Glossary

An investment ideology that focuses on companies, and which is based on the belief that research pays: hard work, knowledge and talent is profitable, because there are “good” and “bad” companies. It is possible to change one’s risk/return ratio by building the portfolio from the bottom up with “good” companies – copying a certain index composition does not necessarily provide the best portfolio. With an active investment ideology, it is possible to choose one or a combination of several investment styles:

Growth: The manager focuses on companies in an attractive industry, with historical and expected growth in sales and earnings, as well as strong management.

Value: The manager focuses on companies that have low valuations in relation to earnings, that are traded at a discount from book capital, that are being overlooked by the market in general and have received little research attention, or that have hidden values.

Momentum: The manager buys when the share price is rising and sells when the share price is falling.

Top down: The manager first finds the best geographic areas, then industry, then company.

Bottom up: The manager primarily focuses on the companies, then the framework.

American Depository Receipts are securities trated on a U.S. exchange as a substitute for the company's own shares. They provide financial rights to a predetermined specified number of shares in a foreign company.

A Norwegian scheme for tax deductible savings in shares through investments in the equity market either directly in individual shares or through equity funds. The scheme was terminated effective the financial year 2000. The scheme is described in more detail under tax favourable products.

Value investing is a strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the company's long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated.

Typically, value investors select stocks with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields. SKAGEN's “applied value investing” is a blend of the quantitative and the qualitative.  Our analysis of companies includes a value-based examination of the principal balance sheet metrics; and an assessment of the harder to access factors such as management ability, ESG prowess and so on.  In short a comprehensive and timely estimation of the true value of a business.

Shares in the same company may be priced differently on two different stock exchanges. This means it may be profitable to buy the security on the cheapest stock market and sell it at a higher price on the other. This price difference is known as arbitrage.

All investment funds have to prepare articles of association. The articles of association shall contain all material information about the fund and its management. In Norway, the articles of association must be approved by the Financial Supervisory Authority of Norway.

A share in a company carrying specific rights. See share classes.

Various types of securities, for example shares and bonds.

The total value of all assets under management including all types of securities owned by the funds.

Shows the company’s financial condition. A specification of assets, liabilities and equity capital. The balance sheet is set up so that the total on the left hand side is equal to (balances with) the total on the right hand side. The company’s assets are entered on the left hand side of the balance sheet (the asset side). Liabilities and equity capital are entered on the right hand side (the liabilities side).

Barclays Capital Global Treasury Index 3-5 years Total Return Unhedged in EUR. The index is a total return index for global government bonds.

One base point is one hundreth of a percentage point. The unit is used in particular in relation to costs and differential returns.

See Net asset value.

A comparison index for funds.

A fund that primarily invests in interest-bearing securities with medium to long term maturities. Funds may have limited mandates, e.g. to just invest in government bonds. 

The fee you have to pay to a broker to do the work associated with trading securities on your behalf. Both the buyer and seller must pay a brokerage fee.

Share with limited rights. See share classes.

All payments in and out during a period.

Certificates are interest bearing instruments similar to bonds. The difference being that certificates have a maximum term to maturity of one year.

Shows the changes in the general price level for selected groups of consumer staples and services. The index is based on the average household consumption with greatest emphasis on the goods that weigh most heavily in the household budget. It is therefore often referred to as ‘headline inflation’ as a measure of inflation for people in general. In Norway, it is Statistics Norway that collects the necessary data, assigns weights to the different product categories and prepares index figures each month.

The risk of a borrower not meeting his payment obligations.  

The monetary unit of a country and its legal tender. The origin of the Norwegian term for currency, “valuta”, is value.

It is stipulated by law that all investment funds must have a custodian to receive and provide safe custody for the fund’s assets. This means that all assets of an investment fund (securities, liquid assets) must be deposited or entered into an account of a securities depository by this custodian. The custodian is also the body that on instruction from the management company receives deposits to the investment fund and makes payments from the fund, either due to a securities trade that the management company has made on behalf of the fund, or due to subscriptions or redemptions by unit owners. The custodian also has an additional supervisory function, in that it should ensure that the management company’s transactions in the individual funds are in accordance with the investment fund legislation and the fund’s articles of association. An investment fund’s custodian is usually a bank, but the function may also be carried out by a securities company. SKAGEN's custodian is Handelsbanken.

Fluctuations between times of economic growth and times of economic recession.

A reduction over time of the general price level, i.e. an increase in the value of money. The opposite of inflation.

The difference between the fund's return and that of the benchmark.

An investment fund puts its assets into many different securities, which results in fewer fluctuations in the value of the fund (i.e. less risk) than by placement in one or a few individual securities. In other words: by diversifying the fund’s portfolio the fund achieves risk diversification. The Norwegian Securities Funds Act sets minimum requirements for a fund’s diversification.

The part of the company’s annual profit that is distributed to the shareholders (owners) of the company. The return received by the shareholders on their shares. Dividend may be paid by the company if the profits are good and all other provisions have been made, and will therefore vary from year to year according to the surplus generated by the company. Dividend is paid once a year. SKAGEN Funds reinvests dividends in the funds.

A concept that, somewhat simply expressed, indicates a measure of the sensitivity of the price (face value) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. The bigger the duration number, the greater the interest-rate risk or reward for bond prices.

EEA stands for European Economic Area. Created in 1994, the EEA combines the countries of the European Union and member countries of EFTA (European Trade Association).

Countries that belong to the EEA are: Austria, Belgium, Bulgaria, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom.

The difference between liabilities and assets in the balance sheet. Equity capital is equivalent to net asset value.

An equity fund invests primarily in shares, but may also invest in interest bearing securities. A share is an interest in the equity capital of a company. The return available to an equity fund is primarily capital gains (or losses). Dividends paid by companies to shareholders will accrue to the unit holders either by being paid directly to its unit holders or by the fund reinvesting dividends received in new shares. There are many types of equity funds on the market. What differentiates them is who manages them, and how they are managed (the fund’s mandate). Mandate differences usually reflect where the funds may invest (from which geographic or industrial sectors' shares may be picked). The major categories are global funds, industry funds, regional funds and national funds. Generally speaking, a fund with a limited mandate, such as a national fund or an industry fund (narrow fund), will carry a higher risk than a fund with a broad mandate and a large spread over regions and industries (broad funds).

The number of currency units you have to pay for a unit of a foreign currency.

A company that lends money – particularly for business purposes.

Includes transferable securities like shares, bonds and certificates.

All markets where participants offer or seek credit ir financial instruments. We talk about the share market, the money market, etc.

Government decisions that impact different revenue and expense items in the government’s budget.

"The FSA Norway is an independent government agency that builds on laws and decisions emanating from the Parliament (Stortinget), the Government and the Ministry of Finance and on international standards for financial supervision and regulation.
Through its supervision of enterprises and markets, Finanstilsynet strives to promote financial stability and orderly market conditions and to instill confidence that financial contracts will be honoured and services performed as intended. In addition to its preventative work, Finanstilsynet maintains a preparedness for dealing with concrete problems that may arise.
Finanstilsynet is responsible for the supervision of banks, finance companies, mortgage companies, insurance companies, pension funds, investment firms, securities fund management and market conduct in the securities market, stock exchanges and authorised market places, settlement centres and securities registers, estate agencies, debt collection agencies, external accountants and auditors. For more information see: http://www.finanstilsynet.no/en/"

This is the general term for funds which only invest in fixed income securities and bank deposits.

A bond which returns the same nominal interest throughout its lifespan.

The interest rate of a loan may be locked in for a period of time, e.g. five years. This rate of interest is usually higher than the floating rate of interest, but it provides certainty if you assume that interest rates will increase in the future. If you want to be certain of how much you have to pay for your loan in the years ahead, a fixed interest rate may be a good alternative, because you will be able to plan your costs better. It is the opposite of a floating interest rate.

A fund is classified as a special type of legal entity under Norwegian law. A Norwegian fund is created by the approval of its articles of association by the FSA.

The fund as a legal entity has limited legal capacity in that it does not have its own board of directors, managing director, etc. but relies on the management company to act on its behalf. The management company is appointed through the fund’s articles of association and these function as a management agreement between the fund and the management company.

The unitholders may influence the fund’s management by representation on the management company’s board of directors; it is a legal requirement that at least one third of the board members shall be elected by the unitholders. Further, the Act on Securities Funds' regulations dictates that certain issues cannot be passed unless a majority of the unitholder-appointed board members has voted in favour.

A fund of funds is an investment fund that invests its assets in one or more underlying investment funds.

A customer who puts money in an investment fund will be issued units in the fund. The number of units issued will depend on the fund’s net asset value per unit, which indicates the value of one unit in this fund at the time of purchase. Each unit in an investment fund has the same value, and each unit has equal rights in the fund.

Global Depository Receipts are securities traded as a substitute for the company's underlying shares. They provide financial rights to a predetermined specified number of shares in a foreign company.

The difference between two return figures can be calculated either arithmetically (percentage point difference in value of numbers) or as a geometric difference where one states the percentage difference between the return figures. For example, the arithmetic difference between 10 and 11 percent is 1 percentage point. The geometric difference is equivalent to (111/110-1) x 100 = 0.9 percentage points.

There is no exact definition of what constitutes a hedge fund, and the variations between the individual funds calling themselves hedge funds may be considerable with respect to investment options and risk profile. A hedge fund usually assumes significantly higher risk than an ordinary investment fund, and is therefore a product designed for risk-seeking professional investors. A hedge fund is not obliged to comply with the Norwegian Securities Funds Act or the EU’s UCITS Directive, and hedge funds are free to use different financial instruments. They may apply leverage, and are usually free to use different derivatives. A hedge fund may also sell securities short, which entails that the fund sells borrowed securities, and then buys the borrowed securities back at a later time (in other words, attempting to profit from a falling market).

For financial instruments like equities and bonds an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value.

An index fund is an investment fund that is managed relatively passively in relation to the fund’s benchmark (replication of an index). See Management style. Broadly speaking, index management may be conducted in three ways:

Full replication: the fund invests in the same securities making up the index, and with the same weighting in the portfolio as the weighting in the index.

Partial replication: the index is split into different elements (e.g. different industries) and the fund follows the index by investing in accordance with the different elements’ weighting in the index (i.e. without investing in exactly the same securities making up the index).

Optimised selection: the fund weighs up the cost of investing in line with the index against the consequences in the form of expected return deviation by deviating from the index. A profitability analysis is performed to evaluate whether the fund will be better served by following index or deviating from it.

Regardless of choice of approach, index management entails that the return of the index fund will correlate quite closely with the performance of the index.

A fund’s information ratio (IR) says something about how the fund has performed in comparison to its benchmark. IR accounts for both return and risk. If the fund has outperformed the market, it will receive a positive IR, whereas it receives a negative IR for poorer performance. As the name implies, IR is a ratio, and is calculated as follows:

Information Ratio (IR) = Differential return / Relative volatility

The differential return shows the deviation of the fund’s return relative to the market, whereas relative volatility shows how the fund’s return fluctuates relative to the return of the index.

An interest bearing security represents a claim on an outstanding debt to be repaid by a borrower. Interest bearing securities may have different maturities (maturity is the time until the loan is repaid). Money market funds invest in short-term interest bearing securities, primarily notes, with a maturity of less than one year, whereas bond funds, as the name implies, invest in bonds, i.e. interest bearing securities with a longer maturity.

The interest rate sensitivity of a fixed income fund is an expression of the immediate percentage change in the fund’s net asset value, if the effective rate of interest of all securities held by the fund is changed by one percentage point. A reduction in the general level of interest will increase the net asset value of a fixed income fund, whereas an increase in the general level of interest will reduce it. If the fund has a high interest rate sensitivity, a fall in the general level of interest will result in a relatively large increase in the net asset value, and vice versa.

Over time, the interest rate sensitivity of individual funds will normally vary within the sensitivity area of the benchmark. Deviations between the interest rate sensitivity of the fund and the benchmark arise when the manager actively tries to increase the return of the fund in relation to the benchmark. “Minimum/maximum interest rate sensitivity” refers to outer limits imposed on the management company for movement of the fund’s interest rate sensitivity.

Example:
If the benchmark of a fixed income fund has an interest rate sensitivity of 3, and the general level of interest increases by ½ percentage point, the benchmark will immediately experience a 1.5 percent reduction in value. The price of a fund using this benchmark, and which, for example, is subject to a minimum/maximum limit for interest rate sensitivity of 1 and 4 respectively, will fall by minimum 1 percent and maximum 4 percent per percentage point change in the level of interest, depending on the interest rate sensitivity of the fund at the time of the rate increase.

An investment universe defines possible areas where an investment fund’s assets may be invested. The universe may be limited to comprise special securities (e.g. shares), investments in specific geographic areas (e.g. Asia), investments in certain industries (e.g. only technology shares), or a combination thereof.

Raising of capital by issuing securities, for example shares and bonds.

An investment fund management company is a company that manages the unit owners’ assets in the funds offered by the company, keeps the accounts and provides periodic information to the unit owners. It is the management company that takes all decisions that fund management entails. In order to be able to manage assets on behalf of unit owners, the company must be approved by the home state regulator.

The expression is a short form for the Management and Administration Fee charged to the fund on a daily basis and paid to the management company that manages and administrates the fund. It is calculated as a percentage of the net asset value and is stated as an annual rate.

Investment funds are managed according to different guidelines. Some investment funds are more or less passively managed, in the sense that the investments are made with relatively small deviations from the benchmark followed by the fund. Other investment funds are more actively managed. This means that the fund manager, by having another composition of securities in the fund than indicated by the fund’s benchmark, endeavours to find securities that provide a better relationship between risk and return than a similar passive management would have done. Actively managed funds may also be managed with different types of investment styles. Read more under Active and passive management.

Amalgamation of two or more companies.

MiFID is short for Markets in Financial Instruments Directive and is a European Union directive that seeks to increase the number of cross border transaction. In additon the directive aims to provide protection for you as an investor when you trade fund units or other financial instruments. 

A money market fund is a fixed income fund that may only invest in money market instruments, which means that the fund may not invest in securities with a maturity of more than one year. Read more under Investment funds.

Interest-bearing securities with short maturities (under one year), i.e. primarily notes and bonds with a residual maturity of less than one year.

MSCI All Country World Index, Daily Traded Total Return Net $ in NOK. This world index is a total return index which includes both industrialised and emerging markets. It is traded daily and includes tax adjusted dividends.

MSCI Emerging Markets Index, Daily Traded Total Return Net $ in NOK. This emerging markets index is a total return index which includes only emerging markets. It is traded daily and includes tax adjusted dividends.

MSCI World Index, Daily Traded Total Return Net $ in NOK.

The net asset value per unit (also referred to as the base price) indicates the market value of one fund unit. The net asset value per unit is calculated by adding up the market value of all securities in which the fund has invested. Then the total costs accrued to the fund on the relevant day are deducted, and the amount is divided by the number of outstanding units in the fund. For most investment funds, the net asset value per unit is calculated daily. The number of units in an investment fund goes up with the subscription of new units in the fund, and goes down with the redemption of units. The performance of the net asset value per unit during a given period is an expression for the net return achieved by the investment fund during this period.

The nominal rate of interest is the rate stated by the bank for one year. It is also called annual interest rate (p.a. = pro anno).

A Norwegian tribunal that handles complaints regarding banks, finance and investment funds. The Norwegian Fund Management Association became associated with the Norwegian Banking Complaints Committee effective 1 January 2002. For more information, please see Complaints.

NOS is a clearing house for the Norwegian derivatives market. The Norwegian derivatives market consists of standardised options, futures and forward contracts traded on the Oslo Stock Exchange, in addition to OTC options (over the counter/ad hoc options), which are not quoted on the stock exchange. NOS executes clearing by stepping into the transaction between buyer and seller and becomes the legal counterpart of both the original parties. 

The ordinary result of business operations before deduction of interest, extraordinary items and taxes.

An agreed right, but not an obligation, to purchase or sell a certain object or service during a certain period of time. Is often used in relation to an agreement to purchase or sell securities.

The Oslo Børs Benchmark Index. This is a daily dividend adjusted index of the most traded shares on the Oslo Stock Exchange.

This is the benchmark index for SKAGEN Vekst as of 1 January 2010. The index is a combination of equal weights of the Oslo Stock Exchange Benchmark Index (OSEBX) and MSCI All Country World Index, which encompasses both emerging markets and industrialised countries. The weight between the two is continuously rebalanced so it stays at 50/50 regardless of how the two indices develop compared to each other. 

The central provider of quoted prices on funds and shares in Norway. Founded 1818.

A passive investment ideology is based on the market always being right with respect to the pricing of shares. It assumes that all available information about a company is reflected in the share price, and to research and calculate the value of the company is a waste of time. The ideology maintains that share prices only move because new, unpredictable information becomes available about the companies. The ideology is not interested in the specific shares being bought, but presupposes that the composition of a market (a market index) is best, and that no other combination will provide a better relationship between risk and return. The risk/return ratio is determined by choosing which index to invest in.

A portfolio is a collection of securities. For example, a share portfolio is put together to achieve a desired risk and return.

Management companies are obliged to prepare a prospectus for each of the investment funds they manage. The prospectus must present the fund’s articles of association, provide a brief explanation of applicable tax regulation for the investment fund and its unit holders, as well as provide information about rights and obligations carried by a unit in the investment fund. Prospectuses are available from individual management companies.

In economics, a distinction is usually made between real capital, such as buildings, machinery, tools and other actual means of production, and financial capital, such as cash, bank deposits, securities, etc.

The actual rate of interest after taking into account the rate of inflation. To arrive at the real rate of interest, you deduct the rate of inflation from the nominal rate of interest.

Fee charged to unit owners for redeeming – selling – units in an investment fund. The redemption fee is calculated as a percentage of the redeemed amount.

Relative volatility is the standard deviation of the annual excess return relative to the benchmark during the relevant period. Relative volatility measures the manager’s ability to create regular excess returns relative to the benchmark, but is often used as a measure of a fund’s independence of the benchmark.

The return indicates how the net asset value has performed during a period. The return is generated through dividends, changes in share prices and possibly changes in currency exchange rates (for investment funds investing in foreign securities) associated with the securities the fund has invested in. All return figures for SKAGEN's investment funds are net figures, i.e. after deduction of all costs charged to the fund.

Return per unit is as of 31.12.2008 and shows the fund's interest/return for the year. During the year the fund will earn interest/return on its investments. This interest/return is added to the fund's net asset value on a daily basis. At the end of the year the interest is payed out and the net asset value declines. This means that you receive new fund units equal to the decline in net asset value. Under Returns on the bond fund pages, one can see what the return per unit was for the year. 

There are a number of types of risk. In general, risk refers to what the chances are of losing money or to miss out on profits. Generally speaking, a fund with a limited mandate, such as a national fund or an industry fund (narrow fund), will carry a higher risk than a fund with a broad mandate and a large spread between regions and industries (broad funds).

The measure of a fund’s return to its unit holders for the risk assumed. There are different ways of measuring this risk, including Information Ratio and Sharpe Index.

The return in excess of the risk-free rate that an investor expects to achieve for assuming more risk.

The relationship between the expected return and the risk of an investment. It may be conservative or aggressive.

A generic term for everything that is traded on a stock exchange. Among other things, securities comprise shares, bonds, notes and bills.

A loan whose principal is repaid in equal, regular instalments. As the principal of the loan is reduced by each instalment, the amount of interest paid also goes down. The monthly instalment amount (principal plus interest) will therefore be gradually reduced throughout the whole repayment period. Such a loan becomes increasingly less expensive, simply because it is being repaid quicker and the total monthly instalments are getting smaller and smaller. In aggregate you will therefore pay less interest on a serial loan than on an annuity loan with the same rate of interest and term.

A share is an equity interest in a company and forms part of the company’s equity capital. There are two main types of share: common and preferred. Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. Also known as "stock" or "equity".

The capital that has to be made available before a limited company may be incorporated. The total par value of all shares in a newly founded company.

Usually all shares in a company have the same rights, but some companies choose to issue several classes or groups of shares, for example A-shares and B-shares or preference shares.

A share index represents the average return for all the shares comprised in that index. Share indices can vary greatly, both in terms of size and calculation methods. Share indices are often used as a basis for comparing and evaluating the returns achieved by fund managers.

A person’s or company’s holdings of different shares.

The market value of a share. Usually applies to shares listed on a stock exchange. The share price, or the market value, varies with supply and demand.

Someone who owns one or several shares in a limited company. Among other things, the shareholder is entitled to receive regular information about the company, participate at general meetings and speak and vote on issues concerning the company.  A shareholder owns a percentage of the company proportionate to the number of shares he/she owns in the company. A shareholder has right of pre-emption with respect to subscription of shares in the raising of additional capital for the company. Shareholders may also receive dividends from the company.

The Sharpe index measures the probability of the fund generating a higher return than the risk-free interest rate. The higher the score the higher the probability. The higher the probability the more certain are the chances of achieving excess returns in the equity market. Thus, the value may be used as a long-term measure of risk, but is often used as an absolute measure of risk-adjusted returns.

Compares a fund’s return and standard deviation with the risk free return and provides a value for the fund’s risk adjusted return. A high number entails that the fund has a high risk adjusted return.  The fund with the highest Sharpe Ratio provides you with the best return relative to the risk you are assuming. This measure does not take any benchmark into account. The advantage is that you may compare funds with different investment mandates.

SICAV is an acronym for ”Société d'Investissement à Capital Variable”. It means an investment company with variable share capital, and may be considered as something in between an investment company and an investment fund. In practice, the share capital of a SICAV is equivalent to the net asset value of investment funds. In Norway the term umbrella fund is often used about a SICAV, because a SICAV usually consists of several different funds, where the investors may freely chose which of the funds they may invest their assets.  A number of Luxembourg registered UCITS funds marketed in Norway are organised as a SICAV.

To prevent a large inflow of new money into a fund, which can jeopardise the chance of achieving the best possible risk adjusted returns, it is possible to increase the subscription fee to in effect close the fund for a certain period  of time.

A measurement of uncertainty, e.g. with respect to an expected return.  The term standard deviation (or volatility) is important with respect to measuring risk. The standard deviation of a fund measures the historical fluctuation of the price of a fund. The lower the standard deviation, the lesser the probability of losing money – in other words, the risk becomes lower, according to this definition.

A stock exchange is an authorised market that organises or runs a market for financial instruments that facilitates trading through regular or public price quotations.  A stock exchange must have a concession from public authorities in order to conduct business. Exchange activities related to securities are what most people associate with the word exchange, but there are also other exchanges, such as commodities exchanges and exchanges that trade in electric power.

A fee for subscribing to – buying – units in an investment fund. The fee is calculated as a percentage of the invested amount.

SKAGEN has established procedures for swing pricing in order to prevent losses for existing unit holders due to subscriptions and redemptions by other fund unit holders. Swing pricing means that the daily net asset value of the fund is adjusted for the fact that net redemptions and subscriptions over a certain level will result in the fund having to make portfolio adjustments that lead to transaction costs and spread costs (the difference between bid and offer prices of the underlying securities).  The procedures are set up according to the industry standard set by The Norwegian Mutual Fund Association for subscription and redemption.

Read more about the industry standard for subscription and redemption of fund units on here.

UCITS is an acronym for "Undertakings for Collective Investments In Transferable Securities" and is a term used for investment funds regulated by the EU Directive of the same name (Council Directive 85/611/EEC 20 December 1985). The UCITS Directive has been, due to the EEA agreement, implemented in Norway through the Norwegian Securities Funds Act. It follows from this directive that UCITS funds approved in one EEA country may be marketed in the other EEA countries.

By putting money in an investment fund, you are issued units in the investment fund and become a unit owner (or unit holder). As a unit owner you have no financial obligations with respect to the investment fund beyond the assets you have committed to the fund. There is no limitation to the number of unit owners in an open ended fund.

An interest rate that moves up and down based on the changes in the market rate. Variable interest is usually lower than fixed interest.

Verdipapirfondenes forening = Norwegian Mutual Fund Association. The Norwegian Mutual Fund Association works to promote a healthy development of the Norwegian Fund Management . The organisation's vision is to make mutual funds the most widely used, effective and efficient savings vehicle in the Norwegian market. Read more here: http://www.vff.no/Internett/English/

Volatility is an expression of to what extent the monthly returns have fluctuated around their own average during a certain measurement period, e.g. the past three or five years. High volatility indicates that there have been great fluctuations in the monthly returns. In pure mathematical terms, a fund’s volatility is defined as the annualised standard deviation of the fund’s monthly return. See also Relative volatility.

VPS is a rights registry, which, among other things, registers owners and changes in ownership for Norwegian securities. The institution provides transactional and other services to issuers of and investors in securities, and their intermediaries. VPS also acts as registrar and maintains the unit owner registry on behalf of several Norwegian fund management companies.

Weighted Average Life (WAL) is the weighted average of the remaining life (maturity) of each security held in a fund, meaning the time until the principal is repaid in full (disregarding interest and not discounting). Contrary to what is done in the calculation of the WAM, the calculation of the WAL for floating rate securities and structured financial instruments does not permit the use of interest rate reset dates and instead only uses a security’s stated final maturity. WAL is used to measure the credit risk, as the longer the reimbursement of principal is postponed, the higher is the credit risk. WAL is also used to limit the liquidity risk.

Weighted Average Maturity (WAM) is a measure of the average length of time to maturity of all of the underlying securities in the fund weighted to reflect the relative holdings in each instrument, assuming that the maturity of a floating rate instrument is the time remaining until the next interest rate reset to the money market rate, rather than the time remaining before the principal value of the security must be repaid. In practice, WAM is used to measure the sensitivity of a money market fund to changing money market interest rates.

The yield refers to the current yield that the fund receives for its interest rate holdings measured as a percentage of the fund’s value. The yield is net of the fund’s management fee. The fund’s future returns will be a function of the current yield that the fund receives, capital gains and losses from the fund’s holdings in bonds and certificates, as well as any gains and losses from currency exposure linked to foreign holdings. Also, the yield on inflation protected securities does not incorporate expected inflation. The fund’s future returns must be expected to differ from the fund’s yield.