Investment glossary: Your A-Z
A
Asset classes are groups of investments, with varying degrees of risk. Examples of common asset classes include equities, fixed income, commodities, and real estate.
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The overall weighting of a portfolio in asset classes such as domestic stocks, international stocks, bonds, cash, and other asset classes.
Non-traditional assets used by investors to diversify portfolio risks.
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An investment strategy that employs ongoing decision making to actively buy and sell investments.
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B
The base rate is the interest rate that’s set by a country’s central bank, like the Bank of England (BoE) in the UK.
A period characterised by rising asset prices.
A period characterised by a decline in asset prices, typically by 20% or more.
Debt issued by either governments or corporates for repayment at a later date.
C
Commodities are raw materials that are either consumed directly, such as food, or used as building blocks to create other products.
A financial institution which is responsible for safeguarding investments and securities on behalf of the owners.
Capital gains tax (CGT) is a tax on the profit that arises when a person disposes of an asset that has increased in value.
A coupon or coupon payment is the annual interest rate paid on a bond.
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D
The amount that an investment asset declines from its highest point to its lowest.
When an investment professional known as a Discretionary Fund Manager (DFM) builds and manages a portfolio of investments on your behalf.
A negative inflation rate that indicates a fall in the cost of goods or services.
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E
A financial asset, usually a donation, which is made to a charitable organisation or individual. It may or may not have to be used for a specific purpose.
Investment strategies that consider environmental, social, and governance (ESG) factors as part of their decision making process.
A type of open-end mutual fund that trades on a stock exchange, like a stock.
Using share ownership rights to influence the behaviour of companies.
A share of ownership in a company, often traded on an exchange such as the London Stock Exchange.
F
An investment that pays a fixed amount of interest like a bond and typically aims to preserve capital.
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An index of the 250 medium sized UK companies listed on the London Stock Exchange.
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An index of the largest 100 UK companies listed on the London Stock Exchange.
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The use of government revenue collection (i.e. taxes) and expenditure to influence a country’s economy.
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G
A general investment account (GIA) is a specific type of account that allows you to invest your savings in the stock market without limits on how much you can put in.
Gross domestic product (GDP) is a measure of the size of an economy over a period of time – normally a year.
Companies with above-average growth rates.
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A nickname for a UK Government bond dating back to when paper certificates issued by the UK had gilded edges.
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I
A pool of money that is invested in line with a specific set of criteria, often in equities or bonds.
The characteristics of an investment, typically broken-down by company size, valuation and growth characteristics.
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A basket of investments constructed with a standardised, rules-based approach to replicate a certain area of the market.
The rate at which the cost of goods or services increases over a given period of time.
L
Large sized companies.
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M
An index of large and mid cap companies in developed and emerging markets.
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The actions of a country’s central bank to influence a country’s economy.
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P
Uses real estate properties as an investment vehicle and gains profit through a variety of methods.
A mix of different investments, usually across different asset classes and regions.
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An investment strategy that buys investments in the proportions required to replicate an index.
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Q
A form of monetary policy whereby a central bank buys bonds to artificially lower interest rates in an attempt to stimulate growth.
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R
There’s a risk associated with any type of investment. An investor’s appetite for risk is the level of uncertainty or exposure to potential loss they’re prepared to take on to achieve the return they want.
The profit or loss made by an investment.
S
The FCA’s expectations of asset managers when making sustainability claims. Includes anti-greenwashing rules, product labels and disclosure requirements.
A stocks & shares individual savings account (ISA) lets you invest your money free from UK tax.
A self-invested personal pension (SIPP), is a personal pension plan that offers greater control and flexibility over where your pension money is invested.
Refers to a range of approaches in which investors aim to achieve financial returns while promoting long-term environmental or social value.
Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Small and medium sized companies.
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T
An investment strategy that buys and sells investments based on predictions in long-term trends.
U
A set of 17 goals adopted by the United Nations in 2015 designed to be a “shared blueprint for peace and prosperity for people and the planet, now and into the future”.
V
How much an investment’s price moves over time and how quickly those fluctuations occur.
Companies with below-average market valuations.
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Y
The income earned from an investment, most often in the form of interest or dividend payments.
