth (=> performance) of a fund over a specific period and not taking into account any issuing premium. Any dividend payments are reinvested at no cost on the day of the dividend payment.
C
Cash => liquidity
Certificate
The field of investment uses the term certificate on the one hand a to mean a bearer share, and on the other hand to mean a capital participation in an index or in a basket of shares which unlike a conventional investment fund is not constructed as special assets.
Close-end fund
Fund with a restricted number of shares. These, unlike open-ended funds, are traded as shares themselves on the stock market. The share value is thus the price, which as a rule reflects not only the current fund assets but also includes speculative expectations in terms of demand for fund shares with limited availability. As a result, the stock market price may differ from the net asset value.
Consolidation
An easing of price variations on the stock market following extreme fluctuations or deviations (approximately ten per cent) from the long-term course.
Cost Average Effect
Mathematical data according to which investors with a savings plan automatically purchase a lower volume of shares when prices are high and a higher volume when prices are low. On average, this means that investors achieve a better starting price than they would if they always purchased the same volume of shares.
Country fund
Fund which invests exclusively in shares in a specific country or region (e.g. Benelux).
Crash
Severe and sudden stock market collapse. Stock market losses of thirty per cent of more within a few days => correction, consolidation.
C share => share class
Custodian
Account for securities, including for investment trust units (investment account).
Custodian bank
Bank which holds deposits of securities. Investment companies are not permitted to deposit fund assets entrusted to them for management themselves, and must appoint a financial institution to do this. Since funds concern special asset, any fund assets held under blocked deposit are held and managed separately from the investment company's assets. Only the custodian bank and the investor himself have access. Investors may purchase and sell their shares. The custodian bank also completes all transactions as instructed by the fund manager (e.g. the purchase and sale of specific shares). It also calculates share prices on a daily basis, and is responsible for the issue and redemption of fund shares. It receives a payment out of the fund assets in return for it services (=> custodian bank fee). The custodian bank for the GAMAX FUNDS is Dexia Bank International in Luxembourg, one of the oldest banks in Luxembourg.
D
DAX® Deutscher Aktienindex.
DAX®-Index - index which reflects the change in share market price of the 30 highest earning German stocks according to their market capitalisation; the most widely known barometer of the German market. The DAX® was assessed at 1,000 points on 31.12.1987 and has grown since then in accordance with the shares it includes.
DAX® is a registered trade mark.
Default value => Blue Chip
Dividend payments
With a so-called fund with dividends, ordinary and extraordinary earnings from the fund at the end of the financial year are booked out of the fund assets and credited to the shareholders. The investor may receive the dividend payment or - generally at no cost - reinvest it in purchasing new fund shares. The share value is reduced correspondingly on the day of the dividend payment. The GAMAX FUNDS - MAXI-BOND is, as a pension fund, the only GAMAX fund to pay a dividend. The opposite of dividend payment is retention.
Dow Jones
Short name for the Dow Jones Industrial Average Index. US-American share index which reflects the change in value of the 30 highest earning industrials. It is also the most important index in the world.
Downturn
Sustained general fall in share prices on the stock exchange opposite: upturn.
E
Earnings
Earnings are defined as all revenues from shares except from exchange profits, with a differentiation being made between ordinary and extraordinary earnings. Ordinary earnings include revenue from interest and dividends as well as the issuer's rental incomer (=> issue). Only private investors are liable for tax on these earnings. Extraordinary earnings include the issuer's capital gains as well as option revenues for the security holder. These are tax-free for private investors following the speculative period. For funds, this means that exchange profits are tax-free for private investors after 1 year (speculative period). Extraordinary earnings may also be tax-free when the dividend payment is made, but ordinary earnings are subject to tax.
Emerging companies
Unlike Blue Chips, these are smaller companies which promise high growth and share price potential.
Emerging Markets
Collective term for less developed economies as opposed to well-established industrial nations.
Equity fund
Investment fund which invests primarily in shares. GAMAX offers the following equity funds:
GAMAX FUNDS -
MAXI FUNDS ASIA INTERNATIONAL
TOP 100
JUNIOR
MAXI BOND
Exchange profit
Increase in value of a security which may be taken tax-free following a 12-month speculative period.
F
FCP
Fonds Commun de Placement. The legal form of a Luxembourg investment fund.
Fixed income fund
Fund which invests exclusively or predominantly in fixed interest securities.
Fixed interest security
Security, usually with an unchanging, constant rate of interest. Depending on the trading type, quoted (e.g. government and corporate bonds) and non-quoted (e.g. Federal treasury notes) securities are divided, according to the method of interest payment, into securities with accrued interest and discounted fixed interest securities. Whereas with accrued bonds, the creditor gets back 100% of the capital loaned at the end of the term and when the final interest payment is made, with discounted bonds, also known as zero coupon bonds or zero bonds, he gets back only 100% of the nominal value. The interest payable is already accounted for as a discount on the nominal value when the bond is purchased.
Fixed term
Fund with a limited term. => guarantee fund
Fund
Short for investment fund
Fundamental analysis => top down approach
Fund assets
Special assets in a fund which encompass the overall value of all assets.
Fund manager
The organisation or individual appointed by the investment company to make investment decisions concerning the securities held. This organisation or individual analyses the underlying economic data (=> fundamental analysis, top down approach) as well as operational figures from the joint stock company in question (=> single value analysis, bottom up approach). DJE Kapital AG and PEH Wertpapier AG are the fund managers for the Mediolanum GAMAX Funds. DJE Kapital AG has also been handling all GAMAX FUNDS since October 2007.
Fund of funds
Investment fund which acquires shares in other investment funds. Not to be confused with umbrella fund!
Fund price => share value
Fund prospectus
Official document for the sale of investment trust units. Where the prospectus concerns the marketing of a fund authorised in Germany, it must contain all the legally prescribed information as required by the German Federal Financial Supervisory Authority (BaFin), e.g. concerning the investment policy or fund costs.
G
Guarantee fund
Fund with a guaranteed capital percentage. Generally speaking, this will be a fixed term fund which guarantees to repay a percentage of the original capital subscribed which is agreed in advance, on a specified date on which the special assets are liquidated. => risk management.
H
Hedge fund
Investment fund which, unlike traditional investment funds, does not focus on a specific market (=> benchmark, index) and which can also achieve profits in falling markets. To do this, hedge funds use shares, bonds and associated derivates from a wide range of investment instruments and techniques, e.g. the so-called short selling of securities. They may also borrow to speculate. The investment objective is to achieve continuous positive returns.
I
Index
Variable which continuously calculates the securities in a portfolio put together according to specific criteria, designed to reflect the growth in a specific market segment. The best known indices in Germany are the DAX® and Dow Jones. Indices are often used as a benchmark.
Index fund
So-called passive fund which mirrors the composition of a specific index in full or very closely. Fund performance therefore follows changes in the index as far as possible.
Interest rebate => tax
Investment account
Account opened and maintained for the purchase and holding of fund shares. GAMAX allows an investment account to be opened with a minimum amount of 2,500 euros. Subsequent payments of 250 euros upwards can be made to already existing accounts.
Investment fund
Special assets of an investment company which are managed by the company or by a fund manager appointed by the company and held by a custodian bank. Depending on the investment policy set out in the fund prospectus, it may include different classifications of security (=> shares, bonds, derivatives, property or property shares). The fundamental thinking behind an investment fund is a broad spread of investments in quoted securities which should also enable small-scale investors to benefit from stock and capital markets at correspondingly low risk.
ISIN
Abbreviation for International Securities Identification Number. International security identification number to enable securities to be identified.
Issue
The sale of securities by an issuer (=> issue), e.g. the issue of shares by a joint stock company shares in a fund sold by an investment company.
Issuing premium
One-off fee for the purchase of shares in a fund.
Issue price
The purchase price of shares in a fund => share class
L
Liquidity
Capital not invested, also known as cash.
Lombard rate
Interest rate which the Federal bank applies to Lombard loans made to merchant banks. Lombarding in this context is defined as the funding of securities by the Federal Bank, i.e. providing a loan guarantee against pledged securities. => prime rates. Replaced by the European Central Bank reference rates under the European Monetary Union.
M
Management fee
Fee for the management of the special assets in a fund by the fund manager which is included in calculation of the share value on each day of trading.
Mixed fund => balanced fund
Money market fund
Fund which invests purely in money market instruments, generally speaking bonds with a remaining term of maximum six months. Because of their short current value, they are hardly affected by speculation and share price fluctuations. Money market funds which invest in the area of fixed deposits are suitable for 'parking' money or bridging periods of falling share prices. Furthermore they are, with the exception of guarantee funds, the safest investment option in the area of investment funds.
MSCI Global Index
Morgan Stanley Capital International Global Index. Index consisting of a portfolio of global standard values and which thus reflects international stock exchange movements.
N
NAV => Net Asset Value
Net Asset Value
Value of the fund assets prepared on each day of trading.
No-load fund
US-American term for a fund with no issuing premium. No-load funds are generally subject to higher sales fees than funds with an issuing premium.
O
Open-ended fund
Fund with an unlimited number of shares which are issued directly by the investment company. As opposed to closed-end funds, the share value is determined as the price after balancing the special assets.
P
Payment plan
Regular payment of the same amount from an investment account; also known as a withdrawal plan. As a rule, a minimum portfolio value is needed for a payment plan to be set up. Payments may be made into the investment account, additional payments taken out, or the account closed at any time.
Pension fund
Special fund for employees within a company which is made up of pension reserves.
PER => Price-earnings-ratio
Performance
The change in a fund's value. In Germany, this is generally calculated using the BVI method.
Portfolio
Composition of the fund assets.
Price-earnings-ratio
Ratio of the price of a share to expected earnings per share for the corresponding fiscal year. The PER shows over how many years the earning per share would have to be earned to achieve the current stock market price. As a rule of thumb: the lower the PER, the lower the cost of the share.
Prime rates
Interest rates set by the Federal Bank when lending money to the merchant banks (=> bank rate, Lombard rate). Prime rates influence rates of interest in the money market and therefore in the shares and bond markets.
Property fund
Fund which invests predominantly in (commercial) property. Property funds may be constructed as an open-ended or close-end fund.
Public fund
Publicly distributed fund which is not restricted to a specific circle of investors.
R
Rating
Creditworthiness classification of fixed interest securities (bonds) by so-called rating agencies. While originally there was a rating only in respect of debtors' credit-rating, today funds are increasingly rated in respect of the quality of their management (=> fund manager). The GAMAX FUNDS - MAXI-BOND was the first in Germany to be rated AAAf for the sale of authorised pension funds by the well-known rating agency Standard & Poor's for the top level of the bonds within it.
Redemption price => share value
Registered share
Fund share held in a collective deposit under the name of the investor. Opposite: bearer share => share certificate.
Retention
The daily reinvestment of earnings in the fund assets as prescribed in the fund prospectus. Opposite: dividend payment.
Retirement income fund (AS fund in German)
Balanced fund where the portfolio is subject to special investment rules. Fundamental components include shares, bonds and property, with the investment being mainly in the value of assets. The proportion of shares must be at least 21% and must not exceed 75%; property in the form of open-end funds or direct holdings may be maximum 30%. Derivatives such as futures and options may be used only to manage risk. Foreign currency risks are limited to 30% of the fund assets. Retirement income funds with these risk management requirements should be used as a pension provision primarily, to which end there must also be the option prior to reaching retirement age, and at the latest three-quarters of the way into the term of the contract, to switch shares to more retirement-focused portfolios.
Risk management
By using modern financial instruments, the price of shares, bonds and foreign currencies can be hedged against price fluctuations (hedging). The financial instruments used are futures.
S
Sales fee => share class
Savings plan
Regular payment of the same or a dynamically adjusted amount into an investment account.
Sector fund
Specialised fund which invests only in the shares of a specific economic sector.
Security
Document which certifies entitlement to assets, a claim or a share in profits or earnings. The most common types of security are the share, bond and derivative (=> risk management).
Security identification number
National six-digit registration number which clearly identifies every security - and therefore also every fund. Internationally, ISIN is now used.
Share
Security that certifies the bearer's (shareholder's) shares in the asset of a company (joint stock company).
Share class
Category of fund shares corresponding to a specific fee structure. The following share classes apply to GAMAX FUNDS:
A share: The investor buys at the share value plus a one-off issuing premium. Shares are later redeemed at their share value.
B share: shares are issued at the share value with no issuing premium which means that the entire investment sum is invested. When the shares are redeemed, costs are incurred in accordance with a scale of redemption premiums applied to the share value at the time of redemption. With equity funds and funds of funds, this redemption premium is scaled over an investment period of seven years, and with pension funds over five years. The redemption premium falls due after this period, when B shares convert automatically into A shares. Until that time however, an additional annual sales fee of currently 1% is payable which along with the management fee is incurred as part of the price calculation on each day of trading.
C share: no issuing premium is payable at the time of issue. There is no redemption premium at the point of redemption. In addition to the management fee, a sales fee of 1% p.a. of the net asset value as calculated at each valuation date is payable.
Share certificate
Security which, depending on the legal construction of the special assets, documents any claims the shareholder has against the fund company or one of its funds. A differentiation is made between bearer shares and registered shares.
Share value
Also known as share price. The net price of a share is calculated on each day of trading by taking the net investment value of the fund assets and deducting ongoing costs divided by all the fund shares issued. It corresponds to the price the investor would receive on redemption of the shares (redemption price), with an additional redemption premium payable for B shares (=> share class).
Sharpe ratio
Factor used to assess the risk to reward ratio of a fund. It is determined by subtracting risk-free earnings (money market returns) from average annual returns. The result is divided by average annual volatility. The higher the Sharpe ratio, the better the earnings in relation to the risk.
Single investment
Single purchase of investment trust units to which GAMAX applies a minimum amount of 2,500 euros for the initial payment and 250 euros for subsequent payments. When the initial investment is made, a so-called investment account is opened.
Single value analysis => bottom up approach
Special assets
Assets contributed to a fund in return for the issue of fund shares. This should be separated from the investment company's equity capital which is held by the custodian bank and can be accessed only by the bank and investors => fund assets.
Special fund
Fund restricted to a limited circle of investors to a maximum of ten shareholders.
Specialised fund
Fund where investment is restricted to specific sectors or security types.
Speculative period
Period during which realised exchange profits, i.e. profits generated from the sale of securities, are liable for tax in Germany. With effect from 1.1.1999, the speculative period has been twelve months. From 01.01.2009, the speculative period has no longer applied to any securities purchased since that date.
Stock picking
The selection of individual securities with no particular consideration given to the economic circumstances.
Switch
Moving from one fund to another. With umbrella funds, this is generally speaking possible at no charge, or for a very small fee.
T
Tax-optimised fund
Fund which minimises the proportion of earnings (=> earnings) and maximises the proportion of exchange profits (=> exchange profits) in a bid to achieve optimal post-tax returns. The term tax-optimised fund is generally used in relation to funds with a higher proportion of fixed income. GAMAX FUNDS are constructed in such a way that their increase in value is derived predominantly though tax-free exchange profits.
Technology funds
Specialised fund with a focus on technology shares.
Theme fund
Specialised fund focused on a specific theme.
Top down approach
Investment strategy which favours assessing and selecting securities according to the economic situation. Opposite: bottom-up approach.
Triple A => AAA
U
Umbrella fund
Collection of several sub-funds under the 'umbrella' of a family of funds. GAMAX FUNDS, FCP is one such umbrella fund whereby the investor can choose between several funds and then switch to another at a later stage at no cost (=> switch). An umbrella fund is not to be confused with a fund of funds.
Upturn
Sustained general increase in share prices on the stock exchange. Opposite: downturn.
V
Volatility
Measure of the scope of historical fluctuations and therefore of the risk associated with a fund investment. Volatility is measured as the average fluctuation from the mean of the average change in a security or market over a specific period of time.
W
Withdrawal plan => payment plan
WKN => German abbreviation for the security identification number
