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Find in Piraeus Asset Management MFMC glossary definitions for Mutual Funds. The definitions of vocabulary arising from the international and domestic academic literature and the institutional framework. 

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Initial Public Offering (IPO)

A company’s Initial Public Offering (IPO) refers to the first sale of equities to public investors. IPOs enable companies to be listed on an exchange and thus to benefit from access to capital, liquidity, prestige and reduced cost of capital.

Investment Grade

Investment Grade is a high consideration of credit quality (low probability of default) assigned by a rating agency. For instance, to be classified investment grade according to Standard and Poor’s, a bond or an issuer must have a rating greater than BBB-. Investment grade is opposed to high yield.

Investment Profile/Risk

An evaluation of an individual or organization's willingness to take risks, as well as the threats to which an organization is exposed. A risk profile identifies:
1. The acceptable level of risk an individual or corporation is prepared to accept. A corporation's risk profile attempts to determine how the corporation's willingness to take risk (or aversion to risk) will affect its overall decision-making strategy.
2. The risks and threats faced by an organization. The risk profile may include the probability of resulting negative effects, and an outline of the potential costs and level of disruption for each risk.
In general, the greater the risk associated with any investment, the greater the return required. Either risk profile - whether used to describe the willingness to accept risk or an evaluation of the risks to which an entity is exposed - can be expressed in graphical form. Risk is often measured in terms of risk probability - the likelihood that a risk will occur and risk impact - a measure of the consequences (such as project costs and schedule) if the risk occurs. Investors, for example, can evaluate the risk to which a portfolio is exposed and make buy and sell decisions based on this risk and their willingness to accept risk.


KIID - Key Investor Information Document

The Key Investor Information Document (KIID) is an information sheet that includes all the key facts and figures about a fund.  It has a standard layout with sections describing what the fund does, the investment risk, charges and performance.  All funds have the same layout, making it easier to compare funds from different providers.


Large Cap

Large cap (Big Cap) is a term used by the investment community to refer to companies with a market capitalization value of more than a defined level.


London Interbank Offered Rate (LIBOR) is the average rate at which major banks in London would be charged to borrow funds in the interbank market. Libor rates are published on a daily basis for 10 currencies and 15 borrowing periods. As Libor rates are calculated through submissions, they are subject to manipulations. Such manipulations have been the cause of the ‘Libor scandal’ revealed in June 2012.


Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price. Market liquidity refers to the extent to which a market, such as a country's stock market or a city's real estate market, allows assets to be bought and sold at stable prices. Cash is the most liquid asset, while real estate, fine art and collectibles are all relatively illiquid.

Liquidity Risk

The liquidity risk refers to the risk of selling (buying) a security at a price significantly lower (higher) than its intrinsic value due to lack of market participants trading it.


Management Fee

The management fee is the cost of having your assets professionally managed. 

In the investment advisory industry, a management fee is a periodic payment that is paid by an investment fund to the fund's investment adviser for investment and portfolio management services. Often, the fee covers not only investment advisory services, but administrative services as well. Usually, the fee is calculated as a percentage of assets under management.

Margin Call

A margin call is a broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when your account value depresses to a value calculated by the broker's particular formula.

Market Risk

Market risk is the possibility for an investor to experience losses due to factors that affect the overall performance of the financial markets. Market risk, also called "systematic risk," cannot be eliminated through diversification, though it can be hedged against.

Market Timing

Market timing is the act of attempting to predict the future direction of the market, typically through the use of technical indicators or economic data.

Maturity Date

Maturity date refers to the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.


MiFID is the Markets in Financial Instruments Directive (Directive 2004/39/EC). In force since November 2007, this directive governs the provision of investment services in financial instruments by banks and investment firms and the operation of traditional stock exchanges and alternative trading venues.

Money Market

A money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities are traded.

Mutual Fund

An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund's current net asset value (NAV) per share, which is sometimes expressed as NAVPS.

Mutual Funds Classification

It's important to understand that each mutual fund has different risks and rewards. In general, the higher the potential return, the higher the risk of loss. Although some funds are less risky than others, all funds have some level of risk - it's never possible to diversify away all risk. This is a fact for all investments. Each fund has a predetermined investment objective that tailors the fund's assets, regions of investments and investment strategies. At the fundamental level, these are the varieties of mutual funds:
Equity funds
Bond funds
Money market funds
Balanced Funds
Specialty Funds
Fund of Funds