We believe a glossary is key for any client trying to navigate through the range of complex terms and jargon in our industry.
Our most frequently defined terms are defined below but if there's something you think we should add, please contact us.
Price at which a security or a unit in a pooled fund can be purchased. See also bid price.
The total number of open positions in a particular futures contract.
Collective investment scheme in which the number of units in the fund varies from day-to-day according to the number of investors wishing to buy or sell the holding in the fund.
Open-Ended Investment Company (OEIC)
A form of pooled fund investment, which is governed by company law (as opposed to a unit trust which is governed by trustees).
The right, but not obligation, to buy or sell a security at an agreed price within an agreed time period. The right to buy a security is known as a call option; the right to sell a security is known as a put option.
Option Adjusted Spread (OAS)
An option adjusted spread analysis measures the incremental yield of a fixed-income security, adjusted for embedded options, compared to the term structure of interest rates. OAS is used for Corporate, Municipal, Mortgage, Convertible and Government securities.
Generally an institution such as a bank, that lends (e.g. mortgages) to borrowers. Once these loans are issued, they are assets sitting on the balance sheet of the originator.
A call option whose exercise price is higher than the current underlying share price, or a put option with an exercise price below the current underlying share price.
Occurs when the principal amount of an underlying pool of assets is greater than the principal amount of the issued securities. This is a form of credit enhancement as it lowers investors’ exposure to default risk in the underlying pool of assets.
Overnight Indexed Swap (OIS)
An interest rate swap where the periodic floating payment is generally based on a return calculated from a daily compound interest investment.
A transaction that does not take place via an exchange. Many derivatives contracts are traded in this way.
Exposure to a specific asset (or asset class) which is higher than the proportion it represents in the market index or benchmark against which the portfolio is measured. Investment managers may take overweight positions in shares or sectors they expect to outperform in order to add relative value to the portfolio.
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