Glossary of Terms

Annual Return. The rate of return that a fund earned over a specific 12-month period.

Annualized Return. The rate of return, for a period greater than 1-year, converted to a yearly rate. For example, a fund with an annualized 3-year return of 10% has grown by the same amount as a fund that experienced an annual return of exactly 10% in each of the past 3 years.

Compound Interest. Interest paid on both the original investment and on the interest the investment accumulates.

Consumer Price Index (CPI). This is an indicator that measures inflation, which is the change in the cost of a fixed basket of products and services such as housing, electricity, food, and transportation. An increase in the CPI signals an increase in the overall cost of living.

Dollar Cost Averaging. A strategy whereby an investor contributes the same amount on a fixed schedule (i.e. $100/month), in a particular investment or portfolio. By doing so, more shares are purchased when prices are low and fewer shares are purchased when prices are high. The point of this is to lower the total average cost per share of the investment, giving the investor a lower overall cost for the shares purchased over time.

Diversification. The practice of spreading your investment risk by investing in several asset classes – each with its own risk characteristics. By spreading risk across several different asset classes, you limit your exposure in any one area.

Fund Manager. The person whose job it is to select the investments to be bought and sold in order to meet the underlying fund’s investment objective. Each fund in your plan is managed by a professional fund manager.

Gross Return. The rate of return for a fund before Investment Management Fees have been deducted.

Index Fund. A fund that is managed to track the return of a specified market index such as the S&P/TSX Composite Index. With an index fund, the manager does not attempt to anticipate which companies will provide a better return. Rather, they manage the fund to provide a return as close to the index as possible.

Inflation Risk. The possibility that increases in the cost of living will reduce or erode investment returns.

Institutional Fund. An institutional fund is sold by way of an “Offering Memorandum” which outlines a fund’s investment policies and guidelines. Institutional pooled funds are subject to less stringent regulations than their retail mutual fund counterparts.

Investment Management Fee (IMF). The amount, expressed as a percentage, that segregated funds charge investors to cover the cost of investment management and administrative expenses for a fund. An IMF is determined at the outset of the plan and deducted from the fund before the calculation of unit values. An IMF is the only fee charged in a group savings plan with the exception of administration charges. An IMF is similar to a mutual fund MER.

Investment Style. The methodology that a fund manager uses to decide what securities to invest in.

Net Return. The rate of return of a fund after Investment Management Fees have been deducted.

Portfolio. The combined holdings of securities or funds of an individual or institution.

Risk. The possibility that an undesired event will take place. In investing, risk typically refers to the possibility that an investment will return less than expected.

Risk Tolerance. An investor’s ability to handle declines in the value of his or her portfolio.

Segregated Fund. A type of pooled investment that is similar to a mutual fund but is considered an insurance product. Proceeds received by the insurance company are used to purchase underlying assets, and then shares of the segregated funds are sold to investors. Assets in these funds must be held separately (segregated) from the general assets of the Company.

Tax Free Savings Account. A Tax-Free Savings Account provides an alternative savings vehicle for Canadians 18 years of age or older. You can contribute $5,000 to the TFSA each year. Contributions are not eligible for tax deductions. Investment growth accumulates without tax implications and there are no tax consequences when a withdrawal is made. The amount withdrawn in a given year is added back to your unused contribution room in the following year. Contributions made to this plan will not impact income-tested benefits and credits such as Old-Age Security, Guaranteed Income Supplement, Employment Insurance benefits, Goods and Services Tax credit or Canada Child Tax Benefit.

Volatility. The tendency of a fund’s value to fluctuate up and down over time. The value of a fund with high volatility will go up and down more dramatically over time than the value of a fund with low volatility.

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Contact Us

For all general inquiries,
please contact us at

1.888.707.2911

custserv@barfinancial.com

If you would like to
contact a particular office
or individual, please
click here.

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