Open-ended Unit Trust

An open-ended unit trust (or open-ended fund) is a collective investment scheme which can issue and redeem shares at any time. An investor will generally purchase shares in the fund directly from the fund itself rather than from the existing shareholders.

AUM

AUM stands for “Assets Under Management” and represents the amount of money that unit trust funds manage on behalf of their clients (and themselves).

NAV

NAV is the value of a fund’s asset less the value of its liabilities per unit. It is the value of a fund’s asset less the value of its liabilities per unit.

Annualized return

Annualized returns are period returns re-scaled to a period of 1 year. This allows investors to compare returns of different assets that they have owned for different lengths of time.

Cumulative return/Since Inception return

Cumulative return is the total return that an investor would have received if they were invested over a specific time period.

Lock-Up

Lock-up refers to the time period that a new investor’s money is required to stay in the fund before they are able to redeem or withdraw their capital. If there is a “soft lock-up” it generally means that the investor can withdraw money before the lock-up period is over, but they will be charged a fee for doing so.

Fund Manager

Manages the day to day affairs of the fund, including directing investments and balancing the portfolio.

Management Fee

This is a flat fee that the investment manager is entitled to keep as compensation. The fee is usually a flat percentage that is based on the total assets that the fund is managing.

Redemption/Withdrawal

Redemption or withdrawal means that an investor wants to disinvest their money from the fund and receive cash in lieu of being invested.

Manager’s Selling price

The unit price at which an investor purchases units of the fund.

Manager’s Buying Price

The unit price at which an investor redeems units of the fund.

Trustee/custodian

A person or firm that holds or administers property or assets for the benefit of a third party. A trustee may have a fiduciary responsibility to the trust beneficiaries.

Money Market

Money market securities consist of Fixed deposits, Treasury Bills, Commercial Paper, Debentures, Repurchase Agreements (Repos) maturing less than 365 days.

Gilt Fund

A gilt fund consists of securities such as treasury bills and bonds that are 100% backed by the government. The securities are high-grade investments with very low risk.

RTGS Tansfer

Basically, this is a system for large-value interbank funds transfers. This system lessens settlement risk because interbank settlement happens throughout the day, rather than just at the end of the day. The transfer is executed on the same day and applies for amounts greater than Rs. 1 million.

SLIPS Transfer

Similar to RTGS but for amounts less than Rs. 1 million.

SWIFT Transfer

A SWIFT money transfer begins when a person gives a bank permission to send a specific amount of money from his account to an account abroad. The person provides her bank with the SWIFT code and account number for the other bank. Electronic instructions are then sent to the other bank detailing the amount that should be posted and the account involved.

Registrar

The executive responsible for keeping a register or official records

Value investing

The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. This is based on the view that in the long run financial markets give a good rate of return despite some volatility, that is, declines.