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Financial Terms | |
Index fund |
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Definition of Index fundIndex fundInvestment fund designed to match the returns on a stockmarket index.
Related Terms:index fundsMutual funds that aim to track the performance of a specific stock or bond index. This process is also referred to as indexing and passive management. Pure index fundA portfolio that is managed so as to perfectly replicate the performance of the market portfolio. Index Portfolio Rebalancing Service (IPRS)index Portfolio Rebalancing Service (IPRS) is a comprehensive investment service that can help increase potential returns while reducing volatility. Several portfolios are available, each with its own strategic balance of index funds. IPRS maintains your personal asset allocation by monitoring and rebalancing your portfolio semi-annually. 12b-1 fundsMutual funds that do not charge an upfront or back-end commission, but instead take out up to Annual fund operating expensesFor investment companies, the management fee and "other expenses," Arms indexAlso known as a trading index (TRIN)= (number of advancing issues)/ (number of declining Balanced fundAn investment company that invests in stocks and bonds. The same as a balanced mutual fund. ![]() Balanced mutual fundThis is a fund that buys common stock, preferred stock and bonds. The same as a Beta equation (Mutual Funds)The beta of a fund is determined as follows: Beta (Mutual Funds)The measure of a fund's or stocks risk in relation to the market. A beta of 0.7 means Bond indexingDesigning a portfolio so that its performance will match the performance of some bond index. Buying the indexPurchasing the stocks in the S&P 500 in the same proportion as the index to achieve the Closed-end fundAn investment company that sells shares like any other corporation and usually does not Consumer Price Index (CPI)The CPI, as it is called, measures the prices of consumer goods and services and is a Consumer Price Index (CPI)An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation. Cost of fundsInterest rate associated with borrowing money. ![]() Dividend yield (Funds)Indicated yield represents return on a share of a mutual fund held over the past 12 EAFE indexThe European, Australian, and Far East stock index, computed by Morgan Stanley. EFT (electronic funds transfer)funds which are electronically credited to your account (e.g. direct deposit), or electronically debited from your account on an ongoing basis (e.g. a pre-authorized monthly bill payment, or a monthly loan or mortgage payment). A wire transfer is a form of EFT. Employee stock fundA firm-sponsored program that enables employees to purchase shares of the firm's Endowment fundsInvestment funds established for the support of institutions such as colleges, private Enhanced indexingAlso called indexing plus, an indexing strategy whose objective is to exceed or replicate Federal fundsNon-interest bearing deposits held in reserve for depository institutions at their district Federal Federal funds marketThe market where banks can borrow or lend reserves, allowing banks temporarily Federal funds rateThis is the interest rate that banks with excess reserves at a Federal Reserve district bank Federal Funds RateThe interest rate at which banks lend deposits at the Federal Reserve to one another overnight. Forward Fed fundsFed funds traded for future delivery. ![]() Fund familySet of funds with different investment objectives offered by one management company. In many Fundamental analysisSecurity analysis that seeks to detect misvalued securities by an analysis of the firm's fundamental analystsAnalysts who attempt to find under- or overvalued securities by analyzing fundamental information, such as earnings, asset values, and business prospects. Fundamental betaThe product of a statistical model to predict the fundamental risk of a security using not Fundamental descriptorsIn the model for calculating fundamental beta, ratios in risk indexes other than Funded debtDebt maturing after more than one year. funded debtDebt with more than 1 year remaining to maturity. Funding CostsThe price of obtaining capital, either borrowed or equity, with intent to carry on business operations. Funding ratioThe ratio of a pension plan's assets to its liabilities. Funding riskRelated: interest rate risk Funds From Operations (FFO)Used by real estate and other investment trusts to define the cash flow from Global fundA mutual fund that can invest anywhere in the world, including the U.S. growth fundsMutual funds that seek long-term capital growth. This type of fund invests primarily in equity securities. Hedge fundA fund that may employ a variety of techniques to enhance returns, such as both buying and High-coupon bond refundingRefunding of a high-coupon bond with a new, lower coupon bond. Income fundA mutual fund providing for liberal current income from investments. income fundsMutual funds that seek regular income. This type of fund invests primarily in government, corporate and other types of bonds, debt securities, and other income producing securities and in certain circumstances can also hold common and preferred shares. IndexA series of numbers measuring percentage changes over time from a base period. The index number for the base period is by convention set equal to 100. indexAn index is a statistical measure of a market based on the performance of a sample of securities in that market. For example, the S&P/TSX Composite index reflects the performance of the most actively traded stocks on The Toronto Stock Exchange. Index and Option Market (IOM)A division of the CME established in 1982 for trading stock index Index arbitrageAn investment/trading strategy that exploits divergences between actual and theoretical Index modelA model of stock returns using a market index such as the S&P 500 to represent common or Index optionA call or put option based on a stock market index. Index warrantA stock index option issued by either a corporate or sovereign entity as part of a security IndexationThe adjustment of benefits to compensate for the effects of inflation. Indexed bondBond whose payments are linked to an index, e.g. the consumer price index. IndexingA passive instrument strategy consisting of the construction of a portfolio of stocks designed to internally generated fundsCash reinvested in the firm; depreciation plus earnings not paid out as dividends. International fundA mutual fund that can invest only outside the United States. international fundA mutual fund that can invest in securities issued anywhere outside of Canada. International Monetary FundAn organization founded in 1944 to oversee exchange arrangements of International Monetary Fund (IMF)Organization originally established to manage the postwar fixed exchange rate system. Jensen indexAn index that uses the capital asset pricing model to determine whether a money manager Labour-Sponsored Venture FundsVenture capital corporations established by labour unions. They function as other venture capital corporations but are subject to government regulation. Liability funding strategiesInvestment strategies that select assets so that cash flows will equal or exceed Life Income FundCommonly known as a LIF, this is one of the options available to locked in Registered Pension Plan (RPP) holders for income payout as opposed to Registered Retirement Savings Plan (RRSP) holders choice of payout through Registered Retirement Income funds (RRIF). A LIF must be converted to a unisex annuity by the time the holder reaches age 80. Load fundA mutual fund with shares sold at a price including a large sales charge -- typically 4% to 8% of Low-coupon bond refundingRefunding of a low coupon bond with a new, higher coupon bond. market indexMeasure of the investment performance of the overall market. Market value-weighted indexAn index of a group of securities computed by calculating a weighted average Match fundA bank is said to match fund a loan or other asset when it does so by buying (taking) a deposit of Money market fundA mutual fund that invests only in short term securities, such as bankers' acceptances, money market fundA type of mutual fund that invests primarily in short-term debt securities maturing in one year or less. These include treasury bills, bankers’ acceptances, commercial paper, discount notes and guaranteed investment certficates. Mutual fundMutual funds are pools of money that are managed by an investment company. They offer mutual fundWhen you buy a mutual fund, you are pooling your money with that of other investors. An investment professional called a portfolio advisor takes that money and invests it for all the investors in a variety of different securities as determined by the investment objectives of the mutual fund. This gives you the benefit of diversification that is, being invested in many different investments at once. Mutual fund theoremA result associated with the CAPM, asserting that investors will choose to invest their Net advantage of refundingThe net present value of the savings from a refunding. No-load fundA mutual fund that does not impose a sales commission. Related: load fund No load mutual fundAn open-end investment company, shares of which are sold without a sales charge. NonrefundableNot permitted, under the terms of indenture, to be refundable. NSF (non-sufficient funds)This appears on your statement if there are insufficient funds in your account to cover a cheque that you have written or a pre-authorized payment that you have already arranged. You will be charged a service fee for non-sufficient funds. Objective (mutual fund)The fund's investment strategy category as stated in the prospectus. There are Open-end fundAlso called a mutual fund, an investment company that stands ready to sell new shares to the Optimization approach to indexingAn approach to indexing which seeks to Optimize some objective, such Overfunded pension planA pension plan that has a positive surplus (i.e., assets exceed liabilities). Pension FundAssets used to pay the pensions of retirees. An investment institution established to manage the assets used to pay the pensions of retirees. Prerefunded bondRefunded bond. present value indexsee profitability index Price IndexA measure of the price level calculated by comparing the cost of a bundle of goods and services in a given year with its cost in a base year. See also index. Private Export Funding Corporation (PEFCO)Company that mobilizes private capital for financing the Profitability indexThe present value of the future cash flows divided by the initial investment. Also called Profitability indexSee cash value added. Profitability IndexA method for determining the profitability of an investment. It is profitability indexRatio of net present value to initial investment. profitability index (Pl)a ratio that compares the present value of net cash flows to the present value of the net investment Purchase fundResembles a sinking fund except that money is used only to purchase bonds if they are selling RefundableEligible for refunding under the terms of indenture. Refunded bondAlso called a prerefunded bond, one that originally may have been issued as a general RefundingThe redemption of a bond with proceeds received from issuing lower-cost debt obligations Regional fundA mutual fund that invests in a specific geographical area overseas, such as Asia or Europe. Registered Retirement Income Fund (Canada)Commonly referred to as a RRIF, this is one of the options available to RRSP holders to convert their tax sheltered savings into taxable income. Revenue fundA fund accounting for all revenues from an enterprise financed by a municipal revenue bond. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |