The language of your investment mandate

Allocation drift is the difference between an asset class's current and target weight, measured in percentage points. The tolerance band recorded in the mandate determines when a deviation calls for a review.

Asset allocation is the way wealth is divided across different asset classes such as equities, bonds and real estate.

The gap between the return a strategy delivers and what investors actually capture from it through their own timing.

The risk that arises when single holdings, sectors, countries or currencies are weighted too heavily in a portfolio. It raises volatility and potential loss; the remedy is diversification.

A waiting period set in advance before any unplanned investment decision, letting a hot impulse cool down before it becomes an order.

A portfolio structure combining a broad, low-cost core with smaller, targeted satellite holdings.

The cost of tinkering: fees, spreads, possible taxes and the return difference between actual interventions and a defined no-action comparison. An intervention can also improve the outcome.

ETF look-through decomposes funds into underlying holdings and scales them by their portfolio weights. This reveals repeated company, country or sector exposure. Holdings dates and data coverage belong alongside the result.

The virtue of staying true to a strategy once set, even through turbulent markets, rather than acting on the moment.

A self-written rulebook for your own money, derived from your Investment Policy Statement: read-only and self-directed, never the handing over of decision-making power.

The maximum drawdown is the largest percentage loss from a peak to the subsequent trough.

Plan alignment describes how your current portfolio fits the target weights, bands and rules in your investment mandate. It compares the portfolio with your own plan, not a return forecast or a buy or sell signal.

Rebalancing brings the current allocation back towards an agreed target. Contributions, withdrawals or trades can help; choosing a new target allocation is a strategy change.

A fund's annual total cost ratio, expressed as a percentage of fund assets and deducted from them automatically.

The tracking difference is the actual return gap between an ETF and the index it tracks, and unlike the TER it also captures costs and income such as securities lending.

The Vorabpauschale is a statutory amount of deemed fund income on which tax may be due, not the tax itself. Distributions and fund performance limit the amount; distributing funds can also be affected.