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Japanese economic policy program named after Shinzo Abe, the country’s Prime Minister since 2012. It consists of three “pillars”: 

  1. massive expansion of the money supply by the central bank to stop deflation, 
  2. limited fiscal stimulus programs, and 
  3. structural reforms.

Absolute Return

This is an investment strategy that aims to generate a positive return in absolute terms every year, regardless of any benchmark. The success of the strategy is measured solely by the performance actually achieved and by comparison with a given index (relative return).

Accrued interest

Interest accrued on a fixed income security since the last coupon date.


An American depositary receipt is the name given to a share certificate or depositary receipt denominated in US dollars and issued by US by a depositary bank in the United States that represents a specific number of deposited shares in a foreign company and can be traded like shares in their place on the US capital market.

Advisory Mandate

Contractual arrangement, whereby a fund’s investment company (Kapitalanlagegesellschaft, KAG) transfers advisory functions to an outside fund manager or asset manager, which in turn makes investment recommendations to the investment company and then implements them upon approval.


Alternative Investment Fund as defined by the German Capital Investment Code (Kapitalanlagegesetzbuch – KAGB)


Distribution of available assets of a fund or wealth over different asset classes, countries, industry sectors etc.

Allocation of Economic Risk

Provides information on the risks to which the fund is actually exposed. Expressed in %, based on fund volume. In particular, the Leverage effect comes into play through the use of derivate financial instruments.


Describes the degree to which a product outperforms a comparable product or index.

Alpha Potential

This indicator describes the potential of a product to outperform (Alpha) a comparable product or index.

Alternative Investments

The generic term for investment classes and strategies, which - in contrast to conventional financial investments such as equities or bonds – are aimed at achieving profits on every market movement.

Analyst Recommendations

Number of analysts recommending buy (positive), hold (neutral), or sell (negative) with respect to a given stock. The number of recommendations made by all analysts, e.g. buy, is expressed as a percentage.

Anchoring Heuristic

Term from the study of decision making that describes the human tendency to rely on one trait or piece of information when making decisions. While new information is taken into account, people often excessively rely on the initial information when making a decision.


Extrapolated to a period of one year.

Asset Class

An Asset Class describes the division of capital markets into various investment segments (e.g., stocks, bonds, real estate).

Asset Deal

A type of transaction in which the buyer purchases specific assets from the target company.
Real estate related:
Direct acquisition of a single property meaning that the item for sale is solely the property itself, not the legal entity.

Asset Management Fund

Mixed investment fund that is suitable for managing all of a customer’s securities holdings, in contrast to a fund consisting purely of stocks or bonds. For Berenberg Bank, the focus of this type of fund is a balance between risk and return.

Average Return (Mean)

This indicator describes the simple arithmetic mean of a return time series. It is calculated by adding the individual returns for the periods under consideration and dividing the sum by the number of periods. The Average Return does not take into account the compounding effect of investment returns.

Backfill Bias

Distortion caused by retroactive re-calculation (e.g. of an index)

Backtesting/ Simulation

A mathematical process by which the past performance of an investment strategy can be measured.

Balance sheet total

The balance sheet total of a given enterprise is calculated by aggregating all the items on either the assets side or the liabilities side of the balance sheet. The total on the assets side must always be the same as the total on the liabilities side. The balance sheet total of an enterprise is a figure used to make comparisons with other companies in the same industry, although the informative value is limited. The balance sheet total is also used to divide enterprises into size classes.

Balanced Portfolio

An investment strategy using a portfolio combination of stocks and bonds.

Basis Point(s)

Unit of rate calculation, where 100 Basis Points equal one per-centage point.


Risks that can negatively influence the value of the company and thus individual shares.

Bear market

Bear marketBear market refers to a longer period of sharply declining market prices.


Comparative standard or method of evaluation for measuring a fund’s return. The objective of an actively managed fund is to beat the Benchmark index. Passively managed (index) funds are expected to perform in a manner roughly equivalent to their Benchmark.

Benchmark-Independent Mandates / Funds

Securities that are not tied to a Benchmark index but rather, for example, seek to achieve a positive return irrespective of the direction of capital market (total return).

Best Advice / Best Price

Describes the principle that the fund managers use all available information in order to guarantee that the investor receives the best price when buying and selling securities. This includes, in particular, the selection of the trading partner or the stock market.

Best Execution

Describes the obligation of a Broker or bank to execute customer orders at the Best Price currently available on the market in order to guarantee that the offered price corresponds to the optimal mix of price movement, speed, and likelihood of execution.


Also called systemic risk. Beta is a financial indicator showing the volatility of a product in comparison to a Benchmark index. Beta measures how an individual security adds to a portfolio’s overall risk.

Black-Litterman model

The Black-Litterman model is a mathematical model for asset allocation. Alongside returns based on market equilibrium, it incorporates expected returns in order to calculate revised returns for the portfolio composition and valuation.

Blind-pool private equity fund

Private equity fund for which the investor does not know at the time of purchase which project or target funds the investment is in. The selection criteria applied by the fund management which are only described.


Bank of England – British central bank.


Bank of Japan – Japanese central bank.

Bond Surrogates

Investment forms equivalent to a secure bond in terms of security and pay-out profile.

Bonus certificate

Bonus certificates are bearer bonds whose repayment is dependent on the performance of a specific underlying. Bonus certificates protect against price losses of the underlying up to a certain point, the hedging level.  Provided that the price of the underlying never falls below the hedging level (also called barrier) during the term of the bonus certificate, the bearer of the bonus certificate will receive at least a payment at the level of the bonus amount at maturity.  The two parameters hedging level and bonus amount have a decisive influence on the risk/reward profile of the certificate. The hedging level, which is always lower than the price of the underlying upon issuance, defines the quality of the partial hedging provided by the bonus certificate. On the other hand, the bonus amount defines the reward from performance which is superior to any direct investment in the underlying.  See also reverse bonus certificate

Book Value

Book Value is the portion of asset value shown on the balance sheet. Book Value constitutes the company’s Share Capital plus retained earnings.



A type of oil sourced from the North Sea.


The abbreviation BRIC is used to group together four countries - Brazil, Russia, India and China - using their starting letters.

Budget surplus/deficit

The budget surplus/deficit is calculated by setting all the revenues of a public authority against all of its expenditures. If revenues exceed expenditures, a budget surplus arises. If, on the other hand, expenditures exceed revenues, there is a budget deficit. The structural surplus/deficit is calculated by adjusting the budget surplus/deficit for additional or reduced receipts due to the economic cycle. This means that the structural surplus/deficit provides information on the budgetary situation given normal economic output. If the state’s interest payments are eliminated from the budget surplus/deficit, the resulting figure is known as the primary surplus/deficit.


Factors that can positively influence the value of the company and thus individual shares.

Bull market

Bull market usually refers to a medium-range or longer period of sustainably rising market prices. However, even a shorter period of positive price movements is often called a bull market.

Buy and hold strategy

The buy and hold strategy is a passive investment strategy that is applied by buying investment securities and holding them for a long period of time. Consequently, the buy and hold strategy is mostly independent of any fluctuations within the market. Less frequent trading minimizes trading costs.
Real estate related:
Specifically in terms of real estate the buy and hold strategy is referring to a long term investment meaning more than about ten years.

Buy Option

See call.


Defined maximum amount up to which an investor can profit from an increase in the price of the underlying instrument.

Capital expenditure

Capital expenditure is the name given to the use (investment) of financial resources to acquire non-current assets.

Capital Investment Act (German: KAGB)

The Capital Investment Act “Kapitalanlagegesetzbuch” represents the German legal framework concerning investment funds since July 2013. The KAGB meets the new regulatory guidelines of the European AIFM (Alternative Investment Fund Managers Directive) legislation and replaces the former German Investment Act (InvG).

Capital ratio

Ratio of eligible equity to the assessment base defined in the Austrian Banking Act (Bundesgesetz über das Bankwesen - BWG): must be at least 8 %.

Capped bonus certificate

Capped bonus certificates are bearer bonds whose repayment depends on the performance of a specific underlying. 

With capped bonus certificates the maximum gain is limited from the outset. Investors participate in price gains in the underlying only up to a clearly defined ceiling which is called “cap”. But this cap has other advantages for the investor: By waiving an unlimited return, a capped bonus certificate can optimize either the sideways return or offer a greater partial hedge. 

Apart from that capped bonus certificates function in exactly the same way as the conventional version (see bonus certificate). If the underlying never falls below the hedging level throughout the entire term, the investor receives at least the bonus amount at maturity. If the underlying rises to above the bonus level, the investor receives a higher payment which is based on the price of the underlying but amounts to the cap at the maximum. 


Freight company (ship operator).

Carry Trades

(Currency) Carry Trades describe an investment strategy that exploits rate differences in various currency zones. With Carry Trades, investors borrow money in a low-interest currency, like the yen, and invest it in currencies with a higher interest rate, such as the euro.

Cash Flow

Economic measurement that shows the net flow of liquid assets from a company’s revenue-generating activities.

Cash Flow Per Share (CFPS)

Cash Flow (CF) has to do with financial resources available to the company for investments and repayment of liabilities. Since Cash Flow is defined in a number of ways, the term as used here has less to do with a precise definition of CF but rather is an aggregate of various definitions.

Cash Flow Return

Cash Flow Return on Investment (CFROI) is an indicator used to evaluate companies. It is calculated as the prior financial return for a single period.

Cash Flow RoEV

Cash Flow Return on Enterprise Value (CFRoEV) is an indicator of a previous financial return for a single period.

Cat bonds

Cat bonds, also known as catastrophe bonds or act-of-God bonds, are fixed-yield securities issued by insurance companies or reinsurers to hedge against extreme risks. (The issuer transfers the risk resulting from certain precisely defined natural disasters to the capital market.) In this way the financial loss that the issuer incurs from such disasters (perils) can be compensated. They normally carry a substantial interest premium over the 3-month money-market rate. In return, the investor assumes the risk of a (partial) loss of the principal in the event of a major natural disaster.


Includes a number of structured financial products, such as bonus or discount certificates. These are mostly made up of a combination of an equity or bond with an option. Certificates are bonds, which pose the risk of the issuer becoming insolvent.

Closed-End Funds

Funds that are closed after launch.

Co-investments in private equity investment

Minority equity investment in a company, for which equity management is handled by a main investor.


Collateral is the term used for assets specifically set aside or pledged by a debtor to secure a loan or a credit. These assets can be realised by the creditor in the event of the debtor defaulting.

Commodities Futures

Commodities Futures are standardized Futures contracts for a specific commodity. Futures obligate the buyer to acquire the Underlying on a specified date. The seller of a Future is obligated to deliver the corresponding Underlying. This is solely contracts for difference trading. The Underlying is not actually purchased. Rather, it is merely necessary to have collateral (Margin) in order to be able to cover any losses from the Futures transaction.

Compound (Geometric) Average Return

In contrast to the simple Average Return, the Geometric Return takes into account the effect of compound interest. This assumes that realized gains are reinvested in the instrument under consideration.

Conditional Value at Risk (CVaR)

Alternative risk measure to the Value at Risk (VaR) that quantifies the expected value of an interval of maximum losses exceeding the extreme case (if the VaR is exceeded) for a specific time horizon. Seen from an economic perspective, it serves to determine the capital requirement in order to compensate an extreme loss.

Consensus Price Target

Average of all price targets communicated by analysts to a data service.

Consensus Recommendation

The average of all analyst Ratings available to a data service. The consensus can be formed from the following Ratings: Strong buy, buy, outperform, add, accumulate, overweight, market weight, neutral, underperform, reduce, sell, underweight, strong sell. The data service converts the Ratings supplied by Brokers into a standardized scale, typically based on five points (1 = Strong Buy, 2 = Buy, 3 = Hold, 4 = Underperform, 5 = Sell). The average is then calculated from these numerical Ratings.

Convergence potential

The potential of a national economy to be able to permanently meet the EU convergence criteria defined in the Maastricht Treaty. The criteria prior to entry comprise: stable inflation rates, stable government finances, stable exchange rates and stable long-term interest rates.

Convertible bond

A convertible bond is an interest-bearing security issued by a company, and usually carrying a nominal interest rate, that gives the holder the right to convert the bond, within a conversion period specified in advance, into stock of the issuing company at a predetermined ratio. In return, the nominal interest rate is generally below the rate for a conventional bond from the same company.


Indicator in the bond area. A derivation of Duration, it describes how the bond price adjusts to changes in interest rates.

Corporate governance

The principles of responsible corporate management and control are discussed under the umbrella of corporate governance. The purpose of good corporate governance is to secure a company’s competitiveness and permanently increase its value. The discussions concentrate on the management structure of listed joint stock companies, because the distance between the company management and the shareholders is regularly relatively large in such cases on account of the broad distribution of shares.


The term comes from regression analysis and describes the strength of the relationship between a dependent and an independent variable. Investments or strategies show a positive correlation if earnings move similarly in comparable market environments. If the correlation of stock A to stock B is 0.5 (-0.5), then A will rise (fall) 5 % of B rises 10 %.


Interest rate set on the issue of fixed-rate securities, entitling the holder to periodic payments.


Ongoing Research by financial analysts regarding an Issuer and its financial instruments.

Covered Bonds

Covered bonds provide double protection for investors by means of liability on the part of the financial institution together with coverage with a special pool of collateral. They consist for the most part of top-rated mortgages or public-sector bonds for which the investors are preferential creditors. Pfandbriefs are an important form of covered bonds.

Covered Call (Writing)

This term describes an option strategy, by which calls (purchase options) are sold on existing securities‘ positions. The investor receives a writing premium for the sale of the options, which can serve both as additional income as well as limited risk cover. In the event of the security being priced higher than the agreed level on the option’s maturity date, the writer is obliged to deliver the security on demand.

Credit Default Swap

A credit default swap is a financial contract concluded between two contractual parties, under which default risks are traded. One party, the so-called protection seller, guarantees payment of an insurance amount, if the bond issuer on which the underlying contract is based (also referred to as reference obligor) defaults. The protection buyer on the other hand has to pay the protection seller a premium for this insurance.

Credit Spread

Risk premium, calculated as difference in return between government bonds and corporate bonds with the same term.

Creditworthiness Risk / Issuer Risk

Risk that the creditworthiness of a securities Issuer may worsen significantly, ending in bankruptcy. A worsening of creditworthiness clearly has a (negative) influence on the valuation of securities.


Inclusion of a second, confirmed price from an agent in order to make a better calculation of the fair price of OTC Options.

Cumulative advance/decline line

This technical indicator is used to measure the breadth of an advance or decline in a stock market or stock index. The indicator is determined by calculating the difference between the number of shares advancing and the number of shares declining on a specific day and adding the result to the last cumulative total. Ideally, the cumulative total number of advancing shares should rise as the stock index or stock market rises. The upward movement in the stock index or stock market is then accompanied by an ever larger number of advancing shares. Thus the upward movement is confirmed by the cumulative advance/decline line. If, however, an upward movement in a stock index or stock market is accompanied by a declining cumulative advance/decline line, this may be an indicator of an imminent trend reversal (declining prices); as the upward movement is supported by ever fewer advancing shares, the advance in the market is not broadly supported.

Currency Futures Contracts (FX Forwards)

Describes the buying or selling of foreign currencies in the future.

Current ratio

The current ratio is calculated by dividing current assets by current liabilities. This ratio is an indicator of an enterprise’s ability to meet its short-term debt obligations. The higher the ratio, the more liquid the enterprise is.

DAX 30

Stock index introduced in 1988 for the 30 largest German companies based on Market Capitalization and trading volume.


Factor that causes an investment to break down.


Funds procured by way of a loan to finance the purchase of property or other asset.

Delta1 Certificate

A certificate showing participation in the rate movements of certain securities or securities-like products (Underlyings). From a legal standpoint, certificates are bonds. In contrast to classic bonds, however, certificates do not bear fixed interest. Due to their legal nature as bonds, certificates carry the risk of total loss of invested capital in the event the Issuer becomes insolvent. The delta shows the intensity of the certificate’s rate movements in comparison to the Underlying. The value fluctuates between 0 and 1. For example, a value of 0.75 means that the certificate changes by EUR 0.75 when the Underlying changes by EUR 1.00. With Delta 1, the investor participates on a 1:1 basis in the performance of the Underlying.

Derivatives (Stock / Bond Derivatives)

Describes a class of securities derived from traditional investment products, such as stocks or bonds, whose value is dependent on the movement of the Underlying. These involve such Underlying instruments as Options or Futures contracts.

Deviating loss risk

Simplified term for conditional value-at-risk. Should the modified value-at-risk (mVaR) be exceeded, the modified conditional value-at-risk can be expected in the long-term average. This figure shows what deviation can be expected in the event of the extreme case arising, meaning if the modified value-at-risk (mVaR) is exceeded.


Amount deducted from the net loan proceeds, but which has to be repaid at the nominal value (100%); reduces the interest payable on the loan.

Discount certificate

A discount certificate is a bearer bond with a set period documenting the right of the investor to participate in the price increases of an equity or equity index (underlying) up to a set cap. In return, the certificate is traded at a risk-reducing discount against the share price or index level. Discount certificates do not document a claim to interest or dividend payments. In the case of a deep-discount certificate, the discount is larger, but the profit participation is far more restricted.

Discount Certificate / Deep-Discount Certificate

Describes a lower-risk investment in a stock. The investor acquires a stock at a discounted rate in exchange for foregoing participation in rate gains above a certain rate level. With a deep-discount certificate, the risk-lowering discount is greater, but the limit on gain participation starts much earlier.

Discount structure

A discount structure reflects the disbursement profile of a discount certificate using a combination of derivatives (options and futures) on the underlying. A discount structure comprising exchange-traded derivatives is not exposed to issuer risk.


Acting at one’s own discretion.


In investment terminology diversification is understood to be the distribution of total assets in various investment classes and/or various issuers of securities. In both cases the investor aims to spread risk for his total portfolio by means of diversification. Risk can be reduced by a combination of securities with low correlation. With a correlation less than one the total portfolio contains a smaller risk than treating the securities in question individually.

Dividend continuity

An equity share distinguishes itself by dividend continuity if it has paid stable or increasing dividends to its shareholders over a longer period of time (for instance several years).

Dividend payout (by closed-ended funds)

Dividends paid to the limited partners from the cash flows of a fund company with the legal form of a limited commercial partnership (Kommanditgesellschaft); may be more or less than the commercial profit of the fund company. Where the commercial profit is less than the dividend payout, the payout represents a repayment of the contribution. In this scenario, the liability may be revived.

Dividend Per Share (DPS)

DPS = Dividend payment/number of outstanding shares.

Dividend Yield

Dividend Yield = Dividend Per Share/price per share


Annual distribution of a portion of earnings that a publicly traded company makes to its shareholders.

Dow Jones Industrial Average (Dow Jones)

The most famous equities barometer worldwide, whose price is calculated by simple division of the aggregate prices of the individual Dow Jones equities by the number of companies included.

Downside Deviation/ Downside Risk

Downside Deviation means deviation in performance downward from the Mean value.


Drawdown measures an investment’s loss from its all-time high.


A mathematical financial indicator showing the average remaining term or average duration of capital commitment for a fixed-income security. Duration is influenced by both the Coupon denomination and the rate of the security.


Estimate. Years for which analyst estimates are available.

Earning Yield

Inverse of the P/E ratio.

Earnings Growth

Growth in Earnings.

Earnings Per Share (EPS)

EPS = earnings/number of outstanding shares.

Earnings Per Share Growth

Percentage changes in Earnings Per Share versus prior year.

Earnings Per Share Revisions (3 months)

Percentage change in analysts’ estimates of Earnings Per Share for the previous three months.


Earnings before interest and taxes.


Earnings before interest and tax.


Earnings before interest, taxes, depreciation, and amortization.


European Central Bank.

Efficiency line

All possibilities for structuring a portfolio that can be described as efficient, taking account of the defined investment restrictions, are found on the efficiency line. A portfolio is deemed efficient when no portfolio exists with a higher return for a given risk or no portfolio exists with a lower risk for the same return.

Efficiency Ratio

These ratios can be used to record and describe the economic efficiency of the assets employed (efficiency ratio) and the quality of the business processes (effectiveness ratio).

Emerging markets

These are aspiring financial markets in countries with high to very high economic growth which also enjoy lower wages and often more favourable demographics than industrialised nations.

Enterprise Value (EV)

Market Capitalization plus Net Debt (or minus net cash and cash equivalents).


Equity, as opposed to debt capital, represents money invested by the company owner to finance this enterprise or which accrues to the company as profit. 

Equity capital

Difference between a company’s assets and liabilities; in the case of closed-ended funds with the legal form of a limited commercial partnership under German law (Kommanditgesellschaft), this consists of the limited liability capital, reserves, profit (loss) brought forward and undisclosed reserve.

ETC - Exchange Traded Commodities

Special form of certificates (bonds of an issuer) which facilitate investments in the complex investment class of commodities because investors can participate in the performance of commodities without being required to purchase futures contracts or physically purchasing commodities. ETCs are traded on the stock exchange, are openly structured, inexpensive and have an unlimited term.

ETN - Exchange Traded Notes

Securities traded in the form of a bond on the stock exchange which replicate a reference index, for example in currencies, commodities or volatility, and develop in line with the index. They are passive investment products and are subject to an issuer’s risk.  

EUREX (European Exchange)

One of the world’s largest Futures exchanges for financial Derivatives, located in Zurich.

Euribor (Euro Interbank Offered Rate)

Family of euro-denominated interbank reference rates for whole-sale money markets, differentiated according to term (from one week to 12 months).

Euribor + x Basis Points

Commonly used Benchmark for funds with fixed-income securities or funds with an Absolute Return investment strategy. The fund is expected to exceed Euribor as a Benchmark index by at least x Basis Points.

Euro Bund Future

In Futures transactions, a fictitious German government bond with a remaining term of between 8.5 and 10.5 years and a Coupon rate of 6%. The countervalue of the contract is € 100,000.00


Stock index consisting of the 50 largest listed companies in terms of market capitalization (based on free float) in the eurozone.

European Financial Stability Facility (EFSF)

Special purpose entity set up to extend aid packages including loans to highly indebted countries in the euro area in return for conditions under an EU/IMF-supervised programme. The EFSF’s shareholders are all euro-area countries, which provide proportionate guarantees in line with the ECB capital key.

European Stability Mechanism (ESM)

The ESM is the successor to the provisional eurozone bailout fund, the EFSF, which it will permanently replace as of 2013 with a view to securing the stability of the single currency. Under certain circumstances (such as the adoption of austerity or reform plans), the ESM can make financial assistance (such as loans) available to eurozone countries.


Evaluation indicators showing the relationship of Enterprise Value to EBITDA and EBIT.

Exchange-Traded Fund (ETF)

Usually an index fund in the form of investment fund traded on stock exchanges and for the most part passively managed.

Expected return

The expected return is an estimate of non-inflation-adjusted earnings achieved each year by an asset class or a combination of various assets classes. The estimates are made using approaches like the arithmetic and exponentially gliding average historic returns for equivalent periods.


Exposure is a term commonly used in the finance industry to describe a commitment or risk caused by market fluctuations. Examples include market and equity exposure as well as interest and currency exposure. Equity exposure, for instance, describes the extent to which the portfolio is invested in a given market or industry. The portfolio is thus exposed to the fluctuations in this market and can participate in its price gains and losses. 


In variance analysis, the F-test is a statistical method used to determine whether two random samples from different, normally distributed datasets vary greatly with regard to their variance. This makes it possible to set up comparisons of the extent to which the variances, and hence also the standard deviation, deviate from each other in order for instance to make volatilities comparable. A further area of application is the comparison of the return variances between two groups, allowing the deviation of the returns from the expected value to be compared.


Foreign Direct Investments.


Federal Reserve – the U.S. central bank.

FEU - Forty Foot Equivalent Unit

Unit of measurement for the cargo capacity of container ships. Maximum loading capacity of 40 foot standard container (L/W/H: 40 X 8 X ca. 8 feet; 12.2 X 2.44 X 2.56 meters).

Fiscal Cliff

Some time ago, tax hikes and spending cuts totalling around $610 billion were agreed in the United States to take effect at the start of 2013 with a view to reducing the public deficit. This corresponds to around 4% of US gross domestic product (GDP). Such a move would, however, entail such a huge loss of demand that the American economy might well “fall off the edge of a cliff”.

Fixed Management Fee

Fixed portion of the management fee calculated independently of performance.

Forward Deal

A property-related forward deal involving an immediate contract of sale and a later contract transferring ownership.

Free Float

The shares of a publicly traded company that are freely available to the public.

Futures, Forwards

Binding contracts between two parties for future or forward transactions.  Agreement is made as to subject, volume, and price. Delivery takes place at a pre-determined future date.


Name of the ten leading industrial nations. The founding members are the USA, Canada, Great Britian, France, Germany, Italy, Belgium, the Netherlands, Sweden and Japan. Switzerland is a member too.


Gross domestic product.


A global depositary receipt (GDR) is a global form of certificate that represents ownership of shares. A GDR always relates to an underlying share and reflects a proportion of precisely such shares or a group of such shares.

GmbH & Co KG

Variant of the limited commercial partnership (Kommanditgesellschaft - KG) governed by the German Commercial Code (HGB).

Gold Bullion LBM U$/Troy Ounce

This index shows the performance of gold prices over time per troy ounce. The troy ounce is a weight measure for precious metals, which is still used in the Anglo-American zone. It is named for the French city of Troyes. The word comes from the Latin uncia, meaning 1/12, and it represents 1/12 of a troy pound, or exactly 31.1034768 grams.

Gold Silver Price Ratio

Price of one ounce of gold relative to the price of one ounce of silver. The higher (lower) the gold silver price ratio is, the smaller (larger) the value of one ounce of silver is relative to the value of one ounce of gold.

Great Rotation

The term great rotation is used to describe major shifts in investments by market participants from one asset class to another. One good example is the move from bonds into equities in response to low interest rates.

Greatest loss

Simplified term for maximum drawdown. The maximum drawdown is a percentage that shows the greatest historical loss of value of an investment fund, benchmark index or portfolio. The ratio serves merely as an indicator for the theoretical potential loss. The possible total loss of the capital employed cannot, however, be excluded.

Growth at a reasonable price

This stock selection strategy combines the methodologies for selecting growth stocks and value stocks. Investments are made in stocks that demonstrate above-average earnings growth but are not overpriced at the same time. This approach thus attempts to identify those stocks for which the relationship between price and growth is particularly beneficial.

Hard currency bonds

These are fixed-income securities issued by borrowers in hard currency countries.

Hard currency countries

These are countries that are characterised by sound fiscal policies (low sovereign debt and little new borrowing) and efforts to ensure monetary stability (low inflation). The exchange rate of currencies from such countries normally remains stable or rises against other softer currencies over the medium to long term.

Hard Stop

Price level at which a security is bought/sold in order to limit losses.

Hedge Accounting

Hedge accounting is the accounting treatment applied to two or more financial instruments that form part of a hedge executed to mutually offset risks either in part or in toto. The hedged items contain the risks that are to be hedged by the hedging transaction. The impact of the hedged item and the hedging transaction should be offsetting, leading to a compensating effect in the income statement or in equity.

Hedge Fund

Investment fund designed to generate a positive return under any market conditions. This involves significantly higher risk, such as with Short Sales, credit financing, and derivates.

Herd Behavior

A phenomenon in capital markets that describes the tendency of market participants to make decisions based on the actions of others when facing uncertainty.

HFRX Absolute Return Index

The HFRX Absolute Return Index is a representative compila-tion of all available Hedge Funds that pursue various strategies. Some of the strategies followed include: convertible arbitrage, distressed securities, equity hedge, equity market neutral, event-driven, macro, merger arbitrage, and relative value. The Index selects those funds that show especially low volatility and a close correlation to traditional markets.

High Yield (Bond)

Designation for bonds having a Coupon with an above-average denomination as a result of comparably poor creditworthiness.


Index family on the stock exchange for fixed-income securities.

Ifo Business Climate Index

This macro-economic leading indicator is a yardstick for measuring the performance of the German economy. It results from the Munich-based Institute for Economic Research surveying 7,000 firms in Germany on a monthly basis on their assessment of the current business situation as well as on their short-term expectations.


International Monetary Fund.

Implied Volatility

Indicator showing the expected price volatility of an Underlying. It is calculated on current market prices rather than historical data on price volatility in the Underlying. It is used, for example, to value Options. In Germany, the VDAX is the best-known barometer for tracking Implied Volatility.

Indexed Performance

The first value in a time series is set to 100 for the purposes of comparison.

Indexed rental agreement

Rents are often coupled to the development of a specific index (such as the cost of living index) and hence index-linked; an indexed rental agreement provides protection from inflation.

Inflation-Indexed Bonds

Bonds whose Coupons and/or nominal values are reset at periodic intervals based on the consumer price index. 

Information Apprehension

Term from the study of decision making that describes the manner in which information is apprehended.

Information Processing

Describes the process of processing information once apprehended.

Information Ratio

A performance indicator for an investment fund, describing the fund’s excess return in relation to the tracking error. The higher the information ratio is, the more beneficial an investment strategy deviating from the index is for an investor.

Interest expense

Interest expense is amount of interest payable on borrowings, which is included in the income statement as an operating expense. The equivalent income is known as interest income accordingly. The eligible tax expense for tax purposes in Germany is limited by an interest cap.

Interest rate future

Forward transaction on a basket of bonds (see Bund-/Bobl-Future).

Interest rate swap

In an interest rate swap, two counterparties agree to exchange one stream of future interest payments for another. One party will make a fixed payment while the other will make a floating payment (often based on the interbank reference rate). This makes it possible for the parties to hedge against rising or falling interest rates, whichever they prefer.

Investment Committee

The decision-making body that directs how Berenberg Lux Invest S. A. sets securities and investment ratios for funds.

Investment Company (Kapitalanlagegesellschaft, KAG)

Also called a Fondgesellschaft or an Investmentgesellschaft. The KAG is a company that manages funds, usually in the legal form of a limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) but also as a corporation (Aktiengesellschaft, AG). Funds are managed separately from the investment company’s assets.

Investment Grade

Rating agencies divide their valuation scale into “investment grade” and “speculative grade” (also known as high yield bonds). Bonds with an investment grade rating are considered assets of at least medium quality. The investment grade scale starts with issuers of fair quality (BBB–, Baa3) and continues through to fail-safe top quality borrowers (AAA). 

Investment Ratio

Describes the amount of a fund’s capital that has actually been invested in securities. It is calculated as the difference between fund volume and spot position.


Initial public offering of shares.

ISM Purchasing Managers Index

An indicator of economic activity released by the Institute for Supply Management (ISM).

Issue Surcharge

Premium applies to nominal value. It is normally expressed as a percentage and is due upon purchase.


Emitter of finacial products, for example the Federal Republic of Germany, banks in general or investment companies.


This index family shows the CDS spreads of various Issuers and is considered an indicator of movements in general creditworthiness in the bond market and of investor confidence in the solvency of Issuers.

Joint venture

A specific form of company cooperation; a legally independent joint venture by two or more partners with equity participation. The participating companies share the financial risk of the investment as well as the management functions.

Jumbo Pfandbrief

Designation for a Pfandbrief with a minimum issue volume of EUR 1 billion. A Pfandbrief is a fixed-income security (covered bond) issued by mortgage banks and secured by a lien on real property.

Junk Bond

Bond of an Issuer with very low creditworthiness and a high likelihood of default, which in turn has a higher-than-average Coupon denomination.

Key Man Risk

Describes the risk of loss of key personnel.


Describes extremely elongated or compressed distributions.

Large Caps

Publicly traded companies with a Market Capitalization of more than EUR 5 billion.


The factor by which invested capital participates disproportion-ately in the movement of capital markets.


The factor by which invested capital participates disproportionately in the movement of capital markets.

Leverage Ratio

The leverage ratio of a given mutual fund is defined as the stock of debt assumed relative to the market values of the properties held in the special-asset fund.

Libor (London Interbank Offered Rate)

Family of reference interest rates calculated for various terms and in various currencies on the London exchange.

Limited liability capital

Capital contributed by the limited partners.

Limited partner

Partner in a limited commercial partnership for whom liability towards third parties is limited to the amount of the limited partner share assumed.

Liquidity Ratio

The liquidity ratio of a given mutual fund is defined as the holding of cash and cash equivalents available at short notice relative to the total assets of the fund.

Long Position

Buy position in the trading of financial instruments. The buyer either holds the instrument as owner or takes delivery of it at a set date or is paid for a positive change in value. In the event of negative performance, the buyer’s position loses value. In this way, the buyer can participate in the positive performance of the financial instrument.

Longest Drawdown Period

From a historical perspective, the longest period during which a Drawdown existed, expressed in days.

Loss risk

Simplified term for Value-at-Risk. The Value-at-Risk (VaR) concept originally stems from the banking sector and is today the standard approach used in the management of risk ceilings. The VaR is a measure of downside risk, focusing solely on losses and not taking into account possible opportunities. The VaR is defined as the estimated maximum loss that, with a certain probability, will not be exceeded over a defined holding period in the long-term average. Calculations carried out in accordance with the Cornish-Fisher expansion (taking account of skewness and kurtosis) lead to the modified Value-at-Risk (mVaR).

M1 money supply

In economics, the M1 money supply refers to nonbank demand deposits and all cash in circulation (cash and equivalents available at any time).


The MACD (Moving Average Convergence/Divergence) is an indicator for the convergence or divergence of the Moving Average, which is usually employed to spot trends. A rising MACD signals an upward trend whereas a falling MACD points to a downward trend.

Macro Research

Macroeconomic analyses on developments in the world economy, individual countries, and price movements in currencies and commodities.

Managed Futures

A class of investment strategies where mostly computer-based trading systems analyze and evaluate market trends and make investment recommendations. This strategy’s ability to track trends is intended to enable positive returns in both rising and falling markets.

MAR Ratio (Minimum Acceptable Return)

The MAR ratio is a performance indicator that is measured by dividing the compound annual growth rate (CAGR) by the maximum drawdown since inception. If the ratio is less than 1, the risk assumed was too high set against the performance achieved. The higher the ratio, the less risk was assumed to achieve the corresponding performance.


A certain amount of collateral as a security deposit for Futures transactions.


Operating Margin = EBIT/Revenues; Net Margin = Net Earnings/Revenues

Market Capitalization

Market Capitalization means the value of a company on the stock exchange. It is calculated by multiplying the share price by the total number of the company’s outstanding shares.

Market Capitalization/Revenues

Valuation indicator the compares Market Capitalization to Revenues.

Market-neutral investments

Market-neutral investments are strategic approaches that are intended to neutralise specific market risks. The main objective is to significantly restrict systematic risk. Among other options, things like funds-of-funds represent an investment option featuring dynamic allocation management of various asset classes.

Maximum Draw Down

Largest historical relative price drop of an investment.

Maximum Draw Down Period

Length of time in days from the date an investment began to experience its longest historical relative price drop to the date on which the original price level is once again attained.

Medium-term tech trend

Trend indicator used to compare the current share price against an average period. If the current share price is 1.75% higher than the 40-day average, for instance, this is considered positive, whereas it is considered negative if it is 1.75% below the average. If the price lies within a specified corridor, it is considered neutral.

Mid Caps

Publicly traded corporations with a Market Capitalization of EUR 1.5 to 5 billion.

Midcap-DAX (MDAX)

Stock index consisting of the 50 medium-sized companies, which follow the 30 DAX companies in terms of market capitalization (based on free float) and trading volume.

Modern portfolio theory

Title of a work published by US economist Harry M. Markowitz in 1952. Since then, the term has also been used to designate the portfolio selection theory that he first devised.

Modified conditional VaR

If the mVaR is exceeded, the modified conditional value-at-risk is projected as the long-term average. This measure shows the deviation to be expected in an extreme case, being when the mVaR is exceeded.

Modified Duration

Simplification / modification of the Duration formula. Modified Duration shows the percentage change of a bond price on the basis of a 1 % change in the interest rate.

Modified Moving Average

Volatility-weighted Moving Average.

Modified value-at-risk

The value-at-risk (VaR) is a concept originating from the banking sector and is the current standard in risk management. The VaR is a measure of downside risk based only on losses without taking account of any opportunities. The VaR is the estimated maximum loss that, at a specific probability level, will not be exceeded in the long-term average over a given holding period. The Cornish-Fisher formula yields the figure modified value-at-risk to be disclosed (taking into account skewness and kurtosis).


Month on Month.

Money Market Instruments

Broad term for all fixed-income securities and promissory notes having a term of not more than 12 months or a periodic rate adjustment at least once every 12 months. These include instruments such as time deposits and bonds with the same characteristics as described above.


Morgan Stanley Capital International, a U.S. financial-services provider.


Morgan Stanley Capital International Asia stock index. Contains the most important stocks in the following 10 developed and emerging-market countries: China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand.

Net Asset Value (NAV)

Net Asset Value describes the (redemption) price of a fund share. The NAV is calculated by adding together all of the fund’s assets values, subtracting all liabilities, and dividing the result by the number of fund shares outstanding.

Net Debt

Long- and medium-term debts, less liquidity (cash). Negative Net Debt means that liquidity is greater than debt.

Net Debt/ EBITDA

Indicator that relates a company’s Net Debt to its earning power (EBITDA).

Net Earnings

The term Net Earnings or earnings are revenues generated over a period, after interest and taxes.

Nikkei 225

Japanese stock index containing 225 select companies.

NOO (Non Operating Officer)

Ship owners who do not operate their ships themselves but rather charter them out.

NYSE Arca Gold BUGS Index

The NYSE Arca Gold Bugs Index (also known as HUI and formerly as the AMEX Gold Bugs Index) is a modified equal dollar weighted index of the world’s leading companies in the field of gold exploration, production or development that have sold their production in forward transactions of less than two years and could hence profit from an expected rise in the price of gold. The biggest stocks (as of April 15, 2011) are Goldcorp, Barrick Gold, Newmont Mining, Harmony Gold Mining, Randgold Resources, Hecla Mining, Eldorado Gold Corp, Anglogold Ashanti Ltd. and Kinross Gold.

OMT programme

Outright Monetary Transactions (OMT) is a programme under which the European Central Bank (ECB) makes purchases of government bonds issued by eurozone countries under certain conditions for a period of up to three years.  

Operating cash flow

This is the cash inflow from operating activities, which is generally calculated on the basis of the net profit. It shows how much money is actually generated by an enterprise’s revenues and is available to fund investments, dividends and so on.

Operating Income (EBIT)

Operating income is earnings generated by a company in all of its business sectors, e.g., from the sale of products it manufactures. Operating Income does not include proceeds from the sale of subsidiaries and company divisions or revenues from financial investments. EBIT = Earnings before interest and taxes.

Operating Margin


Operative Marge


Opportunity costs

Investors incur opportunity costs by missing out on income from an alternative investment opportunity as a result of an investment decision they take. In a positive interest environment, for example, investors fail to receive the interest income from an alternative investment in a bond when they buy gold, as gold itself does not yield any interest.


The holder of a Buy Option (Call) or Sell Option (Put) has the right to acquire or deliver an Underlying at a pre-determined price by a certain deadline.

OTC (Over-the-Counter) Option

Non-standardized Option transactions that are not traded on stock exchanges but are instead directly negotiated between two parties under conditions agreed to on a case-by-case basis.


Outperformance is deemed to exist when the performance of a financial instrument, for instance, is greater than the performance of a benchmark.

Outsourcing Mandate

Contractual arrangements by which management functions are transferred by a fund’s Capital Investment Company to an external fund manager or asset manager, which can make and directly implement its own trading decisions, subject to contractual obligations and investment restrictions.


Describes the tendency to place greater confidence in judgments than is warranted by their objective accuracy.

Overlay Management

Overlay Management means the targeted control of specific price risks within a portfolio. This includes the deployment of transparent and highly liquid Derivatives (usually Futures, Forwards, and Options).

P/B (Price to Book)

Price-to-book relationship.

P/E (Price earnings ratio)

See PER.

Pass-by/pass-through accounts

These are accounts set up at Berenberg on behalf of a third bank that customers can use directly like their own accounts (in other words, the customer can initiate payments from the pass-through account in their own name).

Payer Swaption

See Swaption.

Peer group

The Peer Group consists of a large number of companies or funds that are as similar as possible to a company or fund under consideration in terms of characteristics such as sector, size, and activity.


Price/earnings to growth ratio (sometimes called a “dynamic P/E ratio”) relates the PER to the company’s average Earnings Growth. 


Price-Earnings Ratio.

Performance attribution

Presentation of performance sources and breakdown of factors contributing to the performance.

Performance-Based Fee

Portion of the management fee that is based on performance of the investment strategy.


A bond issued by a mortgage bank, which is secured by mortgages on property.


This abbreviation stands for the initial letters of the following eurozone countries, about which, in view of their very high deficits, concerns were raised on their ability to repay their debts during the European sovereign debt crisis in early 2010: Portugal, Italy, Greece, Spain.


This abbreviation stands for the initial letters of the following eurozone countries, about which, in view of their very high deficits, concerns were raised on their ability to repay their debts during the European sovereign debt crisis in early 2010: Portugal, Ireland, Italy, Greece, Spain.

Plain vanilla option

A plain vanilla option is a standard type of option (call or put option) that possesses no additional features.

Portable alpha strategies

Portable alpha strategies are forms of investment that are implemented using derivatives. In their function as alpha strategies, they are designed to generate positive earnings irrespective of market phase. (By contrast, beta strategies are intended to generate earnings in line with general market movements by means of buy-and-hold trades.) As no investment in the traditional sense is required to trade in derivatives, and only a margin needs to be provided, the traded volume is independent of any available investment volume. This means that they can be applied to any given underlying portfolio, which is what makes them portable. Leveraged trading is also possible.

Porter's 5 Forces

A five forces analysis is a structural analysis of an industry or sector using Porter's "Five Forces" model. It is a tool developed in strategic management by Michael E. Porter for strategic analysis in business planning. It examines the five principal competitive forces in closer detail.

  1. Intensity of competitive rivalry among existing competitors and within a sector (the central driving force)
  2. Threat of new competition (including barriers to entry)
  3. Bargaining power of suppliers
  4. Bargaining power of customers
  5. Threat of substitute products
The stronger the threat from these five forces, the less attractive a given sector or industry, and the more difficult it is to achieve a lasting competitive advantage.


Surcharge or markup on the face or nominal value (100%) of the amount subscribed.

Price-Earnings Ratio (PER)

Measurement indicator in the stock segment, which relates the share price to Earning Per Share. A low PER indicates that a company’s earnings on the stock market may be relatively under-valued, such that the stock may have growth potential.

Price-to-Book Ratio (P/B Ratio)

Share price in relation to Book Value per share.

Price-to-Cash Flow Ratio (P/CF)

P/CF = share price/Cash Flow per share.

Primary account balance

The primary account balance results from adjusting the total state budget balance by interest expenses.

Private Equity

Private Equity is a form of equity participation that is not traded on regulated markets (stock exchanges). Sources of Private Equity may be private or institutional investors, often in the form of specialized capital investment companies (Kapitalbeteiligungsgesellschaften).

Profit margin

This is a profitability ratio defined as the difference between net earnings and expenses in a given period or of a given unit. It is often expressed as a percentage of net earnings.

Prospect Theory

A theory of behavioral economics developed in 1979 by Kahneman and Tversky that describes and analyzes patterns of decision making.

Purchase price factor

Ratio commonly used in the property sector to calculate the purchase price of a building in proportion to the net annual rent; the purchase price is calculated by multiplying the purchase price factor by the net annual rent.

Purchasing Managers Index (Einkaufsmanagerindex)

Indicator of economic activity in Germany, issued monthly.

Purchasing Power Parity (PPP)

Purchasing power parity is the term for a virtual exchange rate between two currencies, where a fixed amount of money (after conversion into the other currency) can purchase roughly the same basket of goods and services in both economies.


A Put is an Option that entitles the holder to sell a set amount of a stipulated Underlying at a pre-determined price during a stipulated period of time (U.S. Options) or on a stipulated date (European Options). The buyer of a Put Option essentially speculates the prices will fall or seeks to hedge a position.

Put-Call Ratio

Relationship of the number of Sell Options (Puts) to the number of Buy Options (Calls). The Put-Call Ratio describes how investors are positioned in the Futures market, indicating their market sentiment.


Quarter on Quarter.

Quantitative analysis

Analysis of financial and risk management questions based on the application of mathematical and stochastic calculations and models.

Quantitative Model

The price movements of various financial instruments are analyzed and evaluated by computer systems, which extrapolate trade recommendations (signals) based on the results.

Range Market

Description for a price pattern without trends, where prices move within a certain range.


Rating of an Issuer’s creditworthiness by a rating agency or a bank. The classification follows the Standard & Poor’s rating classes. The Ratings range from AAA (prime creditworthiness without risk of default), to BBB (average creditworthiness), to the junk bond area (CCC), default (D) and non rated (NR).

Real assets

Real assets are capital investments that are not listed on an exchange and have a long-term investment horizon. Equities, which are also commonly considered real assets, are classified as securities on account of their stockmarket listing, whereas private equity is grouped with real assets accordingly.

Real interest rate

The real interest rate reflects the nominal interest rate adjusted for inflation.


In contrast to Backtesting, an investment with Real-Money Performance uses actual money.

Receiver Swaption

See Swaption.

Regret Avoidance

Describes the tendency of an individual not to act when in doubt, since avoiding losses is given greater weight than not making any gains.


Real Estate Investment Trusts (REITs) are listed property companies that mostly own and operate property. They enjoy tax advantages compared with property companies structured as limited companies.

Relative value analysis

Statistical method used to determine a benchmark for a security relative to its history or to a comparable security in the same category.

Renovation work

Renovation work serves to update a property to meet current market requirements.


The gathering of information on an object being studied. Examples: analysis of a security regarding its price potential or of a company regarding its earning power.

Return on Equity (ROE)

ROE = Earnings Per Share / Book Value per share.

Return on Equity (ROE)

ROE = Earnings Per Share / Book Value per share.


Describes a company’s turnover during a specified period, measured in value units.

Reverse bonus certificate

Reverse bonus certificates are bearer bonds whose repayment depends on the performance of a specific underlying. Reverse bonus certificates apply the bonus concept of bonus certificates in reverse.  While in the case of conventional bonus certificates investors basically assume that the price of the underlying will rise, expectations differ for the reverse version: The bearer of this certificate banks on prices moving downwards or sideways and benefits from the negative performance of the underlying. This is because the bonus mechanism works in exactly the opposite way. The bonus level on the date of issue is lower than the price of the underlying and the barrier is located above it.  If the price of the underlying never touches or exceeds the barrier during the term, the investor receives at least the bonus return at the end of the term. However, if the barrier was breached, there is a risk of losses in case of rising underlying prices. Very heavy price losses in the underlying to below the bonus price are converted into gains on a one-to-one basis. See also bonus certificate


Bond index, calculated by the Deutsche Börse, which measures the performance of German government bonds.


German bond performance index that measures the overall in-vestment performance of the German bond market. Perform-ance components include price changes in the REX and daily reinvestment of the average annual Coupon. It is calculated in two steps at the close of each trading day: First, the price index REX is calculated, and then price changes and interest returns are added to give the performance index.

Risk class/classes

Issuers‘, banks‘ or distribution partners‘ financial instruments are divided up into various groups according to their risk-reward ratio by means of a risk classification. Risk classes serve as a guide especially for the investor in assessing the eligibility/suitability of a proposed investment.  

ROCE (Return on Capital Employed)

Earning power of a company’s total capital. It represents the ratio of EBIT to capital employed.

Rolling Mean/Moving Average

Calculation of a mean value with a forward-moving time frame, whereby older data points are replaced by newer ones. The rolling time period smoothes out extreme variations in the data series.

S&P 500

The S&P 500 (Standard & Poor’s 500) is an index containing the stocks of the largest 500 publicly traded U.S. companies.

S&P GSCI Commodity Total Return

S&P Goldman Sachs Commodity Index is broad-based index and is currently based on 24 liquid commodities from the energy, industrial metals, precious metals, agriculture, and livestock sectors.


Shanghai (Export) Containerized Freight Index, released by the Shanghai Shipping Exchange (SSE).

Scoring Procedure

Procedure for selecting securities, where individual securities are given a score based on quantitative and/or qualitative criteria. Securities are considered as a possible investment only if they exceed a pre-determined minimum score.


Process for selecting companies.

Secondary Research

Secondary Research does not prepare its own evaluations and models but instead analyzes studies performed by investment banks and Research institutions.

Sell Option

See Put.

Sensitivities (Greeks)

Sensitivities (Greeks) indicate how the price of an option or a financial product containing options moves in the event of changes in certain parameters pertaining to the asset underlying the option.

The delta measures the change in the price of the option in the event of the price of the underlying rising by 1%.

The vega measures the change in the price of the option in response to an increase in the expected volatility of the underlying by 1%.

The theta measures the change in the price of the option in the event of the remaining term of the option falling by one day.

The gamma is a second-rank sensitivity. It measures the change in the delta of the option in the event of the price of the underlying rising by 1%.

Sentiment analysis

Sentiment analysis uses investor sentiment in specific market situations to attempt to predict the future performance of assets. Use is made of indicators that are either based on direct investor surveys or indirectly reflect investor sentiment, such as the ratio of puts to calls.

Shadow rating

This is a rating of all units carried out internally by an enterprise, applying at least the same (strict) assessment criteria used by the rating agencies. In both the global financial sector and increasingly also among companies that depend upon the financial market, such a shadow rating is carried out at frequent intervals in order to pre-empt a downgrade by rating agencies and/or identify any risk factors as quickly as possible.

Share Deal

A type of transaction in which the buyer purchases company shares and equity stakes instead of a single asset.
Real estate related:
The buyer purchases shares and equity stakes of a company owning the property.

Shareholder Value

A method of company management that focuses on investor interests and seeks long-term, above-average performance. In this regard, the primary concern is not the highest possible Divi-dend distributions but rather sustained growth in earnings and profits.

Sharpe Ratio

The Sharpe Ratio can be used to evaluate the risk-adjusted return of an investment. This is calculated by taking the returns achieved by the fund in excess of the risk-free interest rate and dividing them by the volatility of the returns. With the return of two investments being equal, the investment with lower volatility, i.e., a higher Sharpe Ratio, is given preference. For example, if fund A has a 12% return, with the risk-free interest rate being 4% and the risk (volatility) of the fund averaging 5%, the investment has as Sharpe Ratio of 1.6. (security A return– risk-free return)/security A risk

Shell bank

Bank without a physical presence in the country of incorporation or not belonging to a supervised banking group, and hence not adequately supervised.

Shiller P/E ratio

A special P/E ratio developed by the US American Economics professor Robert Shiller. As corporate profits can fluctuate strongly in the short term, the Shiller P/E ratio uses the average corporate profits over the last ten years to even out fluctuations.

Short Bund / Bobl Futures

Describes the sale of a Future regarding interest rates. The Bund Future contains a basket of German government bonds with a remaining term of 8.5 to 10.5 years. The Bobl (Bundesobligation, or German government bond) Future contains an analogous basket of German bonds with a remaining term of 3 to 5 years.

Short ETFs

ETFs (see glossary for Exchange Traded Fund [ETF]) enable investors to bet on both rising and falling prices of an underlying benchmark. An ETF that enables an investor to profit from a decline in the value of the underlying is called a "short ETF" or "inverse ETF" or "bear ETF".

Short Position

The seller of a financial instrument takes a Short Position if the seller does not hold the sold instrument as owner and thus is under an obligation to deliver it on a pre-determined date or to compensate for the positive change in price. This enables the holder of a Short Position to benefit from a fall in price of the financial instrument.

Short Sales

Short Sale means the sale of a good, a currency amount, or a security that the seller does not own at the time of sale. The seller profits from the Short Sale if the sold object falls in price. A Short Sale can be structured as a spot transaction or a Futures transaction. The position assumed by the seller on a Short Sale is called a Short Position (opposite: Long Position).


A seamless processing system that ties all investment management operations into one smooth, flexible, transparent and efficient front to back workflow.

Single / Multi Tenant

Single-tenant properties only have one tenant. Multi-tenant properties have more than one tenant.

Single-/funds of hedge funds

Hedge funds are a special type of investment fund characterized by a market-neutral investment strategy. Typically, hedge funds use derivatives, short selling, off shore registration and performance-related compensation. In addition, some hedge funds try to achieve a higher return on equity through debt financing (leverage effect).  Funds of hedge funds invest in several hedge funds in order to spread risk.


The skewness is a statistical measure indicating the asymmetry of a random variable around the norm. It is calculated using the cubed deviations from the historic value normalized using the standard deviation.
The deviation from the symmetrical normal distribution that has a skewness of zero is of particular interest. Positive skewness is where the data points are skewed to the right, while negative skewness involves data points skewed to the left.

Small Cap-DAX (SDAX)

Stock index consisting of the 50 next smallest companies which follow the 50 MDAX companies in terms of market capitalization (based on free float) and trading volume.

Small Caps

Publicly traded corporations with a Market Capitalization of less than EUR 1.5 billion.


Government financial regulations require that insurance companies and banks maintain sufficient equity capital (Solvency resources). This is necessary in order for them to be able to guarantee their continued existence at any time and fulfill their financial obligations.

Solvency Ratio

The Solvency Ratio is the relation of available Solvency resources to the Solvency resources mandated by government financial regulations. A ratio of 100% is deemed sufficient.

Sortino Ratio

This indicator shows the risk attributable to negative volatility. It does not measure general volatility but rather the Downside Deviation, i.e., price spikes below the risk-free interest rate.

Sovereign debt

The sum total of a given state’s liabilities is defined as its sovereign debt. The total amount of sovereign debt encompasses the liabilities of both the governmental units (central government, regional governments and local councils) and the social insurance system. A state’s sovereign debt level is usually stated as a gross figure (meaning without taking any assets into account). Moreover, official figures for sovereign debt only include the explicit liabilities, meaning those that are certificated. Implicit or undisclosed liabilities, on the other hand, are not included because, although these liabilities are already measurable, they are not certificated. State pension commitments are a good example of implicit liabilities.

Specialty Fund

Securities holdings that focus on a particular investment area, such as commodities, solar power, or water.


Describes in general the difference between two variables of equivalent units. This usually has to do with differences between returns of various securities on the basis of various terms or degrees of creditworthiness.

Spread Duration

Percentage change in price with a change in spread of 1%.

Standard Deviation

The Standard Deviation measures the deviation of investments returns from their Mean price. The greater the deviation in returns, the greater the standard deviation.

Stock Market Risk

For the owner of stocks, the stock market risk implies the peril of being exposed to unforeseeable change in prices that can possibly lead to a total loss. A change in prices can have numerous reasons, which however might not be comprehensible to all market participants or might even be only a tendency that can not explain the exact market value. Examples of reasons for a change in price are the publication of company news or quarterly figures. However, stock market prices are not only influenced by company related news but mainly by the general economic situation. Many changes in prices cannot be explained in direct relation to a cause but reflect the market expectation as well as the psychological momentum of all market participants.

Stock Picking

Stock Picking describes an investment style where individual stocks are selected on a targeted basis in the expectation of earning above-average returns.


STOXX Europe 50 stock index. Contains the 50 largest and most actively traded stocks in the Dow Jones STOXX 600 stock index.


The STOXX EU Enlarged Total Market Index (TMI) provides a broad coverage of companies across the ten member states which joined the European Union on 1 May 2004: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, and on January 2007: Bulgaria and Romania. With a variable number of companies, the STOXX EU Enlarged TMI covers approximately 95% of the free float market capitalisation of the represented countries.

STOXX Europe 600

Stock index consisting of the 600 largest listed companies in Europe in terms of market capitalization (based on free float).


A strangle is the combination of a call option (with a higher strike price) and a put (with a lower strike price) option. The seller of such a strategy always profits when the underlying security (such as the DAX index) is neither higher than the call strike price nor lower than the put strike price when the option expires, meaning it lies between the two strike prices set when the option was written. The buyer of such a strategy benefits from larger movements in market prices, meaning that the value of the underlying security is either higher than the call strike price or lower than the put strike price.

Structured bonds

A structured bond is a structured financial product (a bond with a derivative component). Depending on the bond’s features, the derivative component may refer to a coupon (e.g., a rising or falling coupon), may offer the issuer or investor additional cancellation options, or may couple the manner of redemption of the bond to certain conditions. For example, if a redemption is possible in stock instead of at the nominal amount, this is called an equity-linked bond or reverse convertible bond. If redemption depends on the performance of an index (such as the DAX), the bond is an index-linked bond. From the issuer’s viewpoint, equity-linked bonds are instruments to raise capital, and at the same time a way to safeguard trading price; for investors, they are investments with an attractive rate of return compared to conventional bonds, but with a substantially higher price risk and possibly a higher risk of loss.


Also known as the subprime market - this is the market on which securitised private mortgage loans are traded.


Term used in connection with indices to indicate only those securities that are traded on the market. Any component that is no longer traded is removed from the index.



An option that gives the buyer the right but not the obligation to enter into a specified swap agreement with the issuer on a specified future date or during the option period in exchange for a premium. The swap period and interest rate are specified at the outset. A distinction is made between payer swaptions and receiver swaptions. Whereas buying a receiver swaption provides a hedge of falling interest rates, buying a payer swaption is equivalent to hedging rising interest rates.

Synthetic investment

An investment is carried out using derivative instruments that require no capital replacement apart from the margin.

Tail Risk

Tail risk is defined as extreme events that are considered extremely unlikely by market players.

Tangible Book Value

Tangible Book Value corresponds to Book Value less intangible assets (these include, e.g., active intellectual property and so-called goodwill).

Tankan Index

Tankan is the abbreviation for “Tanki Keizai Kansoku” (Short-Term Economic Survey). This indicator of economic activity is released quarterly by the Bank of Japan.


This term is used in connection with the expansive monetary policy of the Federal Reserve. It refers to the gradual reduction of bond purchases by the US central bank.

Technical analysis

This analysis serves to predict future price movements on the basis of past price and turnover data.


See Total Expense Ratio.

TEU - Twenty Foot Equivalent Unit

Unit of measurement for the cargo capacity of container ships. Maximum loading capacity of 20 foot standard container (L/W/H: 20 X 8 X ca. 8 feet; 6.1 X 2.44 X 2.56 meters).

The American Association of Individual Investors (AAII) assessment of the investor’s mood for the next six months

Investors are being surveyed by the American Association of Individual Investors (AAII) regarding their opinion on the equity market’s development in the next six months.

Thereupon, the AAII publishes data on how many percent of the questioned participants expect a positive market development, how many percent are neutral and expect a sideway movement of the market and how many percent expect a negative, hence a decreasing, market development.

Especially, the percentage of positive opinions is an important mood indicator. This is due to its extreme values having the effect of a contrary indicator. When the investor’s mood is very positive, the market often reaches a high. The same happens when the mood is very negative, then the market shows a low.

Time value

Describes the difference between option price and the option’s intrinsic value. The time value is always positive and decreases disproportionately with diminishing time to expiry. It expresses, as it were, the reward or indeed the risk of the market rate of an underlying instrument possibly rising or falling in the time remaining. 

Top-down-Analysis / Bottom-up-Analysis

These involve two different approaches to analysis. Top-down-analysis chooses a preferred stock market or sector. It analyzes the “big picture”. Whereas with Bottom-up-analysis, economic sectors or country distributions are secondary to individual company stock picks. Both approaches should be combined in order to form a synthesis.

Total debt

This is the sum total of all debt accruing in the past.

Total Expense Ratio (TER)

The Total Expense Ratio (TER) describes the total costs (e.g., management costs) incurred and paid by a fund.

Total Return

This is an investment strategy that aims to generate positive returns over the long run (investment horizon of at least three years) involving moderate fluctuations and the systematic limitation of loss risk. The possibility of individual periods with negative performance cannot be excluded. Benchmarks are used to track the management performance achieved.

Track Record

Chronological record of an Investment Company’s performance or of a publicly traded company and its managers/owners. Often serves as a recommendation for an Investment Company (suc-cessful deals) or a Fund.

Tracking Error

A specific measure for the deviation of a Fund’s return from its Benchmark.

Trade-weighted US-Dollar

The trade-weighted US dollar exchange rate indicates the value of the US dollar relative to a basket of currencies of the USA’s major trading partners (euro, Japanese yen, British pound, Canadian dollar, Swedish krone, Swiss franc), whereby the individual currencies are weighted according to their importance for the USA. If the index rises (falls), the US dollar has appreciated (depreciated) against these currencies.


A trustee is a natural or legal person who administers third-party property in their own name but for account of third parties.


A trustor is a person who transfers ownership of physical assets and/or rights to a trustee, who thus attains the full legal position of an owner.


UCITS III stands for Undertakings for Collective Investments in Transferable Securities. In the European legal framework, this set of rules covers open-ended funds that invest in legally defined types of securities and other financial instruments (securities funds). The UCITS Directive defines the specific requirements for funds and the companies that manage them.


The financial instrument underlying an investment strategy, such as stocks, indices, fixed-income securities, or currencies.

Value at Risk (VaR)

Statistical risk measure of risk management that puts a figure on the amount of loss a portfolio (or a security) will not exceed for a given probability and period of time. Financial risks can be quantified with this risk measure.

Value-Added Monthly Index (VAMI)

This index shows the growth of capital hypothetically invested at a specified date in the past. At the start of the term, the index is set to a standard monetary unit, usually 100 or 1,000. The closing monthly values are calculated by multiplying the prior monthly VAMI index by 1 plus the current monthly return.


The variance measures the deviation between a random variable and its expected value. The square root of the variance is known as the standard deviation, which is equivalent to the volatility.

VDax / VStoxx / VIX

These indices measure the implicit volatility of the DAX / STOXX / S&P 500.


In financial mathematics volatility is to be regarded as an indicator for measuring fluctuation levels in financial market parameters, such as equity prices or interest rates. Here it is defined as the standard deviation of changes in the underlying parameter and is an important factor in the risk assessment process. When talking about annualized volatilities (this is normally the case), a year is taken as the period of observation for the changes.   

Volatility beta

Similar to the beta beta calculation for equities a volatility beta describes the volatility relationship of a stock to a volatility index. For example, a beta of 0.8 means that the volatility of a stock rises by 0.8% if the volatility index increases by 1%.

Volatility Skew

The volatility skew („smile“) describes the phenomenon with options whereby differing volatilities can be observed on varying strike prices for options of the same maturity. In the case of a pronounced skew, considerably higher volatilities are priced into purchase options. This is due to the fact that market participants assign a considerably higher occurrence probability to very negative price trends than to significantly positive trends.


Warrants document the right to buy (call) or sell (put) an underlying asset for a set price on a given date or within a certain period. Unlike exchange-traded options, warrants are issued by financial institutions and hence exposed to default risk.

Writer Premium

Amount earned by the seller (= Writer) of an Option. In exchange, the Writer assumes the risk that it will have to deliver (Call) or accept (Put) the Underlying for the term of the Option, regardless of the movement in price.

Yield curve

The yield curve shows the yields paid on bonds with various (remaining) maturities for a given issuer (such as the Federal Republic of Germany).

Yield curve

The yield curve shows the yields paid on bonds with various (remaining) maturities for a given issuer (such as the Federal Republic of Germany).

Yield to maturity

The yield to maturity is a ratio used to value bonds. It expresses the rate of return that a bond investor would earn if he bought the bond at its current price and received the interest payments, and the bond principal is repaid in full at the maturity date.


Year on Year.

ZEW Index

Leading indicator of the economic situation in Germany. The ZEW Indicator of Economic Sentiment measures economic expectations every month, based on a survey of up to 350 financial experts. This indicator shows the difference between positive and negative expectations for future economic conditions (in the next six months) in Germany.

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