Underlying investment

Underlying Investment

The sum of the investments represented in a mutual fund or annuity. When one buys a share in either of these investment vehicles, the share represents a right to the dividends, coupons, and capital gains or losses in each of the securities represented in the fund or annuity in proportion to their representation in it. For example, suppose a mutual fund consists of 50% of Stock A, 25% of Stock B, and 25% of Bond C. All other things being equal, ownership of a share in that mutual fund effectively means that one owns half a share of Stock A and one quarter of a share in Stock B and Bond C. One refers to these investments collectively as the underlying investment. See also: Underlying asset.

Underlying investment.

The investments in a mutual fund, a variable annuity's separate account fund, or other fund makes are considered the fund's underlying investments.

The value of a single share or unit of the fund is based on the combined value of all its underlying investments, minus fees and expenses, divided by the number of outstanding shares or units.

In some cases, when the item underlying a derivative investment is a security, such as the individual stock underlying an equity options contract, it is also called an underlying investment.

However, when the underlying item is a consumable commodity, such as corn, or a financial product, such as an equity index, it is called the underlying product, the underlying instrument, or sometimes simply the underlying.

References in periodicals archive ?
Education Personnel represented Graphite Enterprise Trust's sixth biggest underlying investment as at end-January 2014.
National Futures and Commodities Exchange's enhanced monitoring solutions consist of the following updates: equity portfolio summary investment reports; documentation of trading activity transactions at the company level underlying investments; detailed reports for underlying investment such as exclusive investment exposure to all funds; accurate scaling of performances against wide range of indices; portfolio precise reporting such as diversification by geography, industry, vintage year, or as required; and appraisal processing at the underlying investment phase, accustomed real-time by cash-flows.
However, our structured deposits provide confidence and security by guaranteeing at least 100 per cent of the capital back at maturity plus the performance generated by the underlying investment.
Almost regardless of the underlying investment performance of with-profits funds, the ongoing trend in payouts is downwards and this will probably continue.
The limited participation in the upside of the underlying investment (Don't forget the use of a structured product is not equivalent to a direct investment in the underlying investment)
Variable life has some significant disadvantages, including the potential of forced payment of additional premiums to keep the contract in force, inflexibility of the underlying investment vehicle(s), and insurance rates that may not be competitive.
Make sure the plan is in a position to impose market-based restrictions on trading if required to do so by the underlying investment or if the plan needs to do so to protect participants' interests.
Final bonus rates have been increased, unchanged or reduced as necessary to achieve a closer alignment between actual payout and underlying investment values.
An investor is a person who buys and sells securities with the intention of capturing investment income (such as dividends and interest), and with the intention of realizing appreciation of the underlying investment over a relatively long period of time.
If an underlying investment is subject to an EIA, the fund will be required to provide the Bank with a copy of the environmental impact study (EIS), including a non-technical summary (NTS), or provide a website link to the location where the EIS is published in compliance with the EIB's public disclosure policy.
The underlying investment of the annuity is still a mutual fund, but if you buy a mutual fund outside of an annuity, you are subject to the volatility of the market.