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 ?
If an underlying investment were subject to an EIA, the fund manager will be required to obtain the non-technical summary of it and, where relevant, written confirmation from the competent authority that the investment will not have any significant negative impact on sites of nature conservation.
Sasol Khanyisa received a dividend from Sasol South Africa Limited, the underlying investment of Sasol Khanyisa.
Funds pooled under the pension fund are invested in equity, debt, money market and commodities to diversify inherent risks of the underlying investment while yielding optimum returns.
As such, he does not view today's transaction as meaningful either to AMD's financial model or underlying investment narrative.
Standard Brands was ICG Enterprise Trust's fifth largest underlying investment at 30 April 2017.
At 31 December 2016, Datamars represented 9% of JPEL's total NAV and was JPEL's 2nd largest underlying investment. Datamars is valued at 3.5x JPEL's cost at 31 December 2016, on a CHF basis.
Because of the risk management factors available, especially in variable annuities, clients may be able to take on greater risk in the underlying investment options (e.g., equities, smaller capitalization equities, high yield bonds, etc.) while still maintaining a reasonable overall risk exposure due to the underlying guarantees.
All three underlying investment options will be sub-advised by BlackRock Investment Management, LLC, a provider of asset management, risk management and advisory services worldwide.
The longer answer is that the difference is in the legal structure of the underlying investment. The "ISA" can be thought of as a tax "wrapper", which can be placed around a number of different investments.
* Provide or instruct clients how to obtain, a written statement of total fees and underlying investment expenses paid by the client.
Speaking at the event, David Petrie said: "There is no doubt capital markets were affected by the oil price correction, but this should be short-lived as underlying investment in the sector continues and non-oil businesses remain attractive investment targets.
VUL Protector also features six new underlying investment options from well-known investment companies that offer the potential to accumulate cash value that clients can utilise during their lifetime.