Glossary of Terms

Glossary of Terms

Please see below a list of terms and definitions which investors may find useful. If you have found any terms in our material that are not listed below and/or that you do not understand, please contact us.

Active management

Where the fund manager uses their expertise to pick investments to achieve the fund’s objectives.

Annual management charge

An ongoing fee paid to the management company for managing the fund, usually charged as a percentage of the investment.

Asset allocation

Dividing the money invested in the fund across different investments (‘assets’), e.g. in different types of investments, various geographic areas or by industry sectors such as oil and gas or financial companies.

Bear market

A prolonged period of falling prices, usually measured as a fall in asset prices of greater than 20%.


A loan, usually to a company or government, that pays interest.


An investment approach that focuses on analysing individual shares rather than stock markets or sectors.

Bull market

A prolonged period of rising prices, usually measured as a rise in asset prices of greater than 20%.

Capital growth

An increase in the value invested over time.

Capital markets

Markets that raise money from those who want to invest and make those funds available to businesses or governments.

Currency exposure

The potential for a fund that invests overseas to lose or gain money purely because of changes in the currency exchange rate.

Dilution levy/dilution adjustment

An amount you pay to cover the dealing costs incurred by the fund when it buys or sells investments as a result of you buying or selling shares/units in the fund. It is normally only charged when the costs could materially impact the other investors and is used to protect investors and fund performance.


Investments whose value is linked to another investment, or to the performance of a stock, a group of stocks, a stock exchange or to some other variable factor, such as interest rates.


Holding a variety of investments that typically perform differently from one another.

Emerging markets

Countries that are progressing toward becoming advanced, usually shown by some development in financial markets, the existence of some form of stock exchange and a regulatory body.


Company stock/shares.

Entry/Initial/Preliminary Charge

An up-front fee paid to the management company when you buy shares/units.

Fixed income

An investment where the borrower/issuer (i.e. who the investment is paid to) is obliged to make payments of a fixed amount on a fixed schedule. Bonds are an example of this type of investment.

Frontier markets

Countries that are more established than the least developed countries but still less established than emerging markets.


The increase in value of investments.

Growth Stock/style

Stocks that experience growth in earnings and revenue, they usually pay little or no income.


Using investments as a way to counter or reduce risk. For example taking the opposite position in a related investment with the expectation that a fall in one will be offset by a rise in the other.


Money paid out by an investment, such as interest from a bond or a dividend from a share.

Income share/unit

Funds are divided into portions called ‘shares’ or ‘units.’ In income shares/units, the income earned by the fund is paid out to investors.

Money market instruments

Investments usually issued by banks or governments that are a short term loan to the issuer by the buyer. The buyer receives interest and the return of the original amount at the end of a certain period.

Net of fees

After all fees have been deducted.

Operating Charge/Ongoing Charges Figure (OCF)

A measure of what it costs to invest in a fund. It includes the fee paid to the management company and other operating costs.

Passive management

The fund manager aims to track the performance of a stock exchange index or another investment.

Peer Group

Groups of investments with similar styles or strategies. Used for performance comparison purposes.


An online service that allows you to buy and sell shares and funds and see your investments in one place.

Relative return

The profit or loss on an investment compared to how other investments have performed.


The money made or lost on an investment.

Rolling period

A period of, say, three or five years, starting on any day three or five years ago.


An equal portion representing part ownership of a company which can also apply to a fund.’ Sometimes called a ‘stock’.

Stock lending

Process whereby a fund manager lends a portfolio of investments to other parties who pay a fee for borrowing the assets.


An investment approach that looks at the big picture first, e.g. the economy, then at the detail, like how individual shares are performing.


An equal portion representing part ownership of a unit trust fund (note: ‘Share’ has a similar meaning but for funds structured as corporate entities such as an open-ended investment company.

Value Stock/style

Stocks that are undervalued.


The amount and frequency that an investment fluctuates in value.


The income from an investment, usually stated as a percentage of the value of the investment.