Glossary

• Growth stocks
• Insurance-based pension savings
• Accumulation (accumulation units)
• Sub-fund
• Savings account
• Online savings account
• Conversion
• Income (income units)
• Duration
• Fund
• FCP mutual fund
• Fund of funds
• Pension savings fund
• Feeder fund > Master fund
• Strategic fund
• Alternative investments
• Collective Investment Undertaking (CIU)
• Other investments
• Investment plan
• Branch 21 individual life insurance product/insurance-based investment
• Branch 23 individual life insurance product/insurance-based investment
• Structured product/structured note
• Capital protection/Capital guarantee
• Risk
• Sicav
• Asset value
• Volatility

Growth stocks

Growth stocks are shares of companies that exceptional growth prospects in terms of their revenue or profits. These are often young companies or newly launched businesses. As a result, they still benefit from growing success and high development potential.

Insurance-based pension savings

An insurance-based pension savings plan is a Branch 21 insurance product. The accumulated capital and return are guaranteed. A variable profit-sharing payment is added to the guaranteed interest, which depends on the profits of the insurance company and the economic situation.

Accumulation (accumulation units)

The CIU reinvests the income it receives. The income is therefore automatically added to the CIU's assets and increases its asset value. For the investor, this constitutes deferred income. From a tax perspective, this accumulation of income is regarded as a capital gain on the units and is exempt from tax for the holder (individuals subject to personal income tax).

Sub-fund

Sicavs can be divided into sub-funds: this means that a Sicav can consist of different types of securities, each making up a separate part of the fund’s assets. Each time a sub-fund is issued, a prospectus is made available to investors, explaining its specific investment policy. Investors can convert securities held in one sub-fund into securities in another, easily and at low cost.

Savings account

A savings account is a very simple type of account that is always available. It offers a versatile, user-friendly and almost risk-free way to save money for the short or medium term. The savings account's return consists of a basic rate, a growth bonus and/or a loyalty bonus, all expressed as an annual percentage.

Online savings account

An online savings account is a savings account that can only be opened via online banking. It is reserved for individuals and for private use.

Conversion

The sale of units in one CIU sub-fund accompanied by the purchase of units in another sub-fund of the same CIU for the same value. This term is also used to indicate a change from income units to accumulation units of a CIU or a specific sub-fund (and vice versa).

Income (income units)

Income is distributed to shareholders in the form of annual coupons. From a tax perspective, coupons from foreign CIUs are subject to withholding tax in Belgium. No withholding tax is levied on coupons from Belgian CIUs, as it has already been retained at source, i.e. by the CIU itself (except for pension funds, which are exempt).

Duration

Duration indicates the extent to which the price of a bond is affected by changes in interest rates. A duration of 5 years means that the bond price will decrease by 5% when interest rates increase by 1 percentage point and vice versa.

Fund

Commonly referred to as "funds", collective investment undertakings (CIUs) and undertakings for collective investment in transferable securities (UCITS) are structures that collectively manage capital provided by investors. Funds collect capital and invest it collectively in securities. The most well-known types are Sicavs and FCP mutual funds.

FCP mutual fund

FCP mutual funds are a type of CIU, like Sicavs, from which they originated. Unlike a Sicav, an FCP mutual fund is not a company and does not have legal personality, but holds assets on a co-ownership basis and issues units. Each unitholder has a co-ownership right to the FCP’s assets proportional to the number of shares they hold.

Fund of funds

A fund of funds is an FCP mutual fund that invests in other FCP mutual funds.

Pension savings fund

Pension savings funds are common investment funds created within the legal framework of individual pension savings. They are recognised by Belgian Ministry of Finance and must meet certain legal requirements. As such, they can only accept contributions that are taken into account for pension savings tax relief.

The advantage of pension savings funds is that the interest and dividends they receive are exempt from withholding tax, and do not have to pay any financial transaction tax.

The assets in which these funds can invest are subject to certain investment rules.

Feeder fund > Master fund

A fund is said to be a "feeder fund" when it invests almost all of its assets in one other fund, called the "master fund", which is legally independent from it. This type of financial product structure allows a financial institution to offer a product that is managed in a similar way to another product (and therefore pool its management resources) but marketed in a way that is better suited to its own clients.

Strategic fund

A strategic fund reflects the investment strategy developed by Fortis Investments for each of its existing investor profiles. Each benchmark portfolio is established according to a specific allocation of assets between equities, bonds and cash. Depending on market conditions, the strategy may deviate from the benchmark portfolio to a greater or lesser extent.

Alternative investments

These include investments in units of "Absolute Return" CIUs, as well as financial instruments that allow a sub-fund to benefit from exposure to real estate and commodity markets. 

Collective investment undertaking (CIU)

Generic term for various investment funds.

A CIU can be either a Sicav or an FCP mutual fund. A CIU is usually created by a financial institution, and is an independent legal entity. Buying units in a CIU entitled an investor to a share of the CIU’s profits, and that share depends on the amount invested. The invested capital can also decrease in value. Investing in a CIU diversifies risk and facilitates access to stock exchanges and foreign markets.

Investments in CIUs are covered by Belgium’s Protection Fund for Deposits and Financial Instruments. This means that the Protection Fund may pay out up to €20,000 if a credit institution or brokerage firm holds CIU units on behalf of its clients but is no longer able to deliver or return them to their legitimate owners. Note that the Protection Fund does not cover any decrease in the value of CIU units compared with the price paid to buy them.

Other investments

When BNP Paribas Fortis analyses a portfolio, it distinguishes between equities, bonds, cash and other investments. By "other investments", we mean real estate, commodities and investments whose structure or composition is likely to change rapidly.

Investment plan

Flexinvest is an accessible investment plan that adapts to each individual. It is completely free of charge, and combines the ease of automatic savings with all the potential of a financial investment. You build your own investment plan, which means that when you sign up for the contract, you decide:

• the frequency of your payments – monthly, bi-monthly, quarterly, semi-annual or annual;
• the amount of your payments – starting from €30 euros per payment, regardless of the selected frequency;
• the sub-fund of the Sicav or FCP mutual fund in which you want to invest – the entire range of funds marketed by BNP Paribas Fortis is at your disposal, except for Fix funds and pension savings funds

Branch 21 individual life insurance product/insurance-based investment

Branch 21 is the name of the range of life insurance products that offer a guaranteed interest rate and potential profit-sharing payments. Outstanding balance insurance and annuity plans are part of this category.

Branch 23 individual life insurance product/insurance-based investment

Branch 23 life insurance products do not offer a guaranteed return at maturity. Their return depends on the return of the investment funds to which they are linked. Some formulas also provide capital protection at maturity.

Structured product/structured note

Structured notes are hybrid instruments typically issued by financial institutions that use a combination of complex financial techniques to offer a return linked to a stockmarket index or interest rate and, in some cases, capital protection. They always have a predetermined maturity.

Capital protection/capital guarantee

For a collective investment undertaking (CIU) to offer capital protection or a capital guarantee, it must meet certain strict legal conditions. Both a capital guarantee and capital protection mean that the initial capital (excluding fees and taxes) is 100% guaranteed or protected at the final maturity. The difference lies in how the guarantee or protection is offered.

For funds with a capital guarantee, the guarantee is granted by a third party.

In the case of capital protection, the protection is an integral part of the fund's investment strategy through an underlying investment in cash deposits or debt instruments (bonds).

There are also investments that offer protection of less than 100%, in which case it is referred to as an "x% capital-protected” investment.

Risk

Risk can be defined as the degree of probability that the final return on an investment will deviates from the expected (advertised, promised, planned etc.) return. For bonds, there is a distinction between issuer risk, currency risk and interest-rate risk.

Sicav

A Sicav is an investment company with variable capital. It is a collective investment undertaking (CIU) managed exclusively in the interests of its unitholders, with the sole objective of investing in financial products, and whose capital increases or decreases according to the money invested and withdrawn by investors. Investments in a CIU are covered by Belgium’s Protection Fund for Deposits and Financial Instruments. This means that the Protection Fund may pay out up to €20,000 if a credit institution or brokerage firm holds CIU units on behalf of its clients but is no longer able to deliver or return them to their legitimate owners. Note that the Protection Fund does not cover any decrease in the value of CIU units compared with the price paid to buy them.

Asset value

The total value of a CIU's investment portfolio divided by the number of units in issue at the time of calculation. The price thus determined for a unit or investment is called the asset value. The most commonly used abbreviations are AV or NAV (net asset value).

Volatility

Volatility indicates the extent to which the return on a security or portfolio fluctuates compared to the average return. Investors should be aware that share prices experience significant fluctuations. The daily or weekly return on a stock can thus vary greatly, resulting in high volatility. The value of euro-denominated savings bonds, on the other hand, is relatively stable and their volatility is low.

From a mathematical perspective, volatility is the variance of historical returns. To measure volatility, we look at past returns and calculate how much they deviate from the average return.

Historical volatility is no guarantee of future volatility.