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Account fee
A fixed, value-based or conditional charge for an account/platform/custody service, separate from fund operating expenses. It may apply without any purchases or sales.
Ask price
The lowest currently quoted selling price in the observed market, relevant to buyers. It covers available quantity and can change before execution; it promises no single price for any amount.
Bid price
The highest currently quoted buying price in the observed market, relevant to sellers. Available quantity matters; it is not a completed sale and can be below the last chart price.
Commission
A charge for arranging a trade, sometimes based on amount/units with a minimum. Zero commission leaves possible spreads, conversion costs, account fees and fund expenses.
Currency conversion cost
An explicit exchange fee and/or markup within the offered rate. Trace conversions actually required for contributions/withdrawals and avoid overlooking embedded charges or counting included fees twice.
Discount to NAV
Market price below fund NAV per unit. At the same currency/valuation time, €99 versus €100 NAV is a 1% discount. It proves neither cheap underlying investments nor eventual gap closure.
Expense ratio and ongoing charges
Recurring fund operating expenses relative to assets. Check what expense ratio, ongoing charges or TER covers: portfolio transaction/account/dealing costs may be excluded. Internal expenses affect value without a separate invoice.
Gross and net return
Return before/after specified deductions. Identify expenses and tax assumptions: a fund’s net result need not deduct personal brokerage charges/taxes. “Net” alone establishes no complete cost treatment.
Limit order
An instruction to buy at the limit or lower, or sell at it or higher. It bounds execution price without guaranteeing any fill. Fees remain separate; the purchased holding can lose value.
Management fee
A portfolio-management charge that may already form part of broader operating expenses. It need not be the entire cost; do not add it again when included in the stated total.
Market order
An instruction to trade at the best prices available on execution. The last displayed price is not guaranteed; portions can fill at different prices, subject to market/provider terms.
Market price
The price at which an investment trades. Last trade, current bid and ask can differ, as can ETF price and NAV. One displayed price establishes no available quantity for your whole order.
Premium to NAV
Market price above fund NAV per unit. At the same currency/valuation time, €101 versus €100 NAV is a 1% premium: more than that measured share of net assets, before other costs.
Settlement
Transfer of cash/securities completing trade obligations, distinct from execution. Process/timing depend on instrument, market and account. Even settled proceeds may need withdrawal/bank transfer before spending elsewhere.
Spread (bid–ask)
The gap between quoted ask and bid. An illustrative €10.00 bid/€10.04 ask has a €0.04 unit spread before other charges. Crossing it affects results even with zero explicit dealing fee.
Total cost of ownership
Relevant fund, account, dealing, conversion and exit costs of your actual arrangement. Construct it from comparable terms; there is no universal fee. Separate this budget from returns already reflecting some expenses.
Tracking difference
Fund return minus benchmark return over the same period in this handbook’s convention. 6.2% versus 6.5% gives −0.3 percentage points. Match currency/income/cost treatment; fund expenses may already affect the gap.
Tracking error
Variability of periodic fund-minus-benchmark return gaps, commonly annualised standard deviation; methods differ. Low error can accompany persistently negative tracking difference. It measures gap consistency, not absence or a future maximum.
Transaction costs
Costs of buying/selling, including commissions and dealing-price effects, inside funds or personal accounts. Fund portfolio transaction costs can fall outside the expense ratio while still reducing NAV/returns.
Turnover
A period’s buying, selling or replacement of holdings, often expressed as a percentage. Check calculation/period before comparison. It may explain transaction costs but is neither a fee, complete cost nor evidence of better results.
Related materials
- Investment instruments and funds: investing glossary
- Currencies and investment infrastructure: investing glossary
- The full cost of owning a portfolio
- Reading a fund's documents
- A broker, your holdings and a careful purchase
- Read the fund behind the factor label
- Compare the returns an investor could have received