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T

Technical analysis

The basic premise of technical analysis is that prices move in trends that persist and this characteristic can be used to achieve superior returns. Technical analysis often uses computer programmes to examine market data such as prices and volume of trading to make an estimate of future price trends and an investment decision.

Unlike fundamental analysis, technical analysis is not concerned with the financial position of a company.

Total return

The total percentage return of an investment over a specified period, calculated by expressing the difference between the investment’s initial price and final price as a percentage of the initial price.

Trading Adviser Report (TAR)

A performance report produced by an investment manager that is made available, usually on a monthly basis, to clients with holdings in a particular product. The report details the change in net asset value of a product and explains performance in light of market conditions as well as any relevant portfolio changes and developments.

Track record

The actual performance of an investment since inception, usually represented by audited monthly returns, net of fees.

Trend

The general direction of the market, such as a relatively persistent upward or downward price movement over a period, sometimes represented by the mean of price changes in that period.

Top-down

An investment strategy whereby an investor finds the best sectors to invest in and then searches for the best companies within those sectors or industries. Opposite of Bottom-up.

U

UCITS

UCITS, or 'Undertakings for Collective Investment in Transferable Securities', can refer to funds which comply with a set of European directives which aim to establish a single market for financial services within the European Union. The funds are designed to offer investors low minimum investments, liquidity, transparency and onshore regulation.

Unit / new unit

A generic term used to describe the 'instrument' (share, bond, unit, note) which is issued by a product. Investors subscribe to or invest in a product by buying units and redeem their holding by selling units at the prevailing net asset value per unit, as detailed in the relevant legal document.

V

Value-at-risk (VAR)

A widely used risk measurement technique that calculates (at a pre-specified level of probability) the loss that would be experienced in a day or some other pre-specified time horizon in the event of an increase in volatility or an adverse correlated move in market prices, assets or the investments making up a portfolio. At Man, the proprietary measure of VAR is also known as Total Portfolio Risk (TPR).

Volatility

Volatility is the measurement of risk used most often in the investment industry. It measures how variable price changes are in relation to the price trend for an investment. It is important to note that volatility says nothing about the direction of the trend itself. Expressed in slightly more technical terms, volatility is a measure of how much a set of returns for an investment deviates from the price trend or mean of that investment. It is usually calculated as 'standard deviation' [see Standard deviation] and expressed as 'annualised volatility' – the standard deviation on a yearly basis.

Z

Zero coupon bond

A bond bought at a discount from its face value which offers the entire payment at the time of maturity. Unlike other bonds, it does not make periodic interest payments, hence the name ‘zero coupon bond’.
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