Please ensure Javascript is enabled for purposes of website accessibility Glossary - Individual Investor - UK - BNY Mellon





  • Authorised Corporate Director (ACD)

    Is responsible for the running of an investment fund. They have a duty to act in the best interests of the fund’s investors, and ensure that the fund is well managed in line with regulations and with the investment objectives and policies set out in its prospectus.

  • Absolute Return

    Aims to achieve a positive return over a set timeframe and in all market conditions, although this is never guaranteed.

  • Accumulation

    Increasing the position size in one asset, increasing the number of assets owned/positions, or an overall increase in buying activity in an asset.

  • Active management

    A process whereby an investment professional actively makes buy, hold and sell decisions and aims to outperform the overall market.

  • Alpha

    The excess return of a fund relative to the return of its comparative index.

  • Asset financing

    Borrowing undertaken by a company with loans secured against inventory assets such as equipment, machinery and vehicles.

  • Alternatives

    An alternative is a financial asset that does not fall into one of the conventional investment categories, such as equities or bonds.

  • Annual management charge (AMC)

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

  • Asset(s)

    In this context, investments held in a portfolio, for example stocks, bonds, property and cash.

  • Asset allocation

    An investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon.

  • Asset-backed securities (ABS)

    Pools of loans packaged and sold as securities – a process known as “securitisation”. Typically the assets backing these are home mortgages or credit card receivables.

  • Asset class

    A grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.

  • Asset servicing

    Describes a group of tasks and activities provided by a custodian to its clients around the assets it has under custody.

  • Basic materials

    The sector of companies involved in the discovery, development and processing of raw materials. The sector includes the mining and refining of metals, chemical products and forestry products.

  • Basis points (bps)

    Basis point (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001.

  • Bear market

    A bear market is a condition in which securities prices fall 20 percent or more from recent highs amid widespread pessimism and negative investor sentiment.

  • Bear(s)/bearish

    An investor who believes the price of a stock or market will decrease over time.

  • Benchmark

    A baseline for comparison against which a fund can be measured.

  • Bilateral deficit

    Bilateral trade is the exchange of goods between two nations promoting trade and investment; bilateral deficits occur when net imports are higher than net exports.

  • Bond(s)

    A loan of money by an investor to a company or government for a stated period of time in exchange for a fixed interest rate payment and the repayment of the initial amount at its conclusion.

  • Bull market

    A market in which the prices of securities are rising, often characterised by investor optimism and confidence in continuing strong returns.

  • Bull(s)/bullish

    A bull is an investor who is typically optimistic the price of a security or market will rise.

  • Bund(s)

    Bund is the name given to a federal bond issued by the German government.

  • Buyback(s)

    A company purchasing its own shares on the market, which can often lift its stock price.

  • Call option(s)

    An option contract giving the owner the right, but not the obligation, to buy a specified amount of an underlying security at a specified price within a specified time period.

  • Call(s)

    A call is a clause that enables the issuer of a bond to redeem it early, ahead of its original maturity date.

  • Capital

    Resources or money used or available for use in the production of more wealth.

  • Capital growth

    When the current value of an investment is greater than the initial amount invested.

  • Capital loss

    When an asset is sold for less than the price it was purchased for.

  • Capital outflows

    The movement of assets out of a country.

  • Capital preservation

    A conservative investment strategy where the primary goal is to preserve capital and prevent loss in a portfolio.

  • Capital returns

    Payment, or gain, received from an investment.

  • Cash flow

    The term cash flow refers to the net amount of cash and cash equivalents being transferred in and out of a company.

  • Collateralised Mortgage Obligations (CMOs)

    A type of security secured or backed by a pool of mortgages on real estate.

  • Commercial Mortgage-Backed Securities (CMBS)

    A type of security secured or backed by mortgages on commercial properties (not residential real estate).

  • Commodity/Commodities

    An asset in the form of a raw material that can be bought and sold such as gold, oil, coffee, wheat, etc.

  • Compound(ing)

    The ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings.

  • Consumer cyclicals

    A category of stocks that rely heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail.

  • Consumer discretionary

    Goods and services considered non essential by consumers but desirable if their income is sufficient to purchase them.

  • Consumer staples

    Goods and services that people are unable or unwilling to cut out of their budgets regardless of their financial situation.

  • Consumer Price Index (CPI)

    An index used to measure inflation, based on the prices in a basket of goods and services, meant to be representative of those we typically spend our money on.

  • Contingent convertible bond(s)

    A type of fixed income instrument that is convertible into equity (company shares) if a pre-specified trigger event occurs.

  • Convertible(s)/bond(s)

    A convertible bond is a fixed income debt security that yields interest payments, but can be converted into a predetermined number of equity shares. The conversion from the bond to stock can be done at certain times during the bond’s life and is usually at the discretion of the bondholder.

  • Correlation/Correlated

    A measure of the degree to which two variables move in relation to each other.

  • Corporate bonds

    A loan made to a company for a fixed period by an investor, for which they receive a defined return.

  • Coupons

    The interest paid on a bond by its issuer for the term of the security.

  • Covered bonds

    Covered bonds are debt securities issued by a financial institution and backed by a separate group of assets. As such, if the financial institution becomes insolvent, the bond is still ‘covered’.

  • Credit(s)

    In this context it is synonymous with corporate bonds, debt issued by companies.

  • Credit default swap(s) (CDS)

    A credit default swap is a financial contract that allows an investor to “swap” or offset his or her credit risk with that of another investor. For example, if a lender is worried that a borrower is going to default on a loan, the lender could use a CDS to offset or swap that risk. To swap the risk of default, the lender buys a CDS from another investor who agrees to reimburse the lender in the case the borrower defaults.

  • Credit market(s)

    Refers to the market through which companies and governments issue debt (bonds) to investors. (Also called the bond or debt market)

  • Credit Management

    The process of granting credit, setting payment terms and conditions, recovering payments, and ensuring compliance with a company’s credit policy.

  • Credit rating

    An evaluation of the credit worthiness of a borrower, such as a particular company or government. A company with debt rated AAA is considered to be more credit worthy than one with debt which is rated BBB.

  • Credit risk

    The possibility of a loss resulting from a borrower’s failure to repay a loan or meet contractual obligations.

  • Credit spread(s)

    The difference in yield between two bonds of similar maturity but different credit quality; for example if the 10-year Treasury (US government debt) is trading at a yield of 6% and a 10-year corporate bond is trading at a yield of 8%, the corporate bond is said to offer a 200-basis-point spread over the Treasury. Widening credit spreads indicate growing concern about the ability of borrowers to service their debt. Narrowing credit spreads indicate improving private creditworthiness. See also yield, basis points.

  • Cryptocurrency/Cryptocurrencies

    A digital currency in which transactions are verified and records maintained by a decentralised system using cryptography, rather than by a centralised authority.

  • Current account

    An important indicator of an economy’s health. It is defined as the sum of the balance of trade (goods and services exports minus imports), net income from abroad, and net current transfers.

  • Cyclical(s)/Cyclicality

    A stock or industry deemed sensitive to the wider economy. As such its revenues are generally higher in periods of economic prosperity and expansion and lower in periods of economic downturn and contraction.

  • Default(s)

    The failure to pay interest or principal on a loan or security when due.

  • Default rates

    A statistical measure expressing the percentage of issuers in a given fixed income asset class that failed to make scheduled interest or principal payments in the prior 12 months. For example, if an asset class had 100 individual issuers and two of them defaulted in the prior 12 months, the default rate would be 2%.

  • Defensive

    A stock or industry considered less sensitive to the wider economy.

  • Deficit(s)

    The amount by which a resource falls short of a mark. Most often used to describe a difference between cash inflows and outflows.

  • Derivatives

    Financial contracts, set between two or more parties, that derive their value from an underlying asset, group of assets, or benchmark.

  • Developed markets

    A country that is most developed in terms of its economy and financial markets.

  • Digital assets

    Something that exists in only digital form and has a distinct usage right. It includes electronic files of data that can be owned and transferred by individuals, or used as a currency to make transactions.

  • Disinflation/Disinflationary

    A decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services in an economy.

  • Diversified/Diversification/Diversifiers

    Investing in a variety of companies or financial instruments, which typically perform differently from one another.

  • Dividend(s)

    A sum paid regularly by a company to its investors as a reward for holding their shares.

  • Dividend Payout Ratio(s)

    Shows how much of a company’s earnings, after tax, are paid to shareholders in the form of dividends.

  • Dividend yield(s)

    Income received from an investment, expressed as a percentage based on the investment’s costs, its current market value or its face value.

  • Dove(s)/dovish

    A dove is an economic policy advisor who promotes monetary policies that involve low interest rates, based on the belief that low interest rates increase employment. Statements that suggest that inflation has few negative effects are called dovish.

  • Drawdown(s)

    The extent to which an investment declines from its highest peak, expressed as a percentage.

  • Duration

    A measure of the sensitivity of a fixed income security or bond fund to change in interest rates. The longer a bonds duration, the more sensitive it is to interest rate movements.

  • Earnings

    Money obtained in return for labour or services.

  • Earnings growth

    The annual compound annual growth rate of earnings from investments.

  • Easy monetary stance

    An “easy” monetary stance (also called “accommodative”) is one where interest rates are low or falling.

  • Emerging market(s)

    Countries in the process of becoming developed economies.

  • Economically sensitive

    Refers to the impact on a security given a change in some relevant factor within the economy.

  • Emerging market bonds

    Fixed income debt issued by countries with developing economies as well as by corporations within those nations.

  • Enterprise Blockchain

    A type of permissioned blockchain used to streamline business processes at scale, such as track supply chain goods or settle global payments.

  • Environmental, social and governance (ESG)

    Elements or factors of responsible investment consisting of a set of standards through which a company’s operations can be screened prior to investing.

  • Equity/Equities

    Shares issued by a company, representing an ownership interest.

  • Equity Income

    Primarily refers to income from stock dividends, which are cash payments from companies to their shareholders as a reward for investing in their stock.

  • Equity risk premium

    Refers to the difference from investing in a holding or stock market that may be expected over a notional ‘risk-free’ rate (often longer-term government bonds, assuming zero default risk by the government). This return compensates investors for taking on the relatively higher risk of equity investing. The size of the premium varies and depends on the level of risk in a particular holding, index or portfolio. It also changes over time as market risk fluctuates.

  • Eurozone

    The economic region that contains all members of the European Union that use the euro as currency.

  • Exchange-traded commodity (ETC)

    A commodity, or basket of commodities, traded on a stock exchange.

  • Exchange-traded fund (ETF)

    A type of investment fund that is traded on a stock exchange, typically tracks a stock index, a commodity, bonds, or a basket of assets.

  • Ex/Off-benchmark

    A fund often compares its performance to a specified index. Known as its benchmark, a fund will hold many of the same companies (or governments) as that index. When they don’t, they are referred to as off benchmark positions.

  • Fading cyclical upturn

    Fading market momentum.

  • Fallen angel(s)

    A bond or bonds that have had credit ratings downgraded from investment grade to high yield.

  • Financials

    A sector made up of companies that provide financial services.

  • Financial gearing

    Proportions of debt and equity a company uses to support its operations. this information can be used to evaluate the risk of failure.

  • Fiscal/fiscal policy

    Government policy on taxation, spending and borrowing.

  • Fiscal stimulus / stimulus packages

    Government policy on taxation, spending and borrowing designed to stimulate the economy.

  • Fiscal year

    The 12-month period that a company used for accounting purposes and preparing financial statements.

  • Fixed income

    Broadly refers to those types of investment security that pay investors fixed interest or dividend payments until their maturity date.

  • Floating rate notes (FRNs)

    Fixed income securities whose interest (income) payments are periodically adjusted depending on the change in a reference interest rate.

  • Frontier market(s)

    Frontier markets are less advanced economies in the developing world and are less established than an emerging market. Many frontier markets do not have developed stock markets, and while they are smaller, less accessible and riskier than emerging markets, they are still considered viable investments.

  • Fundamentals (company)

    A basic principle, rule, law, or the like, that serves as the groundwork of a system. A company’s fundamentals are factors such as its business model, earnings, balance sheet and debt.

  • Fundamentals (economic)

    A basic principle, rule, law, or the like, that serves as the groundwork of a system. Economic fundamentals are factors such as inflation, employment, economic growth.

  • Futures

    Futures are financial contracts obligating the buyer to purchase an asset or the seller to sell an asset, such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset, they are standardised to facilitate trading on futures exchanges.

  • G7

    A group of 7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) with the largest advanced economies in the world.

  • General obligation instruments/securities

    Municipal securities that are secured by the tax reciepts of the issuing government body. Often in the event of default, general obligation bonds have a superior claim on a municipal’s assets or tax reciepts over other debt securities.

  • Geopolitics/Geopolitical

    Geographic influences on power relationships in international relations.

  • Gilt(s)

    Fixed income security issued by the UK government.

  • Global high yield

    See high yield.

  • Government bonds

    A loan of money by an investor to a government for a stated period of time in exchange for a (generally) fixed rate of interest and the repayment of the initial amount at its conclusion.

  • Green bond(s)

    Fixed income financial instruments that can generate positive climate or environmental benefits.

  • Green Gilt

    Fixed income issued by the UK government that can generate positive climate or environmental benefits.

  • Gross domestic product (GDP)

    A monetary measure of the market value of all goods and services produced in a given period of time.

  • Gross exposure

    A measure that indicates total exposure to financial markets; refers to the absolute level of a fund’s investments.

  • Growth bias or growth investing

    Growth investing is an investment approach, stye or strategy focused on or biased to increasing an investor’s capital.

  • Growth Stocks

    Companies expected to grow sales and earnings at a faster rate than the market average.

  • Hard currency

    Hard currencies are issued by developed countries that have a strong industrial economy accompanied by a stable government. Generally used to refer to the UK pound sterling, the euro and the US dollar.

  • Hawkish

    Those who support high rates are commonly described as hawks, while those who favour low-interest rates are labelled doves.

  • Hedge

    An investment with the aim of offsetting potential losses incurred by a related investment.

  • High yield

    Fixed income securities with a low credit rating that are considered to be at higher risk of default than better quality securities but have the potential for higher rewards.

  • High yield corporate bonds

    A type of corporate bond that offers a higher rate of interest because of its higher risk of default.

  • Income generating funds

    Income producing companies are companies whose stocks (see below) produce a relatively stable income stream for investors.

  • Income stocks

    Stocks that offer regular and steady income, usually in the form of dividends, over a period of time with low exposure to risk.

  • Idiosyncratic Risk

    Risk specific to an individual asset or stock.

  • Impact bonds

    A type of fixed income security in which the proceeds raised are dedicated solely to projects that will meet environmental or social criteria and aim to achieve specific results.

  • Index/Indices

    A portfolio of investments representing a particular market or a portion of it. For example: The FTSE 100 is an index of the shares of the 100 largest companies on the London Stock Exchange.

  • Index-linked bonds

    Fixed income securities where both the value of the loan and the interest payments are adjusted in line with inflation over the life of the security. Also referred to as Inflation-linked bonds.

  • Index-linked Gilts

    UK government bonds where both the value of the loan and the interest payments are adjusted in line with inflation.

  • Industrials

    The industrial goods sector includes stocks of companies that mainly produce capital goods used in manufacturing, resource extraction, and construction.

  • Inflation/Inflationary

    The rate of increase in the cost of living. Inflation is usually quoted as an annual percentage, comparing the average price this month with the same month a year earlier.

  • Inflation hedging

    An investment that is considered to protect the decreased purchasing power of a currency that results from the loss of its value due to rising prices either macro-economically or due to inflation.

  • Inflation Linked Securities

    Fixed income securities where both the value of the loan and the interest payments are adjusted in line with inflation over the life of the security. Also referred to as Index-linked bonds.

  • Inflation protection

    Investments that provide a hedge against the rise in prices of goods and services over time. An inflation protected portfolio, for example, will have assets that perform well in times higher inflation. An inflation protected investment will contain some type of adjustment mechanism that periodically ratchets the payouts up and down according to the rate of inflation.

  • Initial Public Offering (IPO)

    IPO Initial Public Offering – the first equity sale by a private company to the public.

  • Interest rate risk

    The interest rate risk, refers to the chance that investments in bonds will decrease as the result of unexpected interest rate changes, also known as market risk.

  • International Monetary Fund (IMF)

    An organisation working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

  • Investment grade

    Fixed income securities with a medium or high credit rating that are considered to be at lower risk from default than those issued with lower credit ratings.

  • Issuer

    A legal entity that develops, registers and sells securities.

  • Large-cap

    This refers to a company with a very large market capitalisation value. This is based on the market value of a publicly traded company’s outstanding shares.

  • Lead economic indicators

    An indicator of the direction of travel for the economy that reacts before the economy moves in that direction.

  • Leverage(d)

    When referring to a company, leverage is the level of a company’s debt in relation to its assets. A company with significantly more debt than capital is considered to be leveraged. It can also refer to a fund that borrows money or uses derivatives to magnify an investment position.

  • Libor

    The London Interbank Offered Rate – a rate that some of the world’s leading banks charged each other for short term loans. This has been replaced by SONIA.

  • Liquid/Liquidity

    The degree to which an asset or security can be quickly bought or sold in the market without affecting its price. Market liquidity refers to the extent to which a market, such as a country’s stock market, allows assets to be bought and sold at stable prices.

  • Local currency

    A currency that can be spent in a particular geographical locality at participating organisations.

  • Long-Dated

    Long bonds offer a maturity date far out on the investment horizon.

  • Long(s)

    Refers to ownership of a security held in the expectation that the security will rise in value.

  • Long-short

    An investment strategy that involves buying equities expected to increase in value (long) and uses a technique to profit in other equities if they decrease in value (see short).

  • Macroeconomic

    The performance and behavior of an economy, including factors such as economic output, unemployment, inflation and investment.

  • Margin(s)

    Represents what percentage of a business or company’s sales has turned into profits.

  • Maturity/maturities

    The length of time until the initial investment amount of a fixed income security is due to be repaid to the holder of the security.

  • Merger and Acquisition(s) (M&A)

    The buying, selling, dividing and combining of different companies.

  • Mid-Cap

    Companies with a market cap (capitalization)—or market value—between $2 billion and $10 billion.

  • Momentum

    The speed at which the price of a security is changing, an investor may for example look to buy a security as its’ price is increasing and then sell once it price looks to have peaked.

  • Monetary easing

    Monetary policy in which a central bank lowers interest rates and deposit ratios to make credit more easily available.

  • Monetary (policy)

    A central bank’s regulation of money in circulation and interest rates.

  • Monetary stimulus

    An attempt by a government to make the economy grow faster by increasing the money supply (the amount of money in the economy) or lowering interest rates.

  • Monetary tightening

    Monetary policy in which a central bank increases interest rates when an economy is growing too fast or prices are rising too quickly.

  • Multi-Asset

    An investment containing more than one asset class, such as cash, equity or bond.

  • NAV/Net Asset Value

    A fund’s price per share calculated by taking the current value of its assets and subtracting its debts.

  • Non-cyclicals

    A goods and services economic sector containing companies engaged in fishing and farming operations; the processing and production of food, beverages and tobacco; manufacturers of household and personal products; and providers of personal services.

  • Non-farm payrolls

    Nonfarm payroll is a term used in the U.S. to refer to any job with the exception of farm work, unincorporated self-employment and employment by private households, nonprofit organizations and the military and intelligence agencies.

  • Non-fungible token(s)

    Cryptographic assets on a blockchain with unique identifyers to distinguish them from each other.

  • Ongoing charge figure (OCF)

    The amount an investor will pay for the service provided by a fund. The OCF is made up of the manager’s fees along with other costs, such as administration. It’s meant to be used as a standardised method to compare the costs of funds.

  • Option(s)

    Financial contracts that offer the right, but not the obligation, to buy or sell an asset at a given price on or before a given date in the future.

  • Outperformance

    To have a greater performance/return to a comparator.

  • Overweight(ing)

    Having more invested in a company, region or sector, than the benchmark or comparative product.

  • Passive

    An investment strategy, which tries to replicate the behaviour of a specified index.

  • Perpetual bonds

    Perpetual bonds, are bonds with no maturity date. Although perpetual bonds are not redeemable, they pay a steady stream of interest with no redemption date.

  • Platform

    Online service that enables investors and traders to place trades and monitor accounts through financial intermediaries.

  • Portfolio

    A collection of investments.

  • Positive impact bonds

    Debt issued by governments or companies, which are designed to help deliver a positive contribution to one or more of the three pillars of sustainable development (economic, environmental and social). Such bonds can be either social, green or sustainability bonds.

  • Put option(s)

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time period.

  • Quantitative easing

    A monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to stimulate the economy and increase liquidity.

  • Quantitative tightening

    When central banks raise interest rates or sell securities on the open market to decrease the money in circulation.

  • Quasi-government

    A type of corporation in the private sector that is backed by a branch of government. Most quasi-public corporations begin as government agencies and then become separate entities.

  • Range-trading

    Range trading is an attempt to identify ranges, predict how a currency or asset will behave, and profit from such expectations.

  • Real assets

    Real assets are tangible physical assets (eg a property or land). Real assets include precious metals, commodities, infrastructure, real estate, agricultural land, machinery and oil.

  • Recession(ary)

    A significant decline in economic activity spread across the economy, lasting more than a few months; some countries define it as negative economic growth for two consecutive quarters.

  • Relative

    The return an asset achieves over a period of time compared to a benchmark.

  • Relative return

    The return an asset achieves over a period of time compared to a benchmark.

  • Relative value

    The attractiveness of one financial instrument relative to another, measured in terms of risk, liquidity, and return.

  • Residential Mortgage-Backed Securities (RMBS)

    A type of security secured or backed by mortgages on a pool of residential properties.

  • Return(s)/returned

    The gain or loss from an investment over a stated period of time – expressed in either percentage or cash terms.

  • Responsible investing

    An approach to investment that explicitly acknowledges the relevance to the investor of environmental, social and governance (ESG) factors, and of the long-term health and stability of the market as a whole.

  • Revenue bonds

    Municipal bonds that finance income-producing projects and are secured by a specified revenue source. Typically, revenue bonds can be issued by any government agency or fund that is managed in the manner of a business, such as entities having both operating revenues and expenses.

  • Revenues

    Often referred to as sales, is the income received from a company’s normal business operations and other business activities.

  • Rising Star(s)

    In the context of a financial instrument of a company that has the potential to be upgraded when the company establishes a track record of paying back its debt.

  • Risk-adjusted returns

    A calculation of the profit or potential profit from an investment that takes into account the degree of risk that must be accepted in order to achieve it.

  • Risk asset(s)

    Refers to assets that have a significant degree of price volatility, such as equities, commodities, high yield bonds and currencies.

  • Risk premia strategies

    Aim to capture the risk premium associated with market pricing, where ‘risk premium’ refers to the excess return that can be expected from an investment above the return which could be generated from a ‘risk-free’ asset.

  • 'Safe haven'

    Refers to assets that investors perceive to be relatively safe from suffering a loss in times of market turmoil.

  • Sectors

    An area of the economy in which businesses share the same or related business activity, product, or service.

  • Sector Allocation

    The investment of certain proportions of a portfolio in certain specific sectors.

  • Secular Growth Sectors

    When a growth company’s earnings remain constant regardless of other trends occurring within the market.

  • Secured finance

    Secured finance assets are fixed income investments secured by high-quality collateral. Comprising assets such as CMOs, CMBS, and Securitised bonds, all referenced in this glossary.

  • Securitised bonds

    Securitisation is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling their related cash flows to third party investors as securities.

  • Security/Securities

    A tradable financial asset such as a share in a company or a fixed income security also known as a bond.

  • Security selection

    An active portfolio management technique that focuses on advantageous selection of particular security rather than on broad asset allocation choices.

  • Share(s)

    Also known as equity, is a security representing the ownership of a fraction of a company listed on the stock market.

  • Short

    A way for a fund manager to express his or her view that the market or security might fall in value.

  • Short-dated

    A description added to certain income-producing assets to highlight the fact the maturity date is very near or soon.

  • Short-Dated US Treasury Bonds

    Generally a US government bond with a short time to maturity (typically five years or less).

  • Small-cap

    This refers to a company with a small market capitalisation value. This is based on the market value of a publicly traded company’s outstanding shares.

  • Social bond(s)

    Social bonds are fixed income instruments whose ‘use of the proceeds’ are entirely dedicated to projects or activities that promote improved social welfare and positive social impact directly for vulnerable, marginalised, underserved, or otherwise excluded or disadvantaged populations.

  • SONIA (Sterling Overnight Index Average)

    An index based on actual transactions and which reflects the average of the interest rates that banks pay to borrow sterling overnight from other financial institutions and other institutional investors.

  • Spread(s)

    The difference between the yield of a corporate bond, and a government bond with the same maturity. Yield refers to the income received from an investment and is expressed as a percentage of the investment’s current market value.

  • Stagflation

    Economic environment characterised by high inflation, high unemployment, and slow or negative real economic growth.

  • Standard deviation

    A statistical measure of dispersion of a set of data from its mean.

  • Stock

    Also known as equity, is a security that represents the ownership of a fraction of the issuing corporation.

  • Stock Selection

    The process of determining which financial securities are included in a specific portfolio.

  • Sub-investment grade

    Fixed income securities issued with a low rating. They are considered to be at higher risk of default.

  • Subordinated debt

    A loan or security that ranks below other loans or securities with regard to claims on assets or earnings.

  • Sustainable bonds

    Fixed income financial instruments whose proceeds are applied to finance or refinance a combination of both green and social projects.

  • Sustainable investing

    Focuses on meeting the needs of the present without compromising the ability of future generations to meet their needs. The concept of sustainability is composed of three pillars.

  • Synthetic

    A synthetic investment is a position that is meant to imitate the characteristics of another investment, without holding a physical position in the underlying asset.

  • Tapering

    The reduction of the bank’s quantitive easing or bond buying programmes.

  • Tokenised assets

    Tokens which correspond to the value of a particular underlying asset.

  • Total return(s)

    The term for the gain or loss derived from an investment over a particular period. Total return includes income (in the form of interest or dividend payments) and capital gains.

  • Treasury/Treasuries

    US government debt security with a maturity of more than 10 years. Treasury bonds make interest payments semi-annually.

  • Treasury Inflation-Protected Securities (TIPS)

    U.S government debt securities where the value of the loan and the interest payments are adjusted in line with inflation, as reflected in the Consumer Price Index, over the life of the security.

  • Underperformance

    Seeing greater losses in a down market and below-average gains in a rising market.

  • Underweight(ing)

    Having less invested in a company, region or sector, than the benchmark or comparative product.

  • Unhedged

    A position not balanced by a compensating contract or transaction.

  • Value companies

    Well run companies that trade at a discount.

  • Valuation

    A quantitative process of determining the fair value of an asset, investment, or firm.

  • Volatile/volatility

    Large and/or frequent moves up or down in the price or value of an investment or market.

  • Weighting(s)

    The exposure to a company, sector or market in a fund, usually expressed as a percentage – i.e the Fund had a 20% weighting to US companies.

  • Yield

    Income received from investments, either expressed as a percentage of the investment’s current market value, or dividends received by the holder.

  • Yield curve(s) / curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates.

  • Yield-to-worst

    The lowest potential yield that can be received on a bond without the issuer defaulting. This metric is used to evaluate the worst-case scenario for yield to help investors manage risks and ensure that specific income requirements will still be met even in the worst scenarios.