Unit Trust

This is a contribution of funds by many investors, which is kept in a trust by a trustee (like a bank) and overseen by a professional fund manager in a well diversified range.

Adviser

A merchant bank, accountant, auditor, lawyer, stock broking company or such a person who provides advice to the Management Company in relation to OneAnswer Investment Funds. For the general public and investors, an adviser may include an Institutional Unit Trust Agent (IUTA), accountant, auditor, lawyer or a registered and licenced personnel dealing with unit trust (PDUT).

Aggresive

An investment approach that takes higher risks for potentially higher returns.

Aggresive Growth Funds

Funds that invest in shares of companies with earnings and profits that are expected to grow more rapidly than others to seek maximum capital gain. These funds also tend to be potentially riskier because of potential higher returns.

All Malaysian Government Securities Index

Rating Agency Malaysia-Quant Shop Malaysian Government Securities All-Index.

Asked Price

The lowest price that anyone has declared that they will sell their security for at a given time. In over-the-counter stocks, the "ask" is the best quoted price at which a Market Maker is willing to sell a stock.

Asset

Property and tangible resources, such as cash and investments. Examples include stocks, bonds and cash.

Asset Allocation

An investment strategy that aims to enhance total return and/or reduce risk by diversifying assets among different types of stocks, bonds and money market instruments.

Asset Classes

Types of investments such as stocks, bonds, real estate and cash.

Automatic Investment Plan

A regular investment scheme where investment is made periodically through a bank's standing instruction.

Back-End Load

A sales charge that is levied when you redeem your investment.

Balanced Fund

A unit trusts fund that seeks both growth and income.

Basis Point

One one-hundredth of one percentage point. i.e. 0.5% means 50 basis points.

Beta

A measurement of the volatility of an asset or a portfolio relative to a selected benchmark usually a market index. A beta of 1.0 indicates the magnitude and direction of movements of return of the asset or the portfolio are the same as those of the benchmark. A higher-than-1.0 beta indicates greater volatility, while a lower-than-1.0 beta indicates less volatility when measured against a benchmark. A negative beta indicates the asset’s return or the portfolio’s return moves in an opposite direction relative to the benchmark.

Bid Price

The price that someone is willing to pay for a security or an asset. In the stock market, the bid portion of a stock quote is the highest price anyone is willing to pay for a security at that time. The difference between the ask price and bid price is known as the spread.

Blue Chip

A company known nationally for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends.

Bond Fund

A fund that invests in bonds.

Bottom-Up

An investment strategy in which companies are considered based simply on their own merit, without regard for the sectors they are part of or the current economic conditions. A person following this strategy will be looking very closely at the company's management, history, business model, growth prospects and other company characteristics. He or she will not be considering general industry and economic trends and then extrapolating them to the specific company. Followers of this strategy believe that some companies are superior to their peer groups, and will therefore outperform regardless of industry and economic circumstances. The purpose of bottom-up investing is to identify such companies. This is the opposite of top-down.

Broker

A registered representative who handles the general public's and corporate orders to buy and sell securities, commodities, or other property. A brokerage fee is charged for their services.

Brokerage

Security transaction executed through a "brokerage firm" or "broker/dealer" in stocks, bonds, mutual funds, options or other investment securities.

Bull Market

A term used to describe a period of time when investment prices rise faster than their historical average.

Bear Market

A prolonged period in which investment prices fall, accompanied by widespread pessimism. If the period of falling stock prices is short and immediately follows a period of rising stock prices, it is instead called a correction. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly. This is the opposite of bull market.

Business Day

The day on which the Malaysia Securities Exchange Berhad (formerly known as KLSE) is open for trading.

Capital Market

A market where debt or equity securities are traded.

Credit Risk

A unit trust fund could lose money if the issuer or guarantor of a fixed income security, or the counterpart to a derivatives contract, redemption agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honour its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Corporate bonds are subject to the risk that litigation, legislation or other political events, local business or economic conditions, or the bankruptcy of an issuer could have a significant effect on the issuer's ability to make payments of principal and/or interest.

Credit Rating

A published rating based on a careful financial analysis, of a creditor's ability to pay profits or principal owed on a debt.

Cooling-Off Period

Within 6 Business Days from the date your application is received and accepted by the Management Company.

Corporate Bond

An evidence of indebtedness issued by a corporation, rather than by the Malaysian Government.

Counterparty Risk

Counterparty risk occurs when a financial institution that has entered into a securities trade defaults on its obligations under the agreement. A fund may encounter unit price volatility due to this risk arising.

Coupon Bond

Bond with interest coupons attached. The coupons are clipped as they come due and are presented by the holder for payment of interest.

Debt Securities

IOUs created through loan-type transactions-commercial paper, bonds, and other instruments.

Deed

The Deed is a legal document that spells out the obligations of the Trustee and the Management Company as well as rights and liabilities of the unit holders in detail for the protection of your interests.

Derivative

A financial instrument whose characteristics and value depend upon the characteristics and value of an underlier, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline. These techniques can be quite complicated and quite risky.

Diversification

Spreading investments among different types of funds and/or investment styles to lower overall investment risk.

Dollar-Cost Averaging

A strategy to invest fixed amounts of money at regular intervals, regardless of the markets' movements. Dollar-cost averaging is another form of diversification - only instead of spreading your money over a bunch of different stocks or bonds; it diversifies your investments over time. As a result, when the price is lower, more shares of the security are purchased than when prices are higher. It can also be easier on your budget! Dollar-cost averaging helps to take away the problem of attempting to time the market.

Distribution

Net income from fund distributed to unit holders.

Entry Fee

The fee chargeable to acquire units in the fund.

Entry Price

The acquiring price per unit of the Fund or commonly known as the selling price.

Exit Fee

The fee chargeable to redeem units from the fund.

Exit Price

The redemption price per unit of the Fund or commonly known as the buying price.

Equity

A unit trust fund whose portfolio consists primarily of common stocks.

Expense Ratio

Expresses the percentage of a fund's average net assets spent on the operation and management of the fund (includes management fees). The smaller this number, the better it is.

Front-End Load

A deduction made from each investment in the fund. The amount of the charge is generally based on the amount of the investment.

Fixed-Income Securities

An investment that pays a fixed rate of return. This usually refers to government, corporate, or municipal bonds, which pay a fixed rate of interest until the bonds mature and to preferred stock, which pays a fixed dividend.

Forward Pricing

Investments or redemptions are transacted based on forward pricing. When you request to purchase or redeem units today, it will be carried out at the NAV per unit of the relevant fund at the end of each Business Day. This is done after we have received and accepted your application for units. The valuation and pricing of units normally takes place at the end of each business day at the close of the MSEB (KLSE).

Growth Fund

A fund that invests in companies whose rate of growth over a period of time is considerably greater than that of business in general. With more potential growth comes more risk.

Growth Stock

It is stock of a company with a record of relatively rapid earnings growth. Growth stocks tend to trade at above average price per earning (P/E) ratios.

Hedge

An investment made in order to reduce the risk of adverse price movements in a security, by taking an offsetting position in a related security, such as an option or a short sale.

Income Fund

A fund with a primary objective of current income.

Index

A statistical indicator providing a representation of the value of the securities which constitute it. Indices often serve as barometers for a given market or industry and benchmarks against which financial or economic performance is measured.

Inflation

An increase in the general price level of goods and services; alternatively, a decrease in purchasing power of the dollar.

Inflation Risk

A unit trust fund is subject to the risk of an investor's investment not growing proportionately to the inflation rate decreasing the investor's purchasing power even though the investment in monetary terms has increased.

Funds Adviser

A tied agent licensed to sell unit trusts funds. This agent holds a funds distribution contract.

Initial Offer Period (IOP)

The first offering of stock of a company to the public. In the case of unit trust, it is first offering of units in new funds launched by the Management Company. During IOP, price per unit is fixed at RM0.50 or RM1.00 and the IOP duration is 21 days.

Interest Rate Risk

The risk refers to the effect of interest rate changes on the market value of a bond portfolio. In the event of rising interest rates, prices of fixed income securities will decrease and vice versa. Meanwhile, bonds with longer maturity and lower coupon rate are more sensitive to interest changes. The risk will be mitigated via the management of the duration structure of the fixed income portfolio.

Investment Manager

A person who under an agreement with any other person or persons, undertakes on behalf of that person or persons, whether on a discretionary authority granted by such person or persons or otherwise, the management of a portfolio of securities (other than any arrangements made for the purpose, or having the effect, of providing facilities for the participation of persons as beneficiaries under a trust in profits or income arising from trading in futures contracts) for the purposes of investment.

Investments

Assets held to assist in achieving financial objectives.

KLCI

Kuala Lumpur Stock Exchange Composite Index.

KLSE

Kuala Lumpur Stock Exchange. Now known as Malaysia Securities Exchange Berhad (MSEB).

KLSI

Kuala Lumpur Stock Exchange Syariah Index.

Liquidity Risk

This risk exists when particular investments are difficult to purchase or sell, possibly preventing a unit trust fund from selling such illiquid securities at an advantageous time or price. Unit trust funds with principal investment strategies that involve foreign securities, derivatives or securities with substantial market and/or credit risk tend to have the greatest exposure to liquidity risks.

Management Company

The unit trust management company that manages the fund to the best of its ability while maintaining high standards of integrity and fair dealing. The Management Company is responsible for managing your investments skillfully and with utmost care so as to ensure its proper performance.

Management or Company-Specific Risk

Poor management of a unit trust fund may jeopardise the investment of each investor since a unit trust fund is an actively managed investment portfolio. Therefore, it is important for a management company to set investment objectives, policies and appropriate strategies before any investment activity can be considered. However, there can be no guarantee that these measures will produce the desired results.

Management Expense

The costs of operating a unit trust fund. It includes management fees, Trustee fees and expenses incurred for fund administration services.

Management Fee

The fee paid to the investment manager of a unit trust fund for managing the fund that you've invested in.

Market Risk

The market price of securities owned by a unit trust fund might go down or up, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of a security may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investors' sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labour shortages or increased production costs and competitive conditions within an industry. Equity securities generally have greater price volatility than fixed income securities.

MSEB

Malaysia Securities Exchange Berhad. Formerly known as KLSE.

MESDAQ

Malaysian Exchange of Securities Dealing & Automated Quotation.

Net Asset Value (NAV)

The Net Asset Value of the Fund is determined by deducting the value of all the Fund's liabilities from the value of all the Fund's assets, at the valuation point. For the purpose of computing the annual management fee and annual trustee fee, the NAV of the fund should be inclusive of the management fee and trustee fee for the relevant day.

Net Asset Value (NAV) Per Unit

The NAV of OneAnswer Investment Funds divided by the number of units in circulation at the valuation point (i.e. closing price at the end of a business day).

Performance Benchmark

Performance benchmark is the index (or the composite index in the case of diversified funds) that is used to compare the performance of a fund relative to its benchmark. For instance, an equity fund may have an asset allocation benchmark that will over the long term have approximately 95% exposure to equities and 5% exposure to cash. However, the performance benchmark may be 100% KLCI.

Portfolio

A group of funds held by an investor.

Portfolio Turnover Ratio (PTR)

Portfolio turnover of the fund is the ratio of the average of acquisitions and disposals of investments for the year to the average NAV of the fund calculated on a daily basis as follows;

PTR = [(Total acquisitions + Total Disposals)/2] / Average NAV of the Fund

e.g. a PTR of 2 times means that the fund has been turned over twice for that particular year.

Prospectus

The document that offers unit trust for sale to the public. It must explain the funds managed by the Management Company, fees and charges, the funds investment strategy, historical financial statements and other info that will help investors decide whether the investment is suitable for them. The prospectus is required under the Securities Commission Act 1993.

Qualitative Analysis

Determining the value of an investment, especially a stock, by examining its non-numeric characteristics, such as management, employee morale, customer loyalty, and brand value.

Quantitative Analysis

The process of determining the value of a security by examining its numerical, measurable characteristics such as revenues, earnings, margins, and market share.

Risk of Non-Compliance

The operations and administration of the funds by the manager or its delegate are governed by the deed, all applicable laws and regulations or internal policies and procedures. Non-adherence may result in tarnished reputation, limited business opportunities and reduced expansion potential for the management company. Unit holders' investment goals may also be affected should the fund managers not adhere to the investment mandate. However the risk can be mitigated by the internal control and compliance monitoring undertaken by the manager.

Sharpe Ratio

A risk-adjusted measure developed by William F. Sharpe, calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the fund's historical risk-adjusted performance.

Switching

Switching of units from one fund to another fund under the same unit holder's account.

Transfer

Units being transferred from one unit holder’s account to another unit holder’s account.

Trustee

A Trustee acts as the custodian for all the assets of the fund. The Trustee is responsible for ensuring that the Management Company follows all provisions laid down in the Deed; particularly with regards to the creation and cancellations of units, the exercise of investment powers of the fund, collection and distribution of income, proper record keeping of administrative, investment and unit holders' transactions, and in upholding unit holders' interest.

Top-Down

An investment strategy which first finds the best sectors or industries to invest in, and then searches for the best companies within those sectors or industries. This investing strategy begins with a look at the overall economic picture and then narrows it down to sectors, industries and companies that are expected to perform well. Analysis of the fundamentals of a given security is the final step.

Units in Circulation

Total number of units created and fully paid for.

Unit Holder

The person for the time being registered under the provisions of the deed as the holder of units of a fund.

Valuation

The estimated worth of an asset such as security. A valuation makes it easier to decide if an asset would make a good investment at a given purchase price.

Valuation Point

The point in time at which the NAV of a unit trust scheme is determined by reference to market price and from which the Entry price and Exit price of a unit trust scheme are calculated.

Volatility

The relative rate at which the price of an asset or a portfolio moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price. If the price of an asset moves up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility. Standard deviation measures the risk of an asset or portfolio. The higher the standard deviation, the higher the volatility hence the higher the risk of an asset or portfolio.

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