Incubation

A trial process in which a fund company operates a number of funds privately with its own capital or employee capital, and only opens the top performing funds to the public. The higher performing funds that survive the incubation period are used by the fund company to generate business. The funds with unattractive performance, which would be more difficult to market, are liquidated.

See also "incubated fund."

While there is nothing illegal about this practice, some consider it to be unethical because it can overstate the investing performance of the fund company, creating what is known as incubation bias.

For example, suppose that a fund company starts three funds that earn returns of -5%, 2%, and 20%, respectively, over a one-year period. If the fund company only opens the 20% fund to the public and does not disclose the other performances, a bias is created because the average performance of the three funds is actually 5.7%.


Investment dictionary. . 2012.

Look at other dictionaries:

  • INCUBATION — INCUBATI Action qui consiste, chez certains animaux ovipares, à protéger leurs œufs de manière à favoriser le développement normal de l’embryon. Les modalités de cette protection sont très variables, car, au lieu d’être placés sous le corps des… …   Encyclopédie Universelle

  • Incubation — Incubation: Battle Isle Phase Vier Entwickler: Blue Byte Verleger …   Deutsch Wikipedia

  • Incubation — Incubation: Time is Running Out Разработчик Blue Byte Software Издатель Blue Byte Software 1C …   Википедия

  • Incubation — In cu*ba tion, n. [L. incubatio: cf. F. incubation.] [1913 Webster] 1. A sitting on eggs for the purpose of hatching young; a brooding on, or keeping warm, (eggs) to develop the life within, by any process. Ray. [1913 Webster] 2. (Med.) The… …   The Collaborative International Dictionary of English

  • Incubation — (v. lat.), 1) (gr. Enkoimesis, Tempelschlaf), bei den Ägyptiern, Griechen u. Römern der Gebrauch, Kranke in Tempeln, welche Heilgottheiten gewidmet waren, schlafen zu lassen, damit diese den Kranken, im Traume erschienen u. Andeutungen gäben, wie …   Pierer's Universal-Lexikon

  • Incubation — Incubation, lat. deutsch, bei den Alten: das Schlafen in einem Tempel, um im Traume Heilmittel oder Orakel zu erfahren; in der Zoologie: die Bebrütung des Vogeleis; in der Medicin: die Zeit zwischen der Ansteckung und dem Ausbruche der Krankheit …   Herders Conversations-Lexikon

  • incubation — (n.) 1610s, brooding, from L. incubationem (nom. incubatio) a laying upon eggs, noun of action from pp. stem of incubare to hatch, lit. to lie on, rest on, from in on (see IN (Cf. in ) (2)) + cubare to lie (see CUBICLE (Cf …   Etymology dictionary

  • incubation — [in΄kyə bā′shən, iŋ΄kyə bā′shən] n. [L incubatio] 1. an incubating or being incubated 2. the phase in the development of a disease between the infection and the first appearance of symptoms incubational adj. incubative adj …   English World dictionary

  • Incubation — Cette page d’homonymie répertorie les différents sujets et articles partageant un même nom. L incubation est un terme à l origine scientifique introduit avant le XVIe siècle qui dérive du latin incubare (incuber*), littéralement « poser …   Wikipédia en Français

  • Incubation — The word incubation (from the Latin incubare , to lie upon ) may refer to:* Avian incubation, sitting on or brooding bird s eggs in order to hatch them * Incubation period, a medical term for the time between being exposed to infection and… …   Wikipedia

  • incubation — (in ku ba sion ; en vers, de cinq syllabes) s. f. 1°   Action de couver. •   Jamais il [le rossignol] ne chante avec plus de force et de continuité que quand il la voit [sa femelle] travaillée des douleurs de la ponte, et ennuyée d une longue et… …   Dictionnaire de la Langue Française d'Émile Littré

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