Word of the DayWelcome to Investmenterms.com, a comprehensive dictionary for commodity futures traders.
Performance Bond
Another way to describe margin payments for futures contracts, which are good faith deposits to ensure performance of person's obligations under the futures contract rather than a down payment for the underlying security.
Back End Load
A fee (sales charge or load) that investors pay when selling mutual fund shares within a specified number of years, which usually ranges between five to ten years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.
Also known as a "contingent deferred sales charge or load" The back-end load is a type of sales charge that is used with mutual funds that have share classes, which in this case are identified as Class B shares. Class A shares charge a front-end load that is taken from an investor's initial investment. Class C shares are considered to be a type of level-load fund - no front-end and low back-end loads, but the fund's operating expenses are high. In all cases, the load is paid to a financial intermediary, and is not included in a fund's operating expenses.
In essence, funds with share classes carry sales charges (as opposed to no-load funds). The class you choose is what determines how much and when you pay them. In employer-sponsored retirement plans, the loads are generally waived.
Webs
World Equity Benchmark Securities are exchange traded funds that track various foreign country indices such as the U.K., German, and French equivalents of the S&P 500 Index.
Emerging Markets
Emerging Markets funds invest in securities of companies, or the sovereign debt of developing or "emerging" countries. Investments are primarily long. "Emerging Markets" include countries in Latin America, Eastern Europe, the former Soviet Union, Africa and parts of Asia. Emerging Markets - Global funds will shift their weightings among these regions according to market conditions and manager perspectives. In addition, some managers invest solely in individual regions.
Emerging Markets - Asia involves investing in the emerging markets of Asia.
Emerging Markets - Eastern Europe/CIS funds concentrate their investment activities in the nations of Eastern Europe and the CIS (the former Soviet Union).
Emerging Markets - Latin America is a strategy that entails investing throughout Central and South America.
Accredited Investor
An accredited investor is a sophisticated investor who meets or exceeds minimum SEC requirements for net worth and annual income especially as they relate to some restricted offerings. The SEC Criteria are as follows.
a) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer or general partner of a general partner of that issuer.
b) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000.
c) Any natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
d) Any trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase of the securities is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.
e) Any organization that was not formed for the purpose of acquiring the securities being sold, with total assets in excess of $5,000,000.And, any entity in which all of the equity owners are Accredited Investors.
Total Return
The total percentage return of an investment over a specified period, calculated by expressing the difference between the investment's initial price and final price as a percentage of the initial price.