Listed below are terms and descriptions commonly used in the financial industry.


Asset allocation

An investment in cash usually refers to a savings or fixed-deposit account with a bank, or to a money market investment. Cash is generally regarded as the safest investment. Whilst it is theoretically possible to make a capital loss investing in cash, it is highly unlikely. Cash is an ideal short-term investment for investors with low tolerance for volatility or capital loss.

All Bond index (ALBI)

The BEASSA All Bond index comprises of bonds from across the full range of maturities in the bond market and is a useful summary measure of the movement in the bond market.

All Share index (ALSI)

The FTSE/JSE All Share index represents the top 99% of eligible companies listed on the JSE, weighted by full market capitalisation. It is a useful measure of the movement in the equity market.


This is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon. The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time.

Cash equivalents (money market)

An investment in cash usually refers to a savings or fixed-deposit account with a bank, or to a money market investment. Cash is generally regarded as the safest investment. Whilst it is theoretically possible to make a capital loss investing in cash, it is highly unlikely. Cash is an ideal short-term investment for investors with low tolerance for volatility or capital loss.

Collective investment scheme (CIS)

Collective investments are investments in which investors' funds are pooled and managed by professional managers. Investing in shares and fixed income securities offer investors the opportunity to build real wealth. Yet, the large amounts of money required to purchase these securities are often out of reach for smaller investors. The pooling of investors' funds makes collective investments the ideal alternative, providing cost effective access to the world's security markets. Investing in collective investments has become very popular and is considered to be a sound financial move by most investors.

Consumer Price index (CPI)

When we talk about the rate of inflation in South Africa, this often refers to the rate of inflation based on the Consumer rice index, or CPI for short. The South African CPI shows the change in prices of a standard package of goods and services which South African households purchase for consumption. In order to measure inflation, an assessment is made of how much the CPI has risen in percentage terms over a given period compared to the CPI in a preceding period. If prices have fallen this is called deflation (negative inflation).

Dividend withholding tax legislation

Dividend Withholding Tax legislation is tax at a shareholder level and is levied at a rate of 10% of dividends paid out (distribution paid out). It affects individuals and non-South African residents (foreign nationals) only. Dividends Withholding Tax legislation will become effective on a date determined by the Minister of Finance (at least three months after publication). This form of tax should be effective by late 2010 / early 2011 but final dates are yet to be confirmed.


A share represents an institution/individual’s ownership in a listed company and is the vehicle through which they are able to share in the profits made by that company. As the company grows, and the expectation of improved profits increases, the market price of the share will increase and this translates into a capital gain for the shareholder. Similarly, negative sentiment about the company will result in the share price falling. Shares/equities are usually considered to have the potential for the highest return of all the investment classes, but with a higher level of risk i.e. share investments have the most volatile returns over the short term. An investment in this type of asset should be viewed with at least a five-year horizon. However, stock markets can experience protracted periods of poor performance, in which case an even longer period may be required.


 Listed below are the various fees and charges related to investing in unit trusts outlined by CISCA.

  • Initial fund fees
    Momentum Collective Investments Limited does not charge initial fees on any of its funds. Some CIS managers levy initial fees on funds to cover marketing and administration costs. These fees are deducted from the amount invested and can range between 0- 5%. However, since deregulation of fees in 1998, there are no maximum restrictions in terms of initial charges.
  • Ongoing fund fees
    CIS managers levy a service fee on a monthly basis. This fee is recovered from the fund’s income (interest and dividends). The fee is calculated daily, levied monthly but still expressed as a percentage per annum.
  • Financial adviser fees
    Investors can invest directly with the CIS manager or via a financial adviser. The adviser may charge fees for the advice given. This may be charged as a flat fee or an hourly rate. Alternatively, a percentage of the investment amount can be paid to the adviser in the form of commission. The fee can be structured as an initial fee and/or an ongoing fee.

Financial Intelligence Centre Act (FICA)

The Financial Intelligence Centre Act No. 38 of 2001 (FICA) requires all accountable institutions, in this case Momentum Collective Investments Limited, to identify, verify and keep records of all clients with whom they establish a business relationship. Those who fail to comply with these requirements face severe penalties. As a result, Momentum Collective Investments Limited may not process transactions that are subject to FICA if the documents we have on our system are not up-to-date and complete. To download a comprehensive list of FICA document requirements click here. All FICA documents can be emailed to [email protected]. You can also fax this information to +27 (0) 12 675 3389.

Financial markets

Financial markets are the institutional arrangements and conventions that exist for the issue and trading of financial instruments.

Financial Services Board (FSB)

The Financial Services Board (FSB) is the regulatory body of the Collective Investment industry. The Registrar of Collective Investment Schemes is an official of the FSB. Collective investment schemes must be registered with the FSB in order to operate legally.Click here to visit the FSB website and to find out more.

Fund classes

Some funds have multiple classes to cater for different fee structures for various types of investors (individuals, LISPs, FoF, institutions).

Fund class


R Class This applies to funds in existence before June 1998. These are no longer available to new investors
A Class These classes were created after deregulation (April 2000) and are available to all retail investors
B Class These classes were developed for institutional and other wholesale investors

Fund of funds (FoF)

A fund of funds is a collective investment fund that invests in a range of other collective investment schemes. Every fund of funds is required to invest in a minimum of two underlying collective investments. The portfolio manager chooses these based on the fund’s mandate and risk profile.

Gross Domestic Product (GDP)

Gross Domestic Product measures the total volume of goods and services produced in the economy. Therefore, the percentage change in the GDP from year to year reflects the country’s annual economic growth rate.

Income distributions

A unit trust earns dividends on the shares in the portfolio and interest on the fixed interest (bond and cash) investments. The net income received (after deduction of annual management fees) is divided equally among the number of units in issue on the income declaration date. Investors have the option to have these distributions either paid out to them or reinvested in the fund.

Income distributions therefore comprise an interest and/or a dividend portion, depending on the underlying investments in the fund.

Investors who buy units in the fund on or before the income declaration date (cum div) will pay a higher unit price than investors who buy units in the fund after the income declaration (ex div) and who do not qualify to receive the distribution, which has already been declared.

Distributions are expressed in cents per unit (cpu) and typically occur as follows:


Income distributions 

Equity funds Bi-annually
Income and bond funds Quarterly
Money market and dividend income funds Monthly

Inflation-linked bonds (ILBs)

An inflation-linked bond is a bond that provides protection against inflation. The interest payable and the principal amount payable at maturity of the bond is linked to inflation.

Inflation rate

The inflation rate indicates the rate of change in the price of goods and services from one year to the next. It also approximates the decrease in the purchasing power of money. Two commonly used indicators of inflation rates are the Consumer Price index (CPI) and the Producer Price index (PPI).

JSE Securities Exchange

The primary role of the JSE Securities Exchange is to provide a market where securities can be freely traded under regulated procedures. For more information, click here.

Linked Investment Service Provider (LISP)

A LISP is an independent investment administration company that offers investors access to collective investment schemes across a number of different management companies. A LISP acts purely as an administrator and does not manage fund assets nor does it provide investment advice.

Management company

The management company, or “manager” as it is more often referred to, is the central coordinating element of a Collective Investment Scheme (CIS). It is usually the company that launches a CIS, and which maintains overall responsibility for administration, appointing asset managers and trustees, and the marketing of the fund to investors. While some of these functions might be outsourced, it is the CIS manager who directs activities.

MSCI World index

The MSCI World index is a free float-adjusted market capitalisation weighted index that is designed to measure the equity market performance of developed markets. This index consists of the following 24 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States.

Net Asset Value (NAV)

A unit trust portfolio is divided into identical participatory interests (units), each with the same value. These units have a fixed price for the day which is established each evening using the closing prices of the fund’s underlying investments for the day. Money Market funds are priced differently to other funds. This fund is not priced at market value but rather at a fixed price rate of R1.00 per unit. Interest is accrued daily and capitalised monthly.

 NAV = Total value of portfolio/Number of units in issue

Portfolio managers

The person(s) responsible for implementing a fund’s investing strategy and managing its portfolio trading activities. A fund can be managed by one person, by two people as co-managers and by a team of three or more people. Click here to download  the full list of our portfolio managers.

Price-to-earnings ratio (P/E)

Price-to-earnings ratio or P/E ratio is calculated by dividing the price per share by the earnings per share. This ratio provides a better indication of the value of a share, than the market price alone. For example, all things being equal, a R10 share with a P/E of 75 is much more “expensive” than a R100 share with a P/E of 20.

Producer Price index (PPI)

The Producer Price index (PPI) indicates the changes in production prices of locally produced commodities (which are locally sold or exported) and imported commodities. The PPI is compiled from a survey of the prices paid by samples of manufacturers, exporters and importers operating in the South African economy.


Property has both bond and share attributes. Property yields are normally stable and predictable because they comprise of many contractual leases. These leases generate rental income that is passed through to investors. Property share prices however fluctuate with supply and demand and are counter cyclical to the interest rate cycle. Property is an excellent inflation hedge as rentals escalate with inflation, ensuring distribution growth, and property values escalate with inflation ensuring net asset value growth. This ensures real returns over the long term.

Repurchase (Repo) rate

The repo rate is the interest rate at which commercial banks can borrow money from the South African Reserve Bank. The benchmark rate at which the banks lend out to their own clients is called a prime overdraft rate.

Short Term Fixed Interest index (STeFI)

The Alexander Forbes Short Term Fixed Interest index (STeFI) will approximate the performance of money market instruments in the market.

Total Expense Ratio (TER)

All CIS managers, such as Momentum Collective Investments Limited, are required to calculate and publish the TER of a fund so as to be transparent regarding the impact of the fees an costs on the portfolio. It is a measure of the fund’s assets that have been sacrificed as payment for services rendered in the ongoing management of the fund, such as:

  • Management fees
  • Administration costs
  • Custody fees
  • Trustee fees
  • Audit fees
  • Bank charges
  • Taxes
  • Stamp duty
  • Interest charges where the fund’s bank account is in overdraft

TERs are expressed as a percentage of the daily average value of the portfolio and are calculated over a period of a financial year and published quarterly. These are historical figures and are not indicative of future TERs.


An investment portfolio is divided into equal parts. These are referred to as “units”. Each unit represents a direct proportionate interest in every asset in the portfolio. The investor will purchase units in the relevant fund and the amounts he or she will receive depend on the amount invested and the ruling NAV price. The price of the units will reflect the value of the underlying investments (e.g. shares, bonds). The price of the units varies according to the market value of the investments in its portfolio.

Volatility index (VIX)

The CBOE Volatility index (VIX) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world's premier barometer of investor sentiment and market volatility. Values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets.


A yield is the income return on an investment expressed as a percentage of its current market value. It is derived from the interest and/or dividend income received from an investment. The yield calculations for money market and fixed interest unit trust funds are based on standards governing the unit trust industry. This yield provides an estimate of income you could receive at a single point in time and is not an indication of income you will earn going forward. The actual income you receive depends on your investment start and end dates.

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