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Mutual Funds Glossary

Glossary #1 (A - N)   |  Glossary #2 - Morningstar Categories   |  Glossary #3 (P - Z)
If you're having trouble finding a certain term, try our larger Business Glossary.

 

 


12b-1 Fee
The maximum annual charge deducted from fund assets to pay for distribution and marketing costs.

Average Maturity
A fund's average maturity is the dollar-weighted average of the maturities of its fixed-income holdings. Maturity represents the date on which a bond's principal is to be repaid.

Best Fit Index
The market index that shows the highest correlation with a fund over the most-recent 36 months, as measured by the highest R-squared. Morningstar regresses a fund's monthly excess returns against the monthly excess returns of several well-known market indexes. The following indexes are regressed against each equity fund: JSE Gold; MSCI Pacific, MSCI Pacific ex Japan, MSCI World ex U.S., MSCI EASEA, MSCI Europe, Russell 2000, S&P MidCap 400, MSCI All Country World, Wilshire 4500, Wilshire REIT, S&P 500, LB Long-Term Treasury, and FB High-Yield. The following indexes are regressed against each bond fund: Russell 2000, MSCI All Country World, Wilshire 4500, S&P 500, LB Long-Term Treasury, SB World Government, LB Corporate, LB Municipal, LB Government, FB High-Yield, LB Aggregate, LB Intermediate-Term Treasury, LB Mortgage-Backed.

Closed Fund
An open-end fund that has closed, either temporarily or permanently, to new investors. This usually occurs when management finds the fund's increasing asset size to be disadvantageous.

Expense Ratio
The percentage of fund assets paid for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund's NAV. Sales charges are not included in the expense ratio.

Fund Class
To accommodate the largest number of investors, many funds offer separate classes of shares, each carrying different load structures. Shares offered with a front-end load are commonly called "Class A shares," and those with a back-end load "Class B shares." A fund's performance figures and NAVs will be different for different share classes.

Fund Family
A company which offers mutual funds.

Fund Inception Date
The date on which the fund began its operations.

Growth Persistence
A measure of how consistently a fund has outperformed its equity or fixed-income peers.

Manager Name
The name of the individual or individuals who are employed by the advisor or subadvisor who are directly responsible for managing the fund's portfolio, as taken directly from the fund's prospectus. Other terms that may appear in this column include the following:

Multiple Managers: This term appears when more than two persons are involved in the fund management, and they manage independently. Where this term is used, quite often the fund has divided net assets in set amounts among the individual managers. In most cases, multiple managers are employed at different subadvisors or investment firms.

Management Team: This is used when there are more than two persons involved in fund management, and they manage together, or when the fund strongly promotes its team-managed aspect.

Et al: When this term appears just after a manager name, it indicates that while other persons are involved in fund management, the person listed acts as the leader and/or is recognized by the fund as being the principal management player.

Maximum Sales Charge
A combination of the highest possible deferred fees and front-end sales charges a fund can apply. The amount is generally relative to the amount of the investment, so that larger investments incur smaller rates of charge. If 0% is listed, then the fund does not have a front-end sales charge.

Sales charges will usually decrease over time and are generally proportionate to the size of the investment.

Minimum Automatic Investment
The smallest investment amount accepted for establishing an automatic investment plan.

Minimum Initial Investment
The smallest investment amount accepted for establishing a new account.

Minimum IRA Investment
The smallest investment amount accepted for establishing an individual retirement account.

Name
The name of the stock or fund.


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