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Financial glossary

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Behavioural finance

Behavioural finance is a theory which argues that due to psychology-based biases, efficient-market hypothesis is not applicable. The proponents of behavioural finance, emotionality and lack of rationality of some investors explain market anomalies.

Benchmark

The Benchmark refers to an index representing the market(s) in which the fund is invested. The fund may invest beyond the index  components. The Benchmark is the yardstick reference for the measure of performance and risk.

Beta

Beta measures the sensitivity of the fund to the market. Centered around the value of 1, it indicates the impact of a one point market change on the fund.

Bond

A bond is a financial instrument (debt security) under which the issuer owes the holders a debt while being obliged to pay them periodic interest (coupons) repayments as well as the principal at a later date (maturity). A bond is generally negotiable as its ownership can be transferred in the secondary market.

Investments in the aforementioned fund are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment. Source: BNP Paribas Asset Management Holding.