Fund Glossary



Absolute return

The term "absolute return" refers to an approach to fund management that aims to generate a predefined return independently of the stock market cycle: i.e. regardless of whether markets are rising or falling. No benchmark is provided, as is the case with most equity or bond funds.  This means that the portfolio is less sensitive to negative market phases than equities and bonds. Another possible feature is that the fund price should not fall below a predefined minimum value within a certain time period (e.g. five or ten years).


Administrative costs

The professional administration of assets worth hundreds or even thousands of millions costs money, and so it should. After all, a service is also being provided. However, the capital investment company is not able to charge any amount it chooses, rather it must specify the level or maximum level of the administrative costs both in the fund rules, which have to be approved by the national finance minister, and in the fund prospectus. The administrative costs reflect the complexity of a given fund and are usually lowest for money market funds and highest for equity funds specialising in niche markets. They range from a few tenths of a percentage point to 2.5% or more per year. The administrative costs usually also cover the fees of the custodian bank unless otherwise specified in the fund rules.

Experience shows that capital investment companies handle administrative fees with great care so as not to have a negative effect on performance caused by excessively high rates. On the other hand, it is also apparent that reasonable administrative fees could still be introduced by a good fund manager.

(Based on the brochure published by Erste Bank der oesterreichischen Sparkassen AG: &quto;Was ein Privatanleger über inländische Investmentfonds wissen sollte.")


Alternative funds

Alternative funds consist of investments in derivative financial instruments such as options, futures, SWAPs etc., which, though often associated with greater risks, also offer greater opportunities. In addition to commodities (raw materials), alternative  financial instruments also include real estate investments.


Annual financial statement / statement of account 

The annual financial statement / statement of account are drawn up by the capital investment company and audited by an auditor or audit company. The audit examines compliance with the Austrian Mutual Funds Act and the fund terms and conditions. In the process, all relevant information on the investment fund is published in a readily comprehensible form. Among other things, the profit & loss account and the change in fund assets are reported in detail and a detailed statement of assets is provided. The annual financial statement / statement of account are prepared annually for the fund's previous accounting period.


Asset allocation

Signifies the allocation of investment assets to various investment vehicles and markets. This refers to a strategic process, in which investments are consciously spread among equities, bonds, real estate (and other alternative investments) and cash reserves.


Austrian capital gains tax

The Austrian capital gains tax (KESt) is a withholding tax levied at a rate of 25% on domestic capital gains. KESt is directly deducted from interest, bond coupons or dividends from shares. With the Austrian Budget Act of 2011, the taxation of capital assets was reorganised and, among other things, extended to sales of securities. Since April 2012, profits from sales of financial assets have generally been taxable at a rate of 25% (price gains tax).


Balanced funds

Balanced funds can invest in equities as well as bonds.They combine the growth prospects of equity investment with the returns from fixed-interest securities. This broadens the fund manager's investment options. In the event of stagnating or falling equity prices, the manager is able to switch to fixed-interest securities; if a positive trend emerges in the equities market, the manager can shift the emphasis back to investment in equities.



A person who expects stock market prices to fall and speculates accordingly.
Opposite: "Bull"



A benchmark is a yardstick for measuring investment performance. The index for the investment region or asset class in which the mutual fund invests is commonly used for this purpose.


Blue chip

Major listed company with a good international reputation.



A bond is a long-term borrowing arrangement. The issuer undertakes to repay the principal amount and to pay interest at specific times. A bond is issued for the total amount and is subdivided into partial debentures accompanied by written certification.
As for the issuer, distinctions are made between public bonds (state, government, post office, etc.), corporate bonds and bonds issued by mortgage banks (mortgage-backed bonds).


Bond funds

Bond funds are mutual funds that exclusively or primarily invest the fund assets in bonds, debentures and money market instruments. There are very many different segments in the bond market: Funds that are limited to certain currencies or currency groups (such as the euro, dollar, yen), to certain markets (such as Central and Eastern Europe) or to gilt-edged investments.  Experience, a certain readiness on the part of the investor to accept risk awareness and a medium- to long-term investment horizon are the prerequisites for investments in bond funds.


Break-even, break-even point

The profit threshold, i.e. the level above which a product or a company makes a surplus, or profit. The point above which figures are "in the black".



A stock exchange optimist who expects prices to rise and commits himself accordingly.


Capital adequacy

One of the column headings in the investment fund supplement to the official list of quotations of the Vienna Stock Exchange. The column contains capital adequacy figures for the individual funds. These have no meaning for the private investor but are exclusively intended for Austrian credit institutions and certain institutional investors (e.g. pension fund managers) who are also investing in domestic mutual funds. They indicate to a savings institution or bank the percentage of a fund's calculated value that they must back with equity capital (the remainder is capable of bringing in quick returns). Some private investors may therefore also consider a low capital adequacy figure to be an indication of a fund's security.

(Based on the brochure published by Erste Bank der oesterreichischen Sparkassen AG: "Was ein Privatanleger über inländische Investmentfonds wissen sollte.")


Capital investment company

A capital investment company is a bank (according to §6 of the Austrian Investment Fund Act) in the legal form of a limited liability company or public company, which is entitled to management capital investment funds. A capital investment company is not permitted to engage in other (banking) business that extends beyond this and the directly associated activities. The Austrian Investment Fund and Banking Acts include a series of provisions aimed at protecting investors.


Cash transaction

An expression used to describe exchange transactions that are characterised by being completed within a short time frame (delivery, acceptance and payment). For cash transactions in securities, for example, the purchase price must be paid at the time of delivery (opposite: futures trading).


Custodian bank

A fund of funds is an investment fund that invests its assets in several individual funds (sub-funds). The composition of the sub-funds depends on the fund's investment strategy. Fund of funds are often used as vehicles for implementing asset allocation decisions.



Derivatives is the term used to denote futures business, i.e. options and futures. They are mainly traded on dedicated futures exchanges and are used as a hedging solution on the one hand and for speculative trading on the other (e.g. hedging the Vienna Stock Exchange against net losses by selling ATX futures on the ÖTOB).


Derivative financial instruments

Derivative financial instruments, or simply derivatives, is the term used to denote futures transactions, i.e. options and futures. They are mainly traded on dedicated futures exchanges and are used, on the one hand, as a hedging solution and, on the other, for speculative trading.



A dividend is the distributed portion of a corporation's profits. It is not the same as the total profit of a PLC because the dividend sum is reduced by provisions and the like. The dividend level and payout is decided at the company's AGM.



The term duration describes a numerical indicator developed by Frederick Macaulay for assessing bond risk. It is a measure of the risk of changes in interest rate for fixed-interest securities. It represents the average duration of capital tie-up for invested capital, expressed in years. The longer the duration of a bond fund, the more sharply the net asset value increases or falls if interest rates change.

Here is a simple example that does not take interest rates into account: If you invest 1.2 million and receive it back after one year, it means that the money was tied up for one year. However, if you receive 100,000 back every month, the money invested was tied up on average for only half a year. Unlike a bond's time to maturity, however, the duration also takes into account all interest payment flows. The longer the duration (the average duration of capital tie-up in years), the greater the bond interest rate risk, since, during this time, market interest rates could rise or fall and with them the bond price.


Emerging market

The term "emerging markets" is used by financial investors to refer to newly industrialised countries. These countries are undergoing a growth process, accompanied by political and economic change. Compared with "developed markets" – i.e. those of industrialised nations – these markets are exposed to greater fluctuations and political risks.


Equity funds

Equity funds are predominantly or exclusively invested in equities. Equity funds can be just as varied as the equity markets themselves: The investment options extend from worldwide equity funds through national markets (individual stock exchanges) or industries (e.g. healthcare, commodities, technology, environmental protection) to small- and mid-cap shares. Depending on the fund's investment focus, the range of fund price fluctuation can be high to very high. Experience, risk awareness and a medium- to long-term investment timeframe are prerequisites for investments in equity funds.



An exchange-traded index fund (exchange-traded fund, ETF) is a securities portfolio that aims to track the performance of a certain financial index. Units in an ETF are bought and sold on an exchange like shares.



Floaters are bonds with a variable rate of interest which is usually linked to a reference interest rate and is set at regular intervals.



The floor (bottom limit) is the minimum price below which the fund should not fall. The value at the end of the year should therefore at least correspond to the value at the beginning of the year.


Fund assets

Fund assets signify all the assets of a capital investment fund. These assets consist of securities and other entitlements, cash in bank and bank deposits, claims to earnings (income adjustment), they may also include derivatives (e.g. options, futures, swaps etc.). These assets are reduced by costs and fees incurred in the fund (in particular, management fees, custodian fees, transaction costs, etc.) as well as those resulting from any loans or liabilities from derivative financial market instruments. The fund assets are the sole property of the unitholders; the capital investment company simply manages them. This means that unitholders cannot lose their assets, even if the capital investment company or the custodian bank goes into liquidation.


Fund category

Funds are classified according to international standards ("ÖKB classification"). A distinction is made in "short-term funds" between "pure" money market funds (as per CESR/10-049 and MGR 02/2011), short-term money market funds (as per CESR/10-049 and MGR 02/2011) and short-term bond funds (term 0-3 years). Then there are medium-term bond funds (term 3 – 7 years) and long-term bond funds (term over 7 years).

Mixed funds are classified as conservative, balanced and flexible investments ("non-bond exposure" without taking into account derivatives up to 35%, between 35% and 65% and those between 0% and 100%).

Then there are the categories equity funds (min. 85% equities), funds of hedge funds (min. 85%), alternative funds – derivative funds (min. 85%), real estate investment funds (according to the Austrian Real Estate Investment Fund Act) and directive-compliant funds with clear derivative strategy.


Fund mergers

Fund assets signify all the assets of a capital investment fund. These assets consist of securities and other entitlements, cash in bank and bank deposits, claims to earnings (income adjustment), they may also include derivatives (e.g. options, futures, swaps etc.). These assets are reduced by costs and fees incurred in the fund (in particular, management fees, custodian fees, transaction costs, etc.) as well as those resulting from any loans or liabilities from derivative financial market instruments. The fund assets are the sole property of the unitholders; the capital investment company simply manages them. This means that unitholders cannot lose their assets, even if the capital investment company or the custodian bank goes into liquidation.


Fund of funds

A fund of funds is an investment fund that invests its assets in several individual funds (sub-funds). The composition of the sub-funds depends on the fund's investment strategy. Fund of funds are often used as vehicles for implementing asset allocation decisions.


Fund rules

Fund rules are one of the legally required prerequisites for any domestic mutual fund and must be approved by the Austrian Federal Finance Minister and must also be published. They contain the most important rules governing how the respective fund is to be managed. Fund rules are basically divided into two main parts: The first part is the general fund rules governing the legal relationship between the unit holder and the capital investment company. The second part contains the special fund rules. They designate the custodian bank, set out in detail the permissible investments and, in particular, the investment constraints, the size of the initial charge, the financial year, the administrative fee, the use of earnings and the timing of any dividend or payout.The fund rules always form part of the fund prospectus.


Futures are contracts for the future delivery or sale of a particular product. Futures contracts on commodities are referred to as commodity futures, while those on equities, bonds, indices and currencies are known as financial futures. Futures contracts are standardised and facilitate easy market access.



"Hedging" means safeguarding an investment instrument against market fluctuations. This is usually achieved by means of derivative products (options, futures). Hedging can be used wherever there is an opportunity to establish a counterposition. In finance, hedging is a useful strategy for covering interest rate, price and currency exchange risks.


Hedge funds

There is no standard definition of hedge funds. Usually funds that are categorised as hedge funds do not pursue conventional or traditional investment guidelines or strategies. Typically, hedge funds involve a higher risk than conventional investment funds. Under some circumstances, hedge funds even speculate on credit to generate leverage. A success-based fee or management of the hedge fund is often deducted from the return obtained. In most cases, hedge funds are not subject to any or very little regulation since these funds are mostly domiciled offshore (e.g. Cayman Islands, Bermuda). Many hedge funds can only be traded per month and the transparency of hedge funds is often limited.


High yield

The term "high yield" refers to high interest bonds. The ratings for such bonds is BB+ or worse. The issuers of these bonds are therefore outside the "investment grade" segment (ratings from AAA to BBB) and thus do not fulfil certain creditworthiness requirements. In return for this higher issuer risk, such bonds offer above-average returns. However, the risk associated with these investments is very high, the invested capital is only partially protected and no interest is paid. There may also be delays or even defaults of payments.


Income adjustment

A part of any fund assets consists of accrued or already collected income (interest, dividends, price gains etc.), which naturally forms part of the calculated value, the issue price and redemption price. If a new unit holder now invests in the fund, the proportion of the net asset value corresponding to the earnings is also credited to the appropriate income account or debited from it when units are redeemed by the unit holder. This is known as income adjustment.



A measure for a trend - whether it is the movement of consumer goods prices (consumer price index) or the performance of a securities market. Nowadays, almost everything in the money and capital markets is measured and their performance tracked (since 1986, even the prices of the "Big Mac" have been recorded in 100 countries throughout the world using the "Big Mac index", with the prices being converted into US$ and used to measure the purchasing power of individual currencies). It is therefore necessary to find out which one of the numerous indices available best reflects the selected market or market sector. Incidentally, the most famous "index" in the world, the "Dow Jones Industrial", is not a real index at all, but an average: originally, the prices of 12 American stocks were simply divided by 12. Today, there are thirty stocks and the divisor is much more complicated (depending on capital increases and decreases, new stocks, etc.). Nevertheless, the whole world is now guided by the "Dow Jones Index".
(Based on the brochure published by Erste Bank der oesterreichischen Sparkassen AG: "Was ein Privatanleger über inländische Investmentfonds wissen sollte.")


Initial charge

To cover the costs associated with the issuing of fund units (investment units), the capital investment company may levy a premium on the net asset value. The nature and level of this initial charge must be unambiguously stated in the fund terms and conditions. The initial charge can perceptibly reduce the return on investment, especially with short-term investments.


Inventory value

The sum of all assets within a mutual fund: i.e. the value of all securities, cash balances, money deposits and other entitlements. The inventory value is calculated each working day.


Investment Fund Act

InvFG, the abbreviated form of "Investmentfondsgesetz" (Investment Fund Act), is the term commonly used in place of the "Bundesgesetz über Kapitalanlagefonds" (Federal Capital Investment Fund Act). The InvFG was completely revised in 1993 and adapted to meet the Directives of the European Union (UCITS). More recently, it was considerably extended at the beginning of 1998. It regulates virtually all the finer details of the Austrian investment business, including tax treatment. However, the main concern of the InvFG is to protect the investor, which is why the aspects of security, control and advertising regulations feature prominently.
(Based on the brochure published by Erste Bank der oesterreichischen Sparkassen AG: "Was ein Privatanleger über inländische Investmentfonds wissen sollte.")


Investment grade

The term "investment grade" refers to bonds with good to excellent creditworthiness. Investment grade includes all bonds that have a rating of BBB (Standard & Poor's) or Baa (Moody's) or higher. The rating "AAA" signifies the highest level of creditworthiness.


Investment limit rules

One of the measures which the Investment Fund Act provides to protect investors is the comprehensive formulation of investment rules and associated investment limits, some of which must be specified in more detail in the fund rules. These may be reduced but not increased. The aim of these investment rules and limits is to control the risk that may arise through a concentration of investments. In Austria, for example, only 10% of the fund assets may be held in securities that are not traded on a securities exchange or a recognised securities market of an EEA member state (valuation) or a maximum of 10% in securities of the same issuer (where a maximum of 7.5% of the capital stock of the same public limited company may be acquired). In particular, transactions involving derivatives (options, forward transactions, futures, financial and currency futures contracts and options thereon), the type of such transactions (long or short) and also their purpose (hedging of parts of the fund portfolio) are also subject to strict rules.

Compliance with the investment rules and limits is continuously checked by the fund manager, the auditor of the capital investment company and the bank auditor.
(Based on the brochure published by Erste Bank der oesterreichischen Sparkassen AG: "Was ein Privatanleger über inländische Investmentfonds wissen sollte.")


ISIN (International Securities Identification Number)

The International Securities Identification Number (ISIN) is a 12 letter/digit combination and identifies a security that is traded on the exchange. The structure of the ISIN is described in ISO 6166.
(source: Wikipedia)



The term "emerging markets" is used by financial investors to refer to newly industrialised countries. These countries are undergoing a growth process, accompanied by political and economic change. Compared with "developed markets" – i.e. those of industrialised nations – these markets are exposed to greater fluctuations and political risks.



An issuer is an institution that issues securities or similar certificates on the money or capital markets. These securities are normally issued with the support of a bank consortium. Issuers are often legal entities (e.g. public limited companies) or public-sector entities (e.g. countries, federal states, local communities, etc.).


Issue price

The issue price is the price at which mutual fund units are sold. The issue price comprises the net asset value and the initial charge as defined in the fund rules.


Key data, financial

Key performance indicators are used in financial key data analysis and are intended to cover specific analysis fields. They are usually used to compare companies and sectors over multiple periods. The basic materials are the balance sheet and the profit and loss statement for the periods concerned and the budgeted balance sheet for forecast purposes. To make them more meaningful, the individual figures must be broken down further or other figures may be required for clarification purposes. The usefulness of an analysis using key data increases with the use of benchmarking applications. Since these applications are inherently systematic, they rule out the possibility of any arbitrary inclusion or exclusion of indicators in an analysis. The present systems can be grouped into two categories: logical deductive systems (e.g. du Pont system) and empirical inductive systems (e.g. Beaver).


KIID – Key Investor Information Document

The new Austrian Investment Funds Act (2011) brought in its wake a reorganisation of product information for customers of public funds. A mandatory component of the above is the "Key Investor Information Document" (KIID), which replaces the simplified prospectus and which is above all designed to facilitate an improved comparison of funds.

The KIID must present the key information about the funds in a readily comprehensible and standardised form and be made available to the investor before the latter makes any investment decisions. The form and contents of the KIID are governed by strict specifications. It may not consist of more than two pages and must be revised at least annually.


Long position

Long position indicates the ownership of a security. The price change is reflected 1:1, which means that the owner of a share whose price goes up 10 per cent, makes a gain of exactly 10 per cent. The loss risk in the long position is limited to the capital invested

Min/max performance

Min/max performance is the highest gain in % p.a. and the lowest gain in % p.a. achieved in the yearly relevant period, taking into consideration reinvestment of dividends.

The min/max chart on the fund's fact sheet shows the range of fluctuation of the respective mutual fund within a certain investment period.


Mean time to maturity

The average mean time to maturity of the portfolio is derived from the mean of the terms of the individual fund securities from the valuation date to repayment.


Money market funds

Money market funds are mutual funds that invest in money market paper (e.g. interest-bearing treasury paper, non-interest-bearing treasury paper issued by the Austrian federal government, the railways and the postal service) and liquid securities with very short maturities.


Modified duration

The modified duration indicates the percentage change in the market value in response to a change in yield of one percentage point.
Modified Duration: 3.73
Net asset value: 98.53
Fund return: 5.9 %
Assuming that the return falls to 4.9 %, the net asset value will increase by 3.73 % to 102.21.


Morningstar stars (formerly Standard & Poor´s stars)

In order to provide investors with a simple decision-making aid in the mutual fund jungle, Standard & Poor's (international rating agency) developed the S&P fund star system. Up to five S&P fund stars can be awarded, enabling an immediate independent and objective evaluation of a fund compared with its competitors. Since the merger with rating agency Morningstar, the fund stars are now published by this analyst company. The Morningstar stars provide information not only on the three-year performance, but also on performance consistency compared with mutual funds of competitors in the same asset class. However, the assessment is purely quantitative.


Mutual funds

Mutual funds combine the investment capital of many individual investors to invest it in equities, bonds or other types of securities (e.g. real estate, commodities). From a legal perspective, a mutual fund is a special fund that comprises that are selected according to the risk spreading principle. Mutual funds are divided into units that are co-owned by unit holders and managed by a capital investment company. The strict statutory provisions (e. g. the Austrian Mutual Funds Act) afford investors the highest possible degree of security since the focus is on their protection.


Mutual Funds Act

InvFG, the abbreviated form of "Investmentfondsgesetz" (Mutual Funds Act), is the term commonly used in place of the "Bundesgesetz über Kapitalanlagefonds" (Federal Capital Investment Funds Act). The InvFG was completely revised in 1993 and amended to meet the Directives of the European Union (UCITS), providing more consumer protection and reducing the administrative expenses of capital investment companies. It governs virtually all aspects of the Austrian investment business, including tax treatment. The priority of the InvFG is to protect the investor, which is why the aspects of security, risk management and advertising regulations feature prominently. In comparison to the old, frequently amended InvFG 1993, new features are an option for mergers of funds across national boundaries, simplified licensing of foreign funds and the customer information document (KID), which replaces the simplified prospectus.



Net asset value (NAV)

The net asset value or the accounting par value is the value of a fund unit, which is calculated daily by the custodian bank as follows: the sum of all securities, monies, credits, receivables and other entitlements in a fund portfolio less any liabilities – in short, the inventory value – divided by the number of units issued. All fund asset values are of course valued at current prices and, in the case of bonds and bank deposits, interest is accrued on a daily basis.

An initial charge can be added to the derived value to determine the issue price. In the case of the redemption price, a redemption fee can be deducted from the calculated value. Both are only permitted if they have been provided for in the fund terms and conditions.

This precise and elaborate calculation can ensure equal treatment of all unitholders, whether they have just joined, have an ongoing membership or are leaving.


New shares

New shares are those issued to raise capital for a corporation. New shares are offered first to original shareholders since they are entitled to pre-purchase shares under their subscription rights. If the shareholders do not exercise their subscription rights, the remaining new shares are traded on the stock exchange until they achieve the status of "original shares" (full dividend entitlement).


Nominal value

The exposure amount stated on a security that does not necessarily correspond with its market value. The return on a fixed income security relates to its nominal value. The security is redeemed at its nominal value or a few per cent above this (with a premium) or below it (at a discount).


OeKB (Oesterreichische Kontrollbank)

Special bank that, on the one hand, is concerned with issuing export guarantees and processing export financing and, on the other, with providing information about the Austrian capital market.


Option grant

The irrevocable contract to deduct voluntary capital gains tax (KESt) on old issues. Depending on the bank concerned, this may be granted for an entire securities account or just for one individual security.
(Based on the brochure published by Erste Bank der oesterreichischen Sparkassen AG: "Was ein Privatanleger über inländische Investmentfonds wissen sollte.")



Order to buy or sell securities.


Ordinary income

An expression used in taxation in connection with domestic mutual funds and foreign capital investment funds. As opposed to extraordinary income (capital gains), ordinary income refers to interest and dividends that are channelled into the fund and which are paid out or reinvested less the administrative fees.




Mutual funds usually offer an annual dividend, which must be paid out no later than four months after the end of the fund's accounting year. The size of the dividend is not fixed and is determined each year by the respective capital investment company.


Payout fund

In contrast to a reinvestment fund, a payout fund is a capital investment fund that pays out the income generated (e.g. dividends, coupons) after deduction of management fees. Payouts from the principal are also possible. More detailed information on payouts can be obtained from the relevant legal documents for the fund. The tranche of the fund to be paid out is indicated with (A).



The performance of an investment fund is determined on the basis of the net asset value (NAV). The performance is quantified according to the methodology of the ÖKB (Austrian Control Bank).  The management fee is taken into account in determining the performance. However, the non-recurring initial charge incurred on purchase and other costs that reduce returns – such as individual account and custodian fees – are not included. Past performance is not a reliable indicator of future fund performance.



A portfolio is the composition of an investment fund (or capital investment). A portfolio consists of several individual securities (such as bonds, equities, funds etc.) that are selected by the fund manager on the basis of the fund terms and conditions as well as fund strategy.


Portfolio turnover ratio

The portfolio turnover ratio (PTR) indicates how often the securities in a fund were changed in a year - disregarding fund unit purchases and redemptions. 100% means that all securities in this financial year were changed once.
This figure does not refer to the securities themselves but to the turnover volumes. For example, half of the securities may have remained unchanged while the other half were changed twice. The figure also takes hedges into consideration.

A low figure means that the fund manager has changed little in the securities make-up of his fund during the year. This also means that the fund incurred hardly any charges.
A high figure reveals a lot of activity, active management and, usually, higher costs.


Price gains tax

The price gains tax entered into full effect on 01.04.2012 and forms part of the Austrian capital gains tax (KESt). Since 01.04.2012, Austrian banks have been obliged to deduct price gains tax at a rate of 25%. Only private individuals liable for tax are affected by the new tax in Austria. Non-residents and legal entities such as corporations, limited companies (GesmbH) and foundations are not subject to price gains tax.



The prospectus contains all information required to assess the investment as well as the contractual conditions of the investment fund as approved by the financial market regulator. The prospectus is made available to the investor on request. In contrast, the KID – in Austria in the German language – is made available to the investor well before the offered subscription, in paper form or on a permanent data carrier.



Assessment of the creditworthiness of a corporation or country by specialised rating agencies such as Moody's and Morningstar.
In the case Morningstar, the best possible rating is AAA, which subsequently descends through AA, A, BBB, BB, B, CCC, CC, C to D. A corporation or country with a rating below BB is considered as speculative.


Redemption price

The price at which the capital investment company takes back an investment unit – i.e. the net asset value – usually rounded to whole euros or cents (depending on the fund rules).


Reinvestment fund

All the income generated by a reinvestment fund is "automatically" reinvested into the fund. The investor therefore does not receive regular annual income in the form of a payout (payout fund), but enjoys a share in the increase in the value of the fund's assets.



The return on investment is calculated by comparing the market price (or price obtained) with the purchase price. When calculating the return on investment, payouts and/or dividends must also be taken into account. If taxes and expenses are also included, this is referred to as the net return. This method of determining the return is historically oriented.

The return on a bond is not identical with its nominal rate of interest ("coupon") but depends on the current price and (residual) term. If there are changes in creditworthiness or interest rates, the return on a bond also changes over time. The return as a performance index of a bond is used as an estimate for the future return, but due to the many influencing factors this value is not reliable.


Risk management

A basic principle of modern portfolio management theory and therefore also for domestic mutual funds. By consciously spreading investments across different instruments, markets, currencies, maturities etc. risk is spread among several investment instruments.


Risk type

Risks that are typically not adequately taken into account in the risk classification of the SRRI indicator and are significant for the fund include:

1.         Credit and counterparty risks: Issuer or counterparty default may result in losses for the fund. The credit risk describes the impact of any special changes with respect to the issuer in question liable to affect the price of a security, in addition to general trends in the capital markets. Despite the due diligence in selecting securities, it is not possible to rule out losses as a result of a sharp decline in the value of issuers' assets.

2.                     Counterparty risk signifies the risk of the party to a mutual contract failing to honour all or part of its obligations. This applies to all contracts that are entered into on the fund's account.

3.                     Liquidity risk: The risk that it may not be possible to sell, liquidate or close a position in the fund assets within a sufficiently short period of time and at limited expense, with the result that the fund's ability to fulfil its redemption and payment obligations at all times may be impaired.

4.                     Operational risk: The risk of the fund sustaining loss as a result of shortcomings in internal processes as well as human or system failure at the level of the management company, or arising from external factors as well as legal and documentary risks and risks resulting from the trading, clearing and valuation processes performed for the fund.

5.                     Custody risk: The fund may sustain a loss as a result of errors on the part of the custodian bank that holds the assets.

6.                     Risks from the use of derivatives: The fund uses derivatives not only for hedging purposes but also as an active investment instrument. This exposes the fund to additional risk.



A security is a certificate that certifies a contractual right such as co-ownership of a company (e.g. a share). The prerequisite for exercising an ownership right is the possession of a certificate. Securities that are traded on a stock exchange are also known as commercial paper.


Securities analysis

Analysis, assessment and valuation of securities (equities, bonds, convertible bonds, certificates, etc.) in respect of any possible advantages/disadvantages of a potential investment. Securities analysis therefore entails an examination and assessment of the issuer. Its main purpose is to evaluate all of the information available on the financial position of the issuer. Information is provided by financial analysis. Securities analysis is usually broken down into the following stages:

Analysis (preparation and highlighting of "critical" points that may have a positive or negative effect on an investment);
Prognosis (assessment of future income trends based on the analysis of historical data and the information available on the present position and possible future developments);
Valuation (result of forecast expectations taking into account numerous external price-determining factors, such as the capital market, the state of the economy, etc.).


s Fonds Plan

The s Fonds Plan stands for strategic investments. It makes it possible to immediately and automatically contribute each payment and dividend to a fund (as specified by the investor). This ensures automatic investment in the capital market.



A share is a security that evidences a shareholder's rights acquired through the purchase of a share of the capital stock of a corporation. The shareholder is usually accorded the following rights:
an appropriate share in profits (dividend)
a proportionate share of liquidation proceeds
a voting right at the AGM commensurate with capital share Equities can be listed and traded on the stock exchange.


Sharpe ratio

The Sharpe ratio is used to determine the risk/reward ratio of a fund.  It is calculated by deducting the risk-free income from the annual average return and dividing the result by the average annual volatility. The higher the Sharpe ratio, the better the fund has performed relative to the risk potential of its portfolio.

Immediately comprehensible: five stars are better than one - it couldn't be simpler!


Short position

With a short position, the investor sells (short) a security that is not physically held. As with the long position, the share movement is reflected 1:1 in the security, whereby in contrast to the long position, the loss risk in a short position is unlimited. The investor only profits if the price of the short-sold security falls.



Split is a technical term in the securities business. For securities with a nominal par value, such as equities, a split is achieved by dividing this nominal par value, e.g. a share with a par value of 1,000 can be split to give 10 shares with a par value of 100; for securities with no nominal par value, such as mutual funds, a split is generally achieved by dividing the smallest denomination, e.g. one unit is divided into 10 (or two into three, etc.). The most important thing to note, however, is that the investor can never lose from a split even though the value (market price) of his individual security is less than it was before the split. This is because he now has more securities than previously, the total value of which is the same as before the split. On the other hand, a split makes equities in particular "cheaper", and therefore more attractive to ordinary investors, which usually results in rising market prices.
(Based on the brochure published by Erste Bank der oesterreichischen Sparkassen AG: "Was ein Privatanleger über inländische Investmentfonds wissen sollte.")


SRRI indicator

The "SRRI indicator" is used to allocate investment funds to one of three different risk categories (low risk, medium risk, above-average risk).  SRRI stands for "Synthetic Risk and Reward Indicator"  and is calculated in accordance with the rules issued by the Committee of European Securities Regulators.  This indicator forms an integral part of the Key Investor Document (KID) and states the fluctuation of the fund unit price on a scale from 1 to 7.

Investment funds with a low SRRI typically exhibit less fluctuation and, hence, a lower probability of loss.  Funds with a high SRRI experience greater fluctuation as well as a greater risk of loss.

The fund category is not a reliable guide to future performance and may change over time.

A Category 1 rating should not be construed as indicating that the investment is free of any risk. Nor does the rating constitute a target or guarantee. The risk indicator (SSRI indicator) is stated separately for each of our funds.

SRRI indicator Risk categories Volatility intervals

1 Low risk  0%  to 0.5%
2  0.5%  to 2.0%
3 2.0%  to 5.0%

4  Medium risk 5.0%  to 10.0%

5  Above-average risk  10.0%  to 15.0%
6 15.0%  to 25.0%
7 At least  25.0%

How the SRRI indicator is calculated

Volatility (i.e. the degree of fluctuation in the price) is calculated on the basis of the weekly data (returns) for the investment fund over the last five years.  If the history of the investment fund is too short, the performance of a comparable asset or alternative methods stipulated by law can be used for calculating the SRRI.  In the case of a dividend payout, these are also taken into account.  Volatility as well as the SRRI as a risk indicator do not draw any distinction in the direction of the fluctuations but merely express its magnitude.  3.0% volatility, for example, means that the value of the investment fund has fluctuated by an annualised average of plus/minus 3.0% over the past five years.

See also Risk type.


Technical indicators

Technical indicators are instruments for the analysis of securities that are used for determining trends or determining the "optimum" buying or selling point.


Time to maturity

The time to maturity is the amount of time remaining before receivables reach their maturity or redemption date.


Total expense ratio (TER)

The total expense ratio (TER) indicates which costs – as a percentage of the fund assets – were incurred in the fund over the course of the previous financial year. In particular, these costs include the management fee, custodian fee, consultation fees, auditing costs and any other expenses. The lower the figure, the lower the costs incurred by the fund, and the less pronounced the effect on performance.



Short-term purchases and sales of securities with the aim of profiting from short-term volatility.


Treasury security

Depending on the country concerned, treasury notes may be issued by the government, a nationalised company or other public institutions and are short to mid-term debentures. Interest-bearing treasury notes are, like fixed-interest bonds, provided with coupons and have a maturity of three months to several years. Non-interest-bearing treasury notes are issued without an interest coupon and therefore do not offer regular interest payments. The interest on the capital is paid at the time of redemption. Banks like to invest in treasury notes because they represent first-class money market instruments.


Trustee security status

The trustee security status of investments is defined by the legislator, the Republic of Austria. Investments with trustee security status are specially secure investments in which trust money (financial assets that form part of the assets of a minor under guardianship) may be invested.



Unit categories
The following code designations are used on our pages to distinguish the individual unit categories – designated as 'type' in the Fact Sheet:
Code designation A. – units with income paid out
Code designation T. – units with reinvestment
Code designation C. – Capitalplan, where a distinction is made between A.C. (Capitalplan with income paid out) and T.C. (Capitalplan with reinvestment).
Code designation VT. – units with full reinvestment


Unit certificate

The certificate that certifies equity interest in a company, including the equity interest of an investment security in a mutual fund.


Unit value
The unit value of a mutual fund represents the value of the fund assets divided by the number of fund units issued. The unit value of mutual funds is determined and published each working day by the custodian bank.


Value date

The date on which a transfer is booked to or from an account. The interest on a credit or debit balance on an account starts from the value date.



The term "volatility" is used in statistics to signify fluctuations in "time series." In relation to securities, time series are the historical price performance of securities or investment funds. Volatility is defined as the standard deviation of the change of returns and is frequently used as a measure of risk.

Withdrawal plan

With a withdrawal plan, the investor receives regular payments from certain investment assets. The amount to be disbursed is financed by the sale of the corresponding number of units. Investors can be paid their capital plus income over a fixed period (withdrawal plan with capital depletion) or they are paid only the investment income for an unlimited time (withdrawal plan with capital preservation). Withdrawal plans are particularly suitable for supplementary pension provision. Contributions, additional withdrawals or termination of the investment account are possible at any time.



The securities code number (WKN, also abbreviated as WPKN or WPK) is a combination of six digits and letters for identifying securities.
(source: Wikipedia)



The yield is the current interest accrued daily by the fund assets. It takes into account all coupons, prices, maturities and payouts.
The yield is usually calculate with the cash flow method. The "weighted mean" calculation method is used for the following funds: all funds of funds with a bond portion and all funds containing mortgage bonds.