Assets
Something you can own that can be sold for cash or exchanged for another item of value.  Your house, car, furniture, jewellery, savings and any other investments are all assets.

Asset Classes
Another word for Investment Types.  Refers to shares, bonds, cash, property etc.

Balanced Fund                       
These funds are designed to meet the legal requirements for retirement funds, which limit the amount that can be invested in Shares.  Regulation 28 of the Pension Funds Act sets out the maximum exposures that retirement fund savings may have to various asset classes:                                               
75% in equities
25% in property
45% in foreign assets

Bond
A bond is basically “I owe you” certifying that the bondholder has loaned money to a corporation or government and describing the terms of the loan (repayment period and interest rate).  Government bonds, or gilts, are issued to raise money for the government and offer a fixed interest over a fixed period of time.  Placing money in government bonds is similar to having money in cash form.  However government bonds can incur capital losses or gains if traded before their maturity date.  A bond usually pays interest at regular intervals.  The principal amount of the bond (the amount you loaned) is repaid at maturity.

Capital
Any assets or money which can be invested.

Diversify
To spread your assets amongst different types of investment vehicles (e.g. bonds, fixed interest) and/or different Investment Managers

Equities
Another name for shares

Equitable Share
The total value of your benefits in your retirement fund and equal to:

• The full value of your own contribution plus
• The Company’s contribution towards retirement savings plus
• Voluntary contributions (if any) plus
• Any amount you transferred to the fund (if any) plus
• The investment earnings on all these amounts

Inflation
Inflation is a measure of the rise in the cost of living.  Your investment needs to at least keep pace with inflation to preserve its purchasing power.

Investment Manager
An Investment Manager is an investment house or insurer who invests your assets.  The trustees delegate the responsibility of managing the assets to investment managers who have the expertise to invest the assets wisely, and within the constraints of legislation.

Long-Term
Usually refers to a period of more than 8 – 10 years

Market-Related Portfolio         
A portfolio where a portion of the money is invested in shares.  Market-linked portfolios differ from guarantee portfolios in the sense that there are no guarantees of capital preservation.  Members who choose to invest in a market-linked portfolio will share directly in the performance of the financial markets including possible declines in market values resulting in the partial loss of capital.

Multi-Manager                        
A multi-manager is a company who invest with different asset managers on behalf of funds/clients.  The multi-manager chooses asset managers for their expertise in different investment types.

Portfolio
Portfolio is the name used to describe a group of different types of investments.  For example if you had R100 000 to invest, your portfolio might me made up of R40 000 in shares bought on the stock market, R10 000 in property, R45 000 in government bonds and R5000 in cash.  If the portfolio has apportion invested in shares bought on the stock market, it would be said to be a market-related portfolio, because the performance of your investment would be related to that of the share market.  Likewise, a cash portfolio is one in which your money is invested mostly in bank deposits.

Shares
Also known as equity.  Shares represent ownership in a Company.  The price of a given share is based on the investors’ collective view of a Company’s future.  The price of shares can fluctuate dramatically as this view changes.  Investments in shares give you the opportunity to achieve high returns over the long-term but your investment is affected by short-term market and currency fluctuations.

Short-term
Short-term refers to a period of time between three months and three years.

Unit Price
A unit price is determined for each portfolio on a daily basis.  The unit price shows the investment return achieved.  Investments and disinvestments are made on the unit price of the day.

Volatility
The tendency of an investment to experience price swings.  A highly volatile investment experiences dramatic price movement over short periods of time.