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Investment Approach

Your portfolio will be constructed in different ways depending if you choose an individual tailored portfolio or a starter portfolio: When creating your individual Starter portfolio we use the combination of equities and bonds you selected in order to then build your chosen asset allocation with our preferred list of ETFs. Our 21 static portfolios are divided into three broad risk categories: Conservative, Balanced and Aggressive.

The defensive portfolio focus is on minimal risk to the principal amount while still generating an income stream. Only modest long-term growth can be expected, and the time horizon of the investment is short- to mid-range. The target allocation for the defensive portfolio is 80% bonds and 20% equity.

The balanced portfolio seeks to reduce the potential volatility by including income generating investments such as bonds, accepting that the overall portfolio will be likely to deliver moderate growth of the principal amount, and will exhibit short-term price fluctuations. The time horizon for a balanced investment is mid to long-range and has a target allocation of 50% equity and 50% bonds. The aggressive portfolio seeks to maximize the long-term potential for growth of principal. In return the investor is willing to tolerate the risk of large short-term price fluctuations, and that the portfolio is unlikely to generate income in the form of dividends. The time horizon for an aggressive investment is long term and the portfolio has a target allocation of 80% equity and 20% bonds.

For all target allocations, within the equity component the indices are weighted by market capitalisation, and within the bond component the weightings are 80% on government debt in the local currency, and 20% on international bonds. All targets have been rounded to full percentages.

ETFmatic offers three different sets of predefined portfolio models: Starter, Custom and Adaptive portfolios. Unfortunately, we don’t offer the possibility to choose specific ETFs. You can have a look at the geographical regions we track through our Starter portfolios and the ETFs we are currently using to track those regions in our whitepaper under section 4.2. You could choose the percentages you would like to invest in each region through a custom portfolio but the underlying ETFs are always chosen by us.

We currently review and rebalance portfolios on a weekly schedule and we trade once per week.
Dividends will be allocated to the goal and re-invested. In general dividends will be distributed without any tax withholding.

At this point in time we do not foresee including ethical investments as a strategy option.

Find out more about approach here: https://etfmatic.com/whitepaper


Exchange Traded Funds (ETFs) are investment funds, that normally closely track the performance of a financial index. They are traded like shares and hold assets such as shares, commodities or bonds. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors. As ETFs provide a native diversification and have certainly proved their worth over the years they are a tailored instrument to pursue a long-term investment strategy.

Robo-advisors are online investment services that automate investment advice in order to make wealth management accessible to potentially everyone at any time.

ETFs typically represent investments in underlying stocks or bonds. As with all investments, this puts capital at risk.

However, the ETFs ETFmatic use represent investments in broader indices of stocks and bonds.

As such they are more likely to provide a more stable and safe return than investing in single stocks or bonds.

At ETFmatic we constantly review the performance of a wide range of ETFs to then choose the best building blocks. We then combine them in unique portfolios based on the needs of each customer. The current version of our investment platform deploys 21 static asset allocations for our Starter portfolios. For any asset allocation our clients prefer to build with regions, we allocate to in our Custom Portfolios and Adaptive Market portfolios that include proprietary algorithms to limit investment drawdowns and increase returns.These strategies enable us to deliver the best investment solution for you.

Given we adjust the target weight of each asset constantly the aggregated total expense ratio varies by portfolio and in time. Currently our portfolios weighted average TERs vary between a minimum of 0.07 and 0.22%. You can find more details in the App.

TER – The total expense ratio is a percentage that indicates the annual running costs of an ETF.

Account Opening and Administration

The ETFmatic application process is divided in different parts. Please note that the better we know you the better we can tailor your portfolio to suit your personal needs. Therefore we will ask you to give us -beside the regulatory required disclosures – information about your investment preferences and your financial situation which is essential for us to build up your custom-made portfolio. Here are the steps you will be guided through when opening your account:

  1. First choose the currency. Currently only EUR portfolios are available.
  2. Then submit your contact details, starting with your name, address and finally your telephone number.
  3. Phone Verification: after keying in your telephone number, we will send you a SMS with a code which you have to insert in the marked field on our webpage. This is to secure the correctness of your data
  4. Investment experience
  5. Financial Situation
  6. Final declaration

We will try to automatically verify your details. In case it fails we will contact you and ask you to send us a copy of your ID or driver’s license to verify your identity and as proof of your address a phone or utility bill or a bank statement with your address on it.

You can open an account at ETFmatic if you are resident of one of the following member states of the European Union: Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain and Sweden.

Currently only EUR portfolios are available.

Due to tax reporting issues we unfortunately don`t accept applications from or accounts held by US citizens and US tax payers.

Once you complete the KYC you are given one account with ETFMatic. Under this account you can create more goals (=portfolios).

Payments & Transfers

You can decide if you make a bank transfer or if you give us the permission to withdraw your monthly fixed payments or a one-off payment from your current account and transfer it to your ETFmatic account. This permission can be cancelled at any time. Open an account today: https://m.etfmatic.com/

The short answer is, of course you can. If you ask for your portfolio to be liquidated and your money to be returned to you, we will sell off your positions as part of the next trading and transfer the proceeds back to you.

The long answer is that your portfolio is managed according to the preferences you have expressed through the setup of the goal including the time horizon of your investment. Investing in stocks and bonds puts capital at risk and liquidating your portfolio earlier than plan increases the risk that you will incur losses on your holdings.

No that is not possible. Currently only EUR portfolios are available. Finax accepts deposits in EUR only.

Transfer to the EUR account:
As our client money account is held with Citibank Europe plc, BUT in EURO usually it should be enough to create a EUR transfer providing just the IBAN and, in some cases, the BIC.

We charge 0.48% on an annual basis of your assets under management.

Since your holdings will fluctuate over time as a result of additional contributions and changes in the market, we take daily snapshots of the value of your portfolio.

We use these valuation snapshots to calculate pro-rata fees on a monthly basis. We send you a detailed summary of the fees charged per goal.

You can change your monthly contributions at any time by logging into your account. You will find the possibility to change the contribution of your direct debit under the section “Payments” – “Direct Debits”.

Custodian & Score Keeping

We require an initial investment above one of the following thresholds:
An initial investment of above €1,000 for EUR accounts.

You can add or remove from your initial investment whenever you want to. But please keep in mind, investing in stocks and bonds puts capital at risk so your portfolio can go down in value. Your portfolio is managed keeping your target end date in mind, so selling earlier means that you run a larger risk of incurring losses on your holdings.

Client money as well as ETF`s are held in segregated accounts protected by the MiFID rules on Client Money and Safe Custody Assets and secured by the Investment Guarantee Fund.
Therefore, in unlikely case of us going insolvent, your money will be sitting safely at KBC Bank NV. ETFmatic will not be able to, and is not allowed to access your money for any purpose other than investing it in your best interest. Additionally, we are covered by the Investment Guarantee Fund with the usual restrictions, including limits for investments which are currently set at EUR 50.000 (regardless of the currency) per depositor; For more information please refer to the official website of the Investment Guarantee Fund: https://www.garancnyfond.sk/investment-guarantee-fund
ETFmatic uses KBC Bank NV, as the custodian for all client money accounts. All safe custody assets and any client monies in process of being invested are held with KBC Bank NV.
Both client money and safe custody assets are at all times held according to the MiFID regulation, protected by appropriate acknowledgement letters issued by the relevant custodians, and are covered by the Guarantee Investment Fund.

Tax & Compliance

We comply with the UK and EU regulation on the reporting and sharing of financial information for tax purposes. At the end of each tax year we will provide each client with a summary of all the taxable events such as dividend distributions, and ETF purchases and sales (”Tax Report”). It is then up to each customer to file the appropriate Capital Gain Tax filings in their country tax residence.


Clients’ assets are protected by the Slovak Investment Guarantee Fund.  For more information please refer to the official website of the Slovak Invetsment Guarantee Fund: HOW THE GUARANTEE SCHEME WORKS (garancnyfond.sk)


ETFmatic charges an annual fee of 0.48% of your assets under management This fee includes:

  • Design and execution of your investment strategy
  • 24/7 reporting and administration
  • Brokerage fees
  • Custody fees
  • VAT

It doesn’t include:

  • All fees charged by the banks for transfers to your ETFmatic account
  • Total Expense Ratio already priced by the ETF issuers into the assets we buy for your portfolio ranges between a minimum average of 0.07% and a maximum of 0.22%. You can find more details in the App.

Our annual management fee is 0.48% for all portfolios. The underlying total fees of the ETFs we select currently range from 0.1% to 0.35%.

The Total All-Inclusive Fee for a ETFmatic portfolio will therefore range between 0.59% to 0.62%.

Please note the above are only latest estimates and will vary depending on the asset allocation you have selected (Custom portfolios) and any changes in the underlying ETFs we use.

All the ETFs in our portfolios have their own charges (fund costs). These charges are deducted by the the ETF provider .
The individual fund costs of the underlying ETFs will vary depending on the issuer and type of ETF (bond, equity and
geographic region). Given our focus on costs we aim to construct our portfolios with the leading ETF providers offering
the best products with lowest possible fees.

The total fund costs (the weighted average cost) will vary depending on the asset allocation you have selected.
Currently our portfolios range between a minimum of 0.07% and a maximum of 0.22%. You can find more details in the App.

Below is an estimate based on the latest asset allocations and ETFs used. Please note these numbers will vary depending

on the asset allocation you have selected.

 Maximum Weighted Average TERMinimum Weighted Average TER
Starter and Glide
Path Portfolios
Custom Portfolios0.20%0.07%
Market Portfolios
Starter and Glide
Path Portfolios
Starter and Glide
Path Portfolios
Custom Portfolios0.22%0.07%

These numbers are only indicative and will change as the ETFs in the portfolio change. We do not charge our clients any
additional transaction, custody or maintenance fees.

As part of our commitment to transparency we also send all our clients monthly summaries of fees so that it’s clear
exactly what we charge for the services we provide.

Fees will automatically be deducted from the cash held in your ETFmatic account at the end of each month – there’s no extra payment to be made and we don’t access your bank account.

You can view what fees have been charged to your account at any time. You will find this information under your goal in the “Cash Movements”

Terms & Services

Our services are supported by supported by Apple iOS (iPhone and iPad), Android, Windows, Ubuntu and Amazon.

App Notifications

Under “Notifications”/ “Settings” you are able to modify the way you receive information regarding your investment goals. You can be informed about account activity under “Notifications” and via email.

Goal Creation Process

This last step is only for live account users:

Once you have submitted your goal you will be able to fund it. You can do this via a normal direct transfer, a one-off payment or a direct debit. You will find more information about how to fund your goal under the section “Payments” in your account.

You can give your goal a name by logging into the respective goal and then “edit” it.

At ETFmatic we are aiming to have various methods of payment in order for you to fulfil your contribution schedule.

Currently you can choose between making a transfer, creating a direct debit or entering a one-off direct payment. You can find more information about it in your account under the section “Payments”.

Before you can determine your investment preferences, you must decide on your investment horizon. By what time in the future would you like your goal to be reached and your assets to be available. Keep in mind that the time horizon must determined be reasonable manner, since it is used as a guideline for goal progression. There is also the possibility to invest without specifying a investment horizon, if that is desired.

Additionally, it’s important to determine how often you would contribute assets to your account and what would be your initial investment. This amount should solely be used as a guideline and it’s also important to keep in mind that the initial and monthly contributions must not impact your ability to reach ongoing financial obligations.

The next step is to determine what investment amount you would like to reach. It’s important to remember that these values have to be realistic, since they will be used as a guideline for goal progression. There is also the possibility to invest without specifying an investment goal, if that is desired.

Financial Glossary

Active Management

An investment approach employed to exploit pricing anomalies in those securities markets that are believed to be subject to mispricing by utilising Fundamental Analysts and/or Technical Analysis to assist in the forecasting of future events and the timing of purchases and sales of securities. Also known as ‘Market Timing’

Active risk

The risk that arises from holding securities in an actively managed portfolio in different proportions from their weighting in a benchmark index. Also known as ‘Tracking Error


The return from a security or a portfolio in excess of a risk-adjusted benchmark return. Also known as ‘Jensen’s Alpha’

Alternative Investment Market (AIM)

The London Stock Exchange’s (LSE) market for smaller UK public limited companies (PLCs). AIM has less demanding admission requirements and places less onerous continuing obligation requirements upon those companies admitted to the market than those applying for a full list on the LSE.

Alternative investments

Alternative investments are those which fall outside the traditional asset classes of equities, property, fixed interest, cash and money market instruments.


An investment that provides a series of pre-specified periodic payments over a specific term or until the occurrence of a pre-specified event, e.g. death.

Arithmetic mean

A measure of central tendency established by summing the observed values in a data distribution and dividing this sum by the number of observations. The arithmetic mean takes account of every value in the distribution.

Asset allocation

The process of investing an international portfolio’s assets geographically and between asset classes before deciding upon sector and stock selection.

Assets under management (AUM)

Assets under management (AUM) is the total market value of assets that an financial institution manages on behalf of investors. 

Bear market

Conventionally defined as a 20%+ decline in a securities market. The duration of the market move is immaterial.


The covariance between the returns from a security and those of the market relative to the variance of returns from the marke


Debt investment, under which the issuer owes the holders a debt and therefore is obliged to pay them an interest and/or to repay the principal at a defined date. ETFs that track bonds represent the Fixed Income part of your portfolio. They are considered less risky assets than stocks because they tend to be less volatile and selling them could allow you to withdraw part of your contributions at a limited loss even in bad market conditions.

Bull market

A rising securities market. The duration of the market move is immaterial.

Contribution history

Your ETFmatic account is funded via transfers or a monthly direct debit order for each of your goals. These amounts represent the monthly total.


The degree of co-movement between two variables determined through regression analysis and quantified by the correlation coefficient. Correlation does not prove that a cause-and-effect or, indeed, a steady relationship exists between two variables, as correlations can arise from pure chance.


The correlation coefficient between two variables multiplied by their individual standard deviations

Cumulative vs Distributing ETFs

A cumulative ETF reinvests the net income from the back into the ETF whereas the distributing ETF pays out all the net income to you. Cumulative reinvestments are usually completed once it’s affordable while the distributing intervals vary between ETF issuers.

Current Plan of your contributions

Every month your contributions are allocated across the ETFs that are the most efficient in tracking the different markets.

Direct Debit

Give us the permission to withdraw your monthly fixed payments from your current account and transfer it to your ETFmatic account. This permission can be canceled at any time.

Discount (interest) rate

The rate of interest used to establish the present value of a sum of money receivable in the future.


The distribution of a proportion of a company’s distributable profit to its shareholders. dividends are usually paid twice a year and are expressed in pence per share.

Economic growth

The growth of Gross domestic Product (GdP) or Gross national Product (GnP) expressed in real terms usually over the course of a calendar year. Often used as a barometer of an economy’s health.

Efficient frontier

A convex curve used in modern portfolio theory that represents those efficient portfolios that offer the maximum expected return for any given level of risk.

Efficient Markets Hypothesis (EMH)

he proposition that everything that is publicly known about a particular stock or market should be instantaneously reflected in its price. As a result of active portfolio managers and other investment professionals exhaustively researching those securities traded in developed markets, the EMH argues that share prices move randomly and independently of past trends, in response to fresh information, which itself is released at random.


That which confers a direct stake in a company’s fortunes. Also known as a company’s ordinary share capital.


Exchange Traded Funds (ETFs) are investment funds, that normally closely track the performance of a financial index. They are traded like shares and hold assets such as shares, commodities or bonds. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

Ex-dividend (xd)

The period during which the purchase of shares or bonds (on which a dividend or coupon payment has been declared) does not entitle the new holder to the next dividend or interest payment.

Exchange-Traded Fund (ETF)

An investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index.


Exposure captures the loss you’re willing to accept on your investments in exchange for the possibility of higher long term returns. A low exposure means that you prefer a lower risk of losing money and are willing to accept lower returns. A high exposure means that you are willing to accept a higher probability of losing money in return for the possibility of higher returns


At ETFmatic we believe in transparency around what fees we charge you, so we always show you how little we charge to help you turn your savings into investments.

Fiscal policy

The use of government spending, taxation and borrowing policies to either boost or restrain domestic demand in the economy so as to maintain full employment and price stability. Also known as ‘Stabilisation Policy’ and ‘Monetary Policy’.

Flight to quality

The movement of capital to a safe haven during periods of market turmoil to avoid capital loss.


We run several thousand simulations each time you request a Forecast, ranking outcomes in Percentiles

Poor is defined as the bottom 5-25

Average is defined as percentiles 25 to 75

Good is defined as the top 75-95

Future value

The accumulated value of a sum of money invested today at a known rate of interest over a specific term.

Goal Asset

Composition of the goal in stocks, bonds and cash.

Goal Cash

This part of your Portfolio can be liquidated at any point without incurring losses, unfortunately it won’t offer any growth and will suffer from inflation.

Goal Conclusion

The date that you anticipate to sell the ETFs associated with this Goal using one of our Divestment options. ETFmatic will reduce the weight of riskier assets in your Portfolio as you approach your target date. If no target date is selected ETFmatic will increase this Portfolio’s allocation to less risky assets to reduce its volatility.

Goal Investment Strategy

We adapt the weights of your portfolio holdings based on your preferences.

Gross domestic product (GDP)

A measure of the level of activity within an economy. More precisely, GdP is the total market value of all final goods and services produced domestically in an economy typically during a calendar year.

Gross national product (GNP)

Gross Domestic Product (GDP) at market prices plus net property income generated from overseas economies by UK factors of production.

Gross redemption yield (GRY)

The annual compound return from holding a bond to maturity taking into account both interest payments and any capital gain or loss at maturity. Also known as the ‘Yield to Maturity (YTM)’


Displays units of each ETF, relative weight in your holdings and current value.


A single number that summarises the collective movement of certain variables at a point in time in relation to their average value on a base date or a single variable in relation to its base date value

Investment Strategy

Your investment strategy determines if you prefer to take the same actions as everyone else or if you prefer to be contrarian and take the opposite actions – e.g. to buy when the market is dropping. It also takes into account the size of the movements you make – whether you make big bets or if you prefer to move gradually.

London clearing house (LCH)

The institution that clears and acts as central counter party to all trades executed on member exchanges

London stock exchange (LSE)

The UK market for listing and trading domestic and international securities.

Long position

The position following the purchase of a security or buying of a derivative.

Lump sum

A lump sum is a single payment of money, as opposed to a series of payments made over time (such as an annuity). Transfer all funds from this goal into a specified account at the end of the investment period.


The study of how the aggregation of decisions taken in individual markets determines variables such as national income, employment and inflation. Macroeconomics is also concerned with explaining the relationship between these variables, their rates of change over time and the impact of monetary policy and fiscal policy on the general level of economic activity.

Market capitalisation

The total market value of a company’s shares or other securities in issue. Market capitalisation is calculated by multiplying the number of shares or other securities a company has in issue by the market price of those shares or securities.

Markets in financial instruments directive (MiFID)

MiFId came into effect on 1 november 2007. It replaced the Investment Services directive (ISD) and covers the regulation of certain financial services for the 30 member states of the European Economic Area.

Mean-variance analysis

The use of past investment returns to predict the investment’s most likely future return and to quantify the risk attached to this expected return. Mean Variance Analysis underpins Modern Portfolio Theory (MPT).

Modern portfolio theory (MPT)

The proposition that investors will only choose to hold those diversified, or efficient, portfolios that lie on the Efficient Frontier.

Money weighted ratio of return (MWRR)

The internal rate of return (IRR) that equates the value of a portfolio at the start of an investment period plus the net new capital invested during the investment period with the value of the portfolio at the end of this period. The MWRR, therefore, measures the fund growth resulting from both the underlying performance of the portfolio and the size and timing of cash flows to and from the fund over this period.

Monthly contribution

Amount that will be debited from your Bank Account every month to fund the ETF that support this goals.

Net Present Value (NPV)

The result of subtracting the discounted, or present, value of a project’s expected cash outflows from the present value of its expected cash inflows.

Nominal value

The face or par value of a security. The nominal value is the price at which a bond is issued and usually redeemed and the price below which a company’s ordinary shares cannot be issued.

Pari passu

Of equal ranking. new ordinary shares issued under a rights issue, for instance, rank pari passu with the company’s existing ordinary shares.

Passive management

An investment approach employed in those securities markets that are believed to be price-efficient. The term also extends to passive bond management techniques collectively known as ‘Immunisation’.


An investment that provides an indefinite stream of equal pre-specified periodic payments.

Present value

The value of a sum of money receivable at a known future date expressed in terms of its value today. A present value is obtained by discounting the future sum by a known rate of interest.

Rebalancing frequency

The rebalancing frequency is how often the process of realigning the weightings of one’s portfolio of assets is completed. Rebalancing involves periodically buying or selling assets in your portfolio to maintain your original desired level of asset allocation. 

Recurring Contribution

Amount we will debit from your Bank Account every month to fund ETFs supporting this goal.

Regression analysis

A statistical technique used to establish the degree of correlation that exists between two variables.

Reinvestment risk

The inability to reinvest coupons at the same rate of interest as the gross redemption yield (GRY). This in turn makes the GRY conceptually flawed.

Retail prices index (RPI)

An expenditure-weighted measure of UK inflation based on a representative basket of goods and services purchased by an average UK household.


Robo-advisors are online investment services that automate investment advice in order to make wealth management accessible to potentially everyone at any time.

Share buyback

The redemption and cancellation by a company of a proportion of its irredeemable ordinary shares subject to the permission of the High Court and agreement from HM Revenue & Customs.

Share capital

The nominal value of a company’s equity or ordinary shares. A company’s authorised share capital is the nominal value of equity the company may issue while issued share capital is that which the company has issued. The term ‘share capital’ is often extended to include a company’s preference shares.

Share split

A method by which a company can reduce the market price of its shares to make them more marketable without capitalising its reserves. A share split simply entails the company reducing the nominal value of each of its shares in issue while maintaining the overall nominal value of its share capital. A share split should have the same impact on a company’s share price as a bonus Issue.

Short position

The position following the sale of a security not owned or selling a derivative.


A strategy requiring the simultaneous purchase of one or more options and the sale of another or several others on the same underlying asset with either different exercise prices and the same expiry date or the same exercise prices and different expiry dates. Spreads include bull spreads, bear spreads and butterfly spreads

Standard deviation

A measure of dispersion. In relation to the values within a distribution, the standard deviation is the square root of the distribution’s variance.

Standing order / Bank transfer

Give an instruction to your bank to make monthly fixed payments to your ETFmatic account.

Stock exchange automated quotation (SEAQ)

The London Stock Exchange’s (LSE) quote-driven screen-based trading system that displays firm bid and offer prices quoted by competing market makers during the mandatory quote period.

Stock exchange electronic trading service (SETS)

The London Stock Exchange’s (LSE) screen-based order-driven trading system that electronically matches buy and sell orders input to the system. Only the most liquid securities in the UK equity market can be traded through SETS and all orders must be firm and not indicative, as, once displayed, an order must be capable of immediate execution.


ETFs in these categories replicate indices of the major corporations in each market.


An over-the-counter (OTC) derivative whereby two parties exchange a series of periodic payments based on a notional principal amount over an agreed term. Swaps can take the form of interest rate swaps, currency swaps and equity swaps

Synthetic vs Physical ETFs

A Physical ETF invests in securities that replicate or represent the composition of the index it tracks, and a Synthetic ETF uses financial derivative instruments (such as swaps and performance-linked structured products issued by counter-parties) to track index performance. Since Synthetic ETFs invest in over-the-counter derivatives issued by counter-parties, these ETFs are exposed to the credit risk of the derivative counter-parties.

Target Amount

The amount of money and assets you want to have at the end of your contribution period.

Target date

The date that you anticipate to sell the ETFs associated with this Goal using one of our Divestment options. ETFmatic will reduce the weight of riskier assets in your Portfolio as you approach your target date. If no target date is selected, ETFmatic will increase this Portfolio’s allocation to less risky assets to reduce its volatility.

Time value

That element of an option premium that is not intrinsic value. Time value also relates to a sum of money which, by taking account of a prevailing rate of interest and the term over which the sum is to be invested or received, can be expressed as either a future value or as a present value, respectively.

Time weighted rate of return (TWRR)

The unitised performance of a portfolio over an investment period that eliminates the distorting effect of cash flows. The TWRR is calculated by compounding the rates of return from each investment sub-period, a sub-period being created whenever there is a movement of capital into or out of the portfolio.

Total Expense Ratio (TER)

The total expense ratio (TER) is a measure of the total costs associated with managing and operating an investment

Tracking error

Tracking error is the volatility (as measured by the annualised standard deviation) of a fund’s return differences over a period of time (return differences referring to the differences in periodic returns between the fund and its benchmark).

A low tracking error indicates the fund has consistently tracked its benchmark.

Treasury bills

hort-term government-backed securities issued at a discount to par via a weekly Bank of England auction. Treasury bills do not pay coupons but are redeemed at par. Treasury bills are also issued in a similar fashion in the US.

UK Competition Commission

The body to which a merger or takeover is referred for investigation by the UK business Secretary in order to establish whether the combined entity will work against the public interest or will prove to be anti-competitive.

UK corporate governance code

The code that embodies best corporate governance practice for all public limited companies (PLCs) quoted on the London Stock Exchange (LSE). Also known as the Code of best Practice.

UK listing authority (UKLA)

The body responsible for setting and administering the listing requirements and continuing obligations for public limited companies (Plcs) seeking and obtaining a full list on the London Stock Exchange (LSE). The Financial Services Authority (FSA) was appointed as the uKLA in May 2000.

Undertakings for collective investments in transferable securities (UCITS) directive

An EU directive originally introduced in 1985 but since revised to enable collective investment schemes (CISs) authorised in one Eu member state to be freely marketed throughout the EU, subject to the marketing rules of the host state(s) and certain fund structure rules being complied with.


A measure of dispersion. In relation to the values within a distribution, the variance is the mean of the sum of the squared deviations from the distribution’s arithmetic mean.

Variation margin

The cash that passes between the exchange clearing members daily via the clearing house in settlement of the previous day’s price movement in an open derivatives contract.

Weighted average cost of capital (WACC)

The average post-tax cost of servicing a company’s long-term sources of finance. The WACC acts as the discount rate for establishing the net present value (NPV) of investment projects of equivalent risk to those currently undertaken by the company.

Yield curve

The depiction of the relationship between the gross redemption yields (GRYs) and the maturity of bonds of the same type.

Zero coupon bonds (ZCBs)

Bonds issued at a discount to their nominal value do not pay a coupon but which are redeemed at par on a pre-specified future date.

Still have a Questions?

If you cannot find answer to your question in our FAQ, you can always Contact us. We will answer to you shortly!