Glossary t - moneymanager.com.au

Tactical Asset Allocation
A process by which the Asset Allocation of a fund is changed on a short-term basis to take advantage of perceived differences in relative values of the various asset classes. A variation of asset allocation around a benchmark. (See also Strategic Asset Allocation).

Tactical Asset Allocation Overlay
A portfolio management technique, managed on an overlay basis, which gains exposure to the same asset classes as the total fund, through derivatives rather than physical securities, with the aim of taking advantage of short-term movements and opportunities in the markets. Use of a tactical asset allocation overlay manager can allow for a fund to take advantage of that manager's asset allocation skills without them necessarily being responsible for ongoing management of the underlying assets. (See also Overlay Manager, Synthetic Overlay).

Takeover
The acquisition of shares by one company in another so as to gain a controlling interest. Takeovers of Australian companies are regulated by the Corporations Law. (See also Merger).

Taker
The purchaser of an option (in an opening transaction).

Target Company
The company subject to a takeover.

Tariff
A charge levied on imports with the aim of protecting local industries.

Tax Deductible
Referring to an expense which can be offset against taxation liabilities.

Tax Exempt
a) Referring to income which is not liable for tax in the hands of the recipient; b) Referring to a fund which does not incur tax on its income, by virtue of its beneficiaries being a specialised class of persons, eg. a superannuation annuity fund, or a charitable organisation.

Tax File Number (TFN)
A number allocated to taxpayers by the Australian Taxation Office. The TFN is used by the Taxation Office to match income and taxation details.

Tax Loss
A situation where total deductions exceed total income, based on the Taxation Office's definitions.

TCA
Abbreviation for Trustee Companies Association.

Technical Analysis
An approach to the analysis of stock and futures markets and their future trends which examines the technical factors of market activity, often represented by charting patterns, as contrasted with fundamental analysis. Technical analysts normally examine patterns of price change, rates of change, and changes in volume of trading and open interest, in the hope of being able to predict and profit from future trends. Some investment professionals are sceptical of the predictive ability of technical analysis, but most managers keep an eye on the charts anyway.

Technical Position
A term used to describe the strengths and weaknesses of securities markets and individual securities as determined by specific criteria shown to have been reliable and useful in the past (eg. interest rates, money supply, inflation).

Technical Rally (or Decline)
Price variations, up (or down), arising from technical factors such as volume, open interest, delivery conditions or chart configurations, as opposed to movements resulting from supply and demand considerations.

Tender
a) The sale of a commodity or security through the seeking of written bids. (See also Bond Tender); b) A method used by governments to award contracts after publicly advertising their specifications.

Tender Notice
In futures markets, a notice announcing intention of tendering or delivering the actual commodity. A person with a bought futures position who receives a tender notice is usually required to take delivery.

Term Deposit
A deposit with a financial institution for a fixed period and a rate of interest which applies for the duration of the deposit.

Term to Maturity
The amount of time to elapse before the capital of a fixed interest security becomes due for repayment.

TFN
Abbreviation for Tax File Number.

Thematic Manager
An investment manager who utilises macro economic research and expertise to develop themes to influence its asset allocation decisions. The aim of thematic managers is to identify those factors in the market which will have strong influence on companies' profitability and on the market's perception of relative values.

Theoretical Value
An option value generated by a mathematical model given certain prior assumptions about the terms of the option, the characteristics of the underlying security, and prevailing interest rates.

Theta
The ratio of a change in an option price to a small change in the option's term to maturity. In other words, the rate by which an option premium will decrease over time, all other things being equal. (See also Vega).

Thin Market
A market in which there are comparatively few bids to buy, or offers to sell, or both. The phrase may apply to a single security or to the entire stock market. In a thin market, price fluctuations between transactions are usually larger than when the market is more active. A thin market in a particular share may reflect lack of interest in that issue or a limited supply of stock in the market.

Tick
The smallest possible movement in the price of an asset. For example, the `tick' size on a share in BHP is one cent.

Tick Value
The dollar value effect of the smallest unit move in a futures or option contract price.

Tiger Economies
A term for those Asian economies characterised by rapid growth and industrialisation since World War II. These countries include Taiwan, Singapore, South Korea and Hong Kong. (See also Emerging Markets).

Tight Money
A condition existing when interest rates are high and credit is stringent, generally because of official control of interest rates and the money supply. (See also Monetary Policy).

Tilt
The adoption of a particular view on a sector by over-weighting a portfolio in the direction of that sector, (eg. a portfolio with a high level of resource shares and low level of industrials would be described as having a resources tilt). Such a technique is commonly employed by index fund managers when clients indicate a desire for above-index returns.

Time Horizon
The period of time over which an investment objective is to be realised. Time horizon is a critical factor for all investors in determining the types of investments they should make or, at least, the amount of risk they are prepared to carry. The investments made to provide for future retirement income, for instance, would almost always be different from those for short-term purposes.

Time Spread
In options markets, a spread consisting of one long and one short option of the same type and with the same exercise price, but which expire in different months. All options must have the same underlying stock or commodity.

Time Value
The balance of an option premium not represented by the option's intrinsic value.

Time Weighted Rate of Return
A method of determining rates of return on the basis of measuring only the investment performance of assets held for the entire time period measured. This rate provides an effective standard for comparing the performance of different funds, in which cash flow could vary considerably. The investment manager usually cannot control the timing or the amount of contributions to the fund. Because the time weighted rate eliminates the impact of money flows into or out of the fund, it is a useful means of appraising the fund manager's ability to make the fund's assets perform. (See also Money Weighted Rate of Return).

Timing
The art of deciding upon the exact moment to buy or to sell.

Title
A document establishing ownership (eg. of real estate).

TN
Abbreviation for Treasury Note.

Top-down Forecasting
A form of security analysis which begins with forecasting broad macro economic trends then assessing the impact on industries and, finally, individual companies. (Opposite of Bottom-up

Topix
Abbreviation for Tokyo Price Index. A Japanese share price index measuring share prices of selected large companies listed on the Tokyo Stock Exchange. Equivalent to the Australian All Ordinaries Index. Topix is a broader market index than the Nikkei Dow Index.

Total Return
The aggregate increase or decrease in the value of a portfolio resulting from the net appreciation (or depreciation) of the principal of the fund, plus or minus the net income (or loss) experienced by that fund during the period.

TPC
Abbreviation for Trade Practices Commission.

Tracking Error
The degree of proximity with which an actual portfolio follows a representative market index. Technically the tracking error is represented by the standard deviation of the differences in return between the portfolio and the index. Tracking error measures the likelihood (based on historical data) of actual returns differing from index returns.

Trade Practices Commission (TPC)
The former Commonwealth Government agency responsible for administering legislation concerning fair trade practices, and merged in 1995 with the Prices Surveillance Authority to form the Australian Competition and Consumer Commission.

Trader
A person who actively buys and sells securities for his or her own account, usually with relatively short time horizons.

Trade-Weighted Index (TWI)
An index measuring the value of Australia's currency in relation to those of its major trading partners. The index is weighted to take account of the volume of trade conducted between Australia and the countries concerned.

Trading Advice
A document that must be sent by a broker to a client immediately after each trade, confirming all details of that trade. Trailing Commission
A commission paid by the Margin Lender to the adviser or financial planner who was responsible for establishing the loan. It has no impact on the amount the client is charged.

Transaction Costs
Costs associated with managing a portfolio, notably brokerage costs and stamp duties.

Transnational Corporation
Another term for a multinational corporation.

Treasury Note (TN)
A short-term debt instrument issued by the Commonwealth Government, issued on a tender basis each week for terms of either 13 or 26 weeks. The Reserve Bank conducts the tenders, which are pitched in line with liquidity expectations over the period in which the notes have to be paid for, as well as providing liquidity for periods when it is most needed (eg. tax run-down periods).

Trend
A persistent and pervasive direction, upwards or downwards, of commodities, prices, earnings, etc. over a period of time.

Trough
A charting term, also known as a bottom (eg. in charting prices, a trough is the point where the price bottoms before the pressure to buy pushes it back up). (See also Peak).

Trust Deed
An agreement spelling out the methods of receipt, investment and disbursement of funds under a superannuation plan, unit trust, charitable trust, etc. A superannuation trust deed will typically contain provisions for: investment powers of trustees, irrevocability and non-diversion of trust assets, payment of legal, trustee and other fees, liability of trustees, periodic reports by the trustees, records and accounts to be maintained, conditions for removal, resignation, or replacement of trustees, benefit payments under the plan, and the rights and duties of the trustees in case of amendment or termination of the plan.

Trustee
a) A person or company that has legal responsibility for financial aspects (receipts, disbursements and investment) of funds; b) A trust company which acts in a capacity of trust as a fiduciary and to whom assets have been conveyed for the benefit of another party. The Trustee in this case oversees the behaviour of the manager in relation to the operation of a unit trust.

Trustee Companies Association of Australia (TCA)
An industry association representing private state and public trustees since 1945. The main aim of the association is to represent the views of the industry to State and Federal government and regulators, mainly regarding legislation, and provide education to the industry and associated professions.

Trustee Director
A director of a corporate trustee.

Trustee Investment Status
A status conferred on selected investments by State Government Trustee legislation. Rules or trust deeds governing certain types of funds might require a portion of investments to be made in authorised trustee investments.

Trust Fund
A fund whose assets are managed by a trustee or a board of trustees for the benefit of another party or parties. Restrictions as to the type of investments in which the trustee may invest the assets of the trust fund are usually found in the trust deed and in applicable legislation.

Turnover
a) In relation to investment portfolios, the rate at which securities within a portfolio are exchanged for other securities of the same class; b) In relation to investment markets, the level of trading that occurs.