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Investment Jargon Buster


Closet Index Tracker

A fund which claims to be trying to outperform its benchmark whilst in reality all it does is closely track or hug it – sometimes described as a sheep in wolf’s clothing!
According to a study by SCM Private nearly half of all UK equity funds are closet index trackers.


FTSE 100 Index

An index of the 100 largest UK listed companies which just happen to earn less than 25% of their revenues in the UK.


S&P 500 Index

An index of the 500 largest US listed companies which just happen to earn only about two thirds of their revenues in the USA.


 


CAC 40 Index

An index of France’s leading quoted companies which just happen to earn only 20% of their revenues in France.


DAX Index

An index of Germany’s leading quoted companies which happen to earn just over 20% of their revenues in Germany.


Hedge fund

An investment vehicle primarily designed to benefit the managers by extracting large fees.

Simon Lack in his book The Hedge Fund Mirage estimated that from 1998 to 2010, hedge fund managers earned $379 billion in fees, whist their investors only made $70 billion in gains.