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Term
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Definition
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Close-end Fund
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A type of fund where there is a fixed number of units that the fund will issue.
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Custodian
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A bank, brokerage firm or financial institution which holds and safeguards an individual's, a mutual fund's, or an investment company's assets for them.
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Discount
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Amount (stated in Egyptian pounds or a percent) by which the market price of an ETF is below its net asset value.
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Diversification
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A strategy of spreading investments among different securities or sectors to reduce the risk of owning one single investment.
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Dividend
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A distribution of earnings to shareholders of a corporation or a fund.
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Exchange Traded Fund
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An open ended investment fund that tracks the performance of an index but trades like a share on EGX.
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Fund Manager
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An investment professional whose main responsibilities include investing the assets of a mutual, pension, insurance fund, or an ETF implementing investment strategy and managing the day-to-day portfolio trades.
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Hedge
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A strategy used to manage investment risk.
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Index
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An index is a numerical value used to measure changes in financial markets. The index is set at a numerical level e.g. 1000 on the base period or starting point against which a percentage change can be compared to at any particular point of time. Indices often serve as barometers for a given market or sector and benchmarks against which financial or economic performance is measured.
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Index Tracking
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A fund designed to track the performance of an index.
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Intraday
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During a single trading day.
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Liquidity
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The ability to easily turn assets into cash. An investor should be able to sell a liquid asset quickly with a little effect on its price.
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Margin Trading
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A process whereby investors purchase securities with borrowed money and whereby securities themselves are used as collaterals.
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Market Maker
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A member firm of EGX that accepts the risk of holding a certain number of ETFs in order to facilitate trading (buying and selling) of ETFs. The market maker is committed to give quotes on ETFs thus maintain a market in the ETFs during the trading session of EGX.
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Market Price of ETF
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The market price of an ETF is its on going traded price at EGX. It is determined by the forces of supply and demand on the ETF.
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NAV
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Refer to Net Asset Value.
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Net Asset Value
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Value of all the fund assets minus the value of the liabilities, divided by the number of shares outstanding.
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Open-end Fund
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A type of fund where there are no restrictions on the amount of units the fund will issue. Open-ended funds issue new units, or cancel units, as investors move into and out of the fund. This creation and redemption process helps keep the funds market price in line with its underlying net asset value.
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Premium
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Amount (stated in Egyptian pound or a percent) by which the market price of an ETF is above its net asset value.
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Short Selling
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A short sale is the process of selling securities that an investor does not own but have borrowed. The reason is because short sellers expect the price of securities to decline in the future.
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Volatility
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The relative rate at which the price of a security moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price. If the price of a stock moves up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility.
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