Glossary - Banca del Sempione

Asset allocation: Process of allocating wealth across different asset classes, such as equities, bonds, liquidity and other instruments, with the objective of optimising the balance between risk and return.
Asset class: Category of financial instruments sharing similar characteristics in terms of risk, return and market behaviour.

Benchmark: Reference index or parameter used to compare and evaluate the performance of an investment, a portfolio or an investment management strategy.
Bond: Debt instrument through which an investor lends capital to an issuer in exchange for periodic interest payments and repayment of the principal at maturity.

CET1 Ratio: Capital adequacy indicator that measures a bank’s financial strength and its ability to absorb potential losses.
Corporate social responsibility (CSR): Refers to the approach through which a company integrates social, environmental and ethical considerations into its business activities, stakeholder relationships and long-term corporate strategy.
Correlation: Statistical measure that expresses the degree of relationship between the performance of two or more financial instruments, asset classes or markets.
Coupon: Periodic interest payment made to the holder of a bond according to the terms and conditions of the issue.
Currency: Monetary unit used as a medium of exchange and unit of account within a specific country or monetary system.
Currency risk: Risk arising from fluctuations in exchange rates between different currencies, which may affect the value of an investment.

Derivatives: Financial instruments whose value depends on the performance of underlying assets such as equities, bonds, currencies, indices or interest rates.
Diversification: Investment strategy that distributes investments across different instruments, sectors and markets in order to reduce the overall portfolio risk.
Drawdown: Decline in the value of an investment or portfolio from its previous peak.
Duration: Indicator used to measure the sensitivity of a bond’s price to changes in interest rates.

Equity index: Indicator that measures the performance of a group of shares representing a market, sector or geographical area.
ESG: Refers to the Environmental, Social and Governance factors considered in investment decisions and corporate assessments.
ETF: Exchange-listed fund that replicates the performance of an index, market or specific asset class, providing diversified exposure through a single investment.

Financial advisor: Professional who supports clients in managing their wealth and making investment decisions through a holistic advisory approach, identifying solutions aligned with their objectives, personal circumstances, investment horizon and risk profile.
Financial advisory: Service that supports clients in defining investment strategies aligned with their wealth management needs. Under this service, investment decisions always remain with the client.
Financial market: Physical or digital marketplace where financial instruments, capital and currencies are traded, facilitating the interaction between supply and demand.
Financing: Solution that enables clients to access financial resources for personal, wealth-related or business needs, according to terms and conditions agreed with the Bank.
Forex: Global market dedicated to currency trading, characterised by high liquidity and continuous trading activity.

Government bond: Bond issued by a government or public authority to finance its economic activity and public expenditure.

Hedge fund: Investment vehicle that adopts flexible and specialised investment strategies with the objective of generating returns under different market conditions.

Interest rate: Measure that determines the cost of borrowing capital or the return on invested or deposited financial resources.

Leverage ratio: Regulatory indicator that measures the relationship between a bank’s capital and its total exposure, regardless of the associated level of risk.
Liquidity: Ability of a financial asset to be converted into cash quickly without significant changes in value.
Lombard credit: Financing solution secured by financial assets deposited with the Bank, typically used to meet liquidity needs or support wealth management strategies.

Market capitalisation: Total value of a listed company, calculated by multiplying its share price by the number of shares outstanding.
Market value: The value attributed by the market to a financial instrument or portfolio at a specific point in time.
Monetary policy: Set of measures implemented by central banks to influence inflation, liquidity, economic growth and employment through the setting of interest rates or other monetary policy instruments.
Mortgage loan: Financing solution secured by real estate, used for the purchase, construction or enhancement of property, as part of a broader wealth and financial planning strategy.
Multi-asset: Investment approach that combines different asset classes within a single portfolio with the objective of promoting diversification.

Portfolio: Collection of financial instruments held by an investor and structured according to investment objectives, time horizon and risk profile.
Precious metal: Physical asset such as gold, silver or platinum, often used for diversification or investment purposes.

Return: Economic result generated by an investment over a given period, expressed in absolute or percentage terms.
Risk mitigation: Set of techniques and strategies used to reduce exposure to financial risks and preserve the balance of the portfolio.

Share: Security representing an ownership interest in a company and entitling the holder to participate in its economic and financial performance.
Sustainable investment: Investment approach that integrates environmental, social and governance considerations alongside traditional financial objectives.

Volatility: Indicator that measures the magnitude of an investment’s price fluctuations over time and represents its level of risk.

Yield curve: Graphical representation of bond yields across different maturities, used to interpret market expectations regarding interest rates and economic conditions.