Guide to Analysing Companies

Tontine
See annuity.
Total return
A measure of investment return that calculates not just any
capital gain (or loss) but the income or dividend yield
too. Suppose an investor bought $10,000 of stock and sold it for
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TOTAL RETURN
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$12,500 and in the meantime had received dividends worth
$150. The total return would therefore be $12,650 ($12,500 

$150). Notional returns of this kind are widely used in the
swaps and futures markets, particularly where investors are
trying to hedge their risk or balance their return from
another investment. (See next entry.)
Total return swap
A swap in which one side of the transaction is based on the
total return of an equity or fixed-income security
with a life longer than the swap itself. Total return swaps are
most common in equity or commodity markets, but they are
also used in fixed-income markets if one of the counterparties to
the deal is subject to withholding tax. This can sometimes
be avoided if the domestic investor pays the foreign one by
way of a total return swap.
Tracker fund
A unit trust (or mutual fund) that mirrors a particular
market or stockmarket sector, usually as measured by an
index or other benchmark. To do this, the fund has to buy
the securities that make up the index, purchasing others from
time to time as they are promoted to the index and selling others
as they drop out of it. Many investors like to be invested in the
stockmarket but have little faith in a professional manager’s (or
their own) ability to beat it over the long run. So they invest in
tracker funds. An advantage of tracker funds is that it is cheaper
to own units in them than in a fund whose manager is trying to
beat the market.