Glossary
In this section we seek to explain, in alphabetical order, technical terms used in our monthly reports or in our web.
- Asset Allocation
- Beta
- Bloomberg
- Custodian
- Index
- ISIN
- M2
- Management fee
- Market Capitalisation
- Net Asset Value
- Risk adjusted returns
- Sector Allocation
- Sharpe
- VAR
- Volatility
Asset Allocation
It represents the percentage of assets held by the fund in the three asset classes in which it invests: equities, fixed income and cash.
Beta
It measures the fund's sensitivity to movements in the stock market. It is expressed as a coefficient and it is an indication of how much the fund's NAV would change as a results of a rise/fall in the stock market. For example: if the beta of Cartesio Y is 0.5, the fund should rise (fall) 0.5% for every 1% rise (fall) in the stock market.
Bloomberg
The prominent professional financial information system. The Cartesio funds have a Bloomberg code which allows access to extensive information and research tools about them.
Custodian
It is the financial institution responsible for the registration and book keeping of the assets held by the fund and all the subscriptions and redemptions. It is totally independent from the manager. The fees charged by the custodian are accrued and charged to the fund on a daily basis and therefore reflected in its daily Net Asset Value.
Index
A statistical number which reflects the total value of its components. In the monthly reports we use a benchmark index for European equities (MSCI Pan Europre) and another for long term Euro zone government bonds (Bloomberg/EFFA Euro Generic Government Bond 10 year). The investment objective of the Cartesio funds is to obtain better risk adjusted returns than its benchmark index over the longer term.
ISIN
International Securities Identification Number. It is the standard international code to identify any financial instrument. It an alphanumeric combination of twelve characters, the first two identify the issuer's place of registration (for example ES is for Spain). The Cartesio funds have each their own ISIN codes.
M2
A measure of risk adjusted returns which, expressed as a percentage, shows the theoretical return one would have achieved by assuming the same level of risk ( price volatility) as the index. It is a more intuitive measure of risk adjusted returns than the Sharpe ratio.
Management fee
It is the fee charged by the manager (Cartesio Inversiones SGIIC SA) to the fund for its services. The Cartesio funds have a fixed annual fee which is a percentage of the assets held by the fund, and a performance fee (not for Pareturn Cartesio Equity) based on the annual positive returns generated by the fund. Both management fees are calculated daily and are deducted to arrive at the daily Net Asset Value of the fund.
If the fund has a loss in a given year the performance fee is zero and will be charged again only when the loss is recovered; the fund has three years to recover the loss. After three years without recovering the loss a new performance period is set to calculate the performance fee.
Market Capitalisation
It is the value in the stock market of a company, normally expressed in billions of Euros. It is the product of multiplying the price of a share in the market times the number of shares issued. The companies held in the fund are classified according to their market capitalisation as large, medium and small.
Net Asset Value
The result of valuing the fund's assets at market prices after deducting all fees and expenses. It is calculated daily.
Risk adjusted returns
The holy grail of investment is to achieve the highest possible returns with the lowest possible risk. Cash is the only asset without risk. Risk is measured by price volatility, the higher the volatility of an asset the higher is the risk of capital loss. We give two measures of risk adjusted returns in our reports, the Sharpe ratio and M2 , both use the returns and the volatility of the funds and compare it with the returns of cash.
Sector Allocation
It represents the percentage, within the equities or the bond portfolio, invested in each of the ten economic sectors into which the world stock market is divided by Morgan Stanley Capital International. In the reports we also show the weight that each sector has in our benchmark equity index (MSCI Pan Europe).
VAR
Value at risk. Measures the expected maximum loss (with a 95% confidence level) of the fund within a given period. It is calculated using the price volatility of the fund.
Volatility
The standard deviation of the fund's daily net asset value. It is expressed in annual terms. The higher the standard deviation, the higher the probability the fund incurs a significant capital loss in a given year. The Cartesio funds have a history of moderate (Cartesio Y) or low (Cartesio X) volatility.