Glossary


Paying agent	The agent or bank which is explicitly appointed by the issuer and which is responsible for all ongoing transactions that arise for the owner of the securities concerned, such as the collection of dividends and coupons as they fall due.
Payout ratio	Expresses the ratio of cash flow to distributed income, which indicates how much of the funds earned during a business year has actually been distributed.
Performance	Total return of an investment expressed as a percentage of its market value at the beginning of the period measured. Performance is composed of price changes plus reinvested income (i.e. dividend distributions in the case of shares and coupon payments in the case of bonds). Performance is always reported in the currency of the fund. For distribution funds, the performance calculation is predicated on a reinvestment of distribution payments. The overall or absolute performance over 5 years (OP5) includes the compound interest effect. It can be computed using the following multiplication of the last 5 yearly performances (YP1 to YP5): OP5 = (YP1+1) x (YP2+1) x (YP3+1) x (YP4+1) x (YP5+1) – 1 (all performance figures in %). The annualised or average annual performance (AP5) is represented as a geometric rather than arithmetic average and can be computed with the following formula: AP5 = [1+OP5] 1 – 5 –1. For example, for an overall performance of 20% over 5 years, the annualised performance is 3.71%.
Performance	Percentage change in the value of an investment, plus any accumulated income, and corrected for inflows and outflows of funds during a defined period of time.
Performance fee	For non-classical investment funds such as hedge funds, the investor often has to pay, in addition to the conventional management fee, a supplementary performance fee in the form of a percentage (e.g. 20%) of the fund’s annual increase in value. A high watermark is usually set for this amount.
Perpetual bonds	Bonds with no maturity date. Perpetual bonds make regular interest payments, but never redeem the principal amount; to get back the capital invested in such bonds, investors must sell them on an exchange.
Portfolio	In the investment fund business, the composition of a fund’s assets.
Portfolio managers	Investment specialists who manage the assets of an investment fund. They decide which securities to buy and sell within the defined investment principles. Also called asset managers.
Portfolio theory	The relationship between risk and return is a key tenet of modern portfolio theory. In principle, a higher return can only be "purchased" for a higher risk. However, the relationship between risk and return may be optimised via a broad spread of investments (diversification). By doing so, a higher return can be generated with the same level of risk, and a lower return can be achieved with a lower level of risk.
Premium	A figure, usually expressed as a percentage, to indicate, for example, how high the issue price of a security lies over a specific reference price, usually the nominal value. A premium can also mean the amount (often also expressed as a percentage) a buyer is willing to pay for a right (option price, option, subscription right) above the book value. For derivative instruments used for hedging purposes (put options), it is the price that the option buyer pays for the right to sell the underlying security. In the case of the put options used for the Limited Risk Funds, the premium rises as market volatility increases.
Premium	The premium is the percentage difference between the current stock exchange price and the net asset value adjusted for the distribution plus the last distribution (proportionate).
Price differential	See premium.
Private equity	A start-up company or a young company already in business requires capital, which it seeks from investors and private equity funds. Since these companies are usually ones that are not yet listed on the stock exchange, so-called private markets that receive investment are referred to here.
Prospectus/ fund regulations	The rights and obligations of the contracting parties are defined in the prospectus and fund regulations. In particular, these documents contain guidelines governing investment policy, the use of earnings and the costs the fund and/or the investor have to bear.
Put options	See options.

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