• Use our handy glossary to look up any technical jargon you are unfamiliar with.

  • Term Definition
    AiM Alternative Investment Market (AiM) is the London Stock Exchange's global market for smaller, growing companies.
    AIC Association of Investment Companies. This is a collective association for UK investment trust companies.
    All cap           A Fund that invests in equities without regard to whether a company is characterised as small, medium or large.
    Assets The investments and cash held by an investment trust company.
    Asset allocation The distribution of assets across a variety of geographic regions, asset classes or sectors.
    Asset class A group of securities that exhibit similar characteristics, behaves similarly in the marketplace and is subject to the same laws and regulations. The three main asset classes are equities or stocks; fixed income or bonds; and cash or money market instruments. Some investment professionals also add real estate and commodities. 
    Bank of England The UK’s central bank, responsible for the country’s monetary policy.
    Bear market A market in which prices fall over an extended period.
    Benchmark A target against which investment performance is measured. A benchmark is usually an index or the average performance of other similar funds.
    Bid price Investment trust shares are sold via the stock exchange at the bid price. This price is determined by supply and demand.
    Blue-chips The shares in companies with the highest status as investments.
    Bond A form of loan paying a generally agreed rate of interest over a fixed term, with the principal paid at maturity. Bonds may be issued by governments or companies. Bonds can generally be traded on the stock market and therefore may trade above or below their issue price.
    Bond yield The amount of return an investor earns on a bond holding.
    Bull market A market in which prices rise over an extended period.
    Buy-backs Investment trusts have the ability to buy-back a certain proportion of their shares to improve shareholder value – usually to narrow the discount. Shareholders will be asked to vote each year so that the fund manager can exercise this right as and when it is deemed suitable.
    Capital Gains Tax (CGT) A tax charged on gains arising from the sale of assets. There is a CGT exemption limit set each tax year and any gains up to that will not be taxable.
    Capital structure The different amounts and types of ordinary and preference shares which are in issue.
    Capital value In real estate investing, the value of a freehold or leasehold asset.
    Cash investments Relatively safe, liquid assets. Cash investments include Treasury bills, money-market funds, and short-term certificates of deposits.
    Closed-ended investment company A collective investment scheme, such as an investment trust, with a fixed number of shares. Closed-ended investment companies are traded on the stock exchange.
    Collective investment scheme An investment scheme in which money from more than one investor is pooled into a single fund or trust. Unit trusts, investment trusts, and open-ended investment companies (OEICs) are all types of collective investment schemes.
    Corporate bond A form of loan issued by a company in order to raise capital and an alternative to issuing stock through a rights issue. Bonds pay a fixed rate of interest over a fixed term, with the principal repaid at maturity.
    Coupon The interest rate stated on a bond when it’s issued. Typically coupons are paid six-monthly.
    CPI Consumer Price Index is a measure of inflation. The index measures the cost of all goods and services to a typical consumer.
    Credit rating An independent assessment of a company’s or government’s ability to pay its debt. Credit ratings are provided by rating agencies; changes to a company’s or government’s rating can dramatically affect the price of its bonds.
    Dealing Buying and selling of shares
    Deflation The general decline in prices for goods and services, occurring when the inflation rate falls below 0%. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been.
    Derivative A contract between two parties that derives its value from the performance of the underlying entity. This underlying entity can be an asset, index or interest rate.
    Diluted Net Asset Value A method of calculating the net asset value of a company after taking into consideration any outstanding convertible loan stock, warrants or options which are assumed to be exercised by the holders, so increasing the number of shares among which the assets are divided.
    Discount When the share price is lower than the Net Asset Value (NAV), it is referred to as trading at a discount. The discount is expressed as a percentage of the Net Asset Value.
    Dividend Income paid to shareholders by the company they invest in.
    Dividend yield The annual dividend income per share received from a company divided by its current share price. Put simply - how much income you're getting out of the company for the capital you've got locked up in it.
    EBITDA      Earnings before interest, tax, depreciation and amortization (EBITDA) is a measure of a company's opearting performance.
    Economic cycle The recurring and fluctuating levels of economic activity an economy experiences over an extended period of time.
    Emerging markets Countries with a low per-head income compared to the developed world but with a functioning stock exchange. The potential for rapid growth makes emerging markets attractive for investors prepared to accept a higher level of risk. Emerging markets include Brazil, Russia, India and China (see BRIC); others of significance include Mexico, Indonesia, South Africa, Poland and South Korea.
    Equities Shares in a company listed on a stock exchange. Shareholders are effectively the owners of the company and typically have the right to vote on company matters.
    European Central Bank (ECB) The institution in the European Union responsible for setting monetary policy for all European Union countries that use the euro.
    Ex-dividend Purchase of shares without entitlement to current dividends.
    Financial Conduct Authority (FCA) The UK’s main financial services regulatory body. It is an independent non-government organisation.
    Fixed-income securities Investments that obligate the borrower to pay the owner interest during the term of the loan and to return the principal when the loan matures. Bonds are an example of fixed-income securities.
    FTSE The Financial Times and Stock Exchange, a publisher of indices and the name of the family of indices it publishes.
    FTSE 100 index An index that tracks the share price of the largest companies, by market value, listed on the London Stock Exchange.
    FTSE All-Share index An index of the UK’s leading companies’ share prices, covering around 800 companies and including investment trusts.
    Fund Manager The person responsible for the day-to-day management of the investment trusts.
    Fund of funds A fund that invests in several funds at the same time with the aim of spreading risk and minimising the impact of any poor performance in a single fund. Fund of funds managers select the funds they invest in, but not the individual stocks.
    Fund size The total value of assets under management in a trust.
    Gearing The amount of borrowing a company or trust has relative to its share capital. Trusts that are geared have the ability to borrow money and therefore take advantage of wider investment opportunities. If a company is highly geared, its profits and losses can be greatly affected by even small changes in interest rates.
    Government bond A bond issued by a government to raise finance. Government bonds are negotiable and can be traded on the stock market. In the UK they are often referred to as gilts.
    Growth trust A trust whose main objective is to maximise the value of the capital sum invested rather than generating income.
    High-yield bonds Bonds issued by companies where there is perceived to be a higher risk of default – but also the potential for higher returns. Also known as sub-investment-grade bonds.
    Income trust A trust whose main objective is to provide investors with a regular income from its investments.
    Index A scale that measures relative changes in performance. A financial market index, such as the FTSE 100, is an imaginary portfolio of securities. The method for calculating changes in indices differs across financial markets.
    Indirect property trust A trust that invests in real estate vehicles such as property shares, property investment companies, REITs, limited partnerships or property unit trusts as opposed to the actual properties themselves.
    Inflation           The rate at which the general level of prices for goods and services is rising and, consequently the purchasing power of currency is falling. 
    Interest The charge for the priviledge of borrowing money, typically expressed as annual percentage rate (APR). Interest can also refer to the amount of ownership a stockholder has in a company, usually expressed as a percentage.
    Investment property Real estate purchased as an investment rather than a place to live.
    Investment trust A public limited company that is listed on the London Stock Exchange. It exists to invest in the equity of other companies with the aim of producing a return for its shareholders.

    Individual Savings Account (ISA) offers tax advantages for UK based investors. Any returns earned are free from capital gains tax and no further income tax is paid. The F&C ISA is a stocks and shares ISA and you can invest up to £20,000 each tax year. F&C does not offer cash ISAs.

    You also have the option of transferring the value of any of your existing stocks and shares ISAs (including stocks and shares ISAs that were PEPs on 5 April 2008) or cash ISAs (including TESSA only ISAs) to us without losing their tax-efficient status. However your existing ISA manager may charge you for the transfer.

    Mid-cap These are UK companies that generally have a market value in the £250 million to £2 billion range and make up indices such as the FTSE 250 Index.
    Monetary policy Decisions made by a government or central banks, regarding the amount of money in circulation in the economy. This includes setting official interest rates.
    Net asset value A key measure of the value of a company or trust – the total value of assets less liabilities, divided by the number of shares.
    Offer price Investment trust shares are bought offer price.
    Open-ended Investment funds that are not restricted in the number of shares they may issue. (See also closed-ended.)
    Open-Ended Investment Company (OEIC) A company or fund in the UK that invests in other companies and is permitted to adjust the number of shares in issues on a daily basis.
    Ordinary shares Companies can have different types of shares, but the vast majority are 'ordinary' shares. As a holder of ordinary shares, you have bought a stake in the ownership of the company. You will be invited to attend shareholders' general meetings, including the Annual General Meeting and have the right to vote on certain decisions of the company.
    Overweight A portfolio holding an excess amount of a particular security (or sector or region) compared to the security’s weight in the benchmark portfolio. (See also underweight.)
    Passive management A style of investment management in which the trust’s portfolio mirrors its benchmark.
    Preference shares Shares in a company that have a higher claim on the assets and earnings than ordinary shares. Dividends for preference shares generally must be paid out before those to ordinary shares. Preference shares usually don’t have voting rights.
    Portfolio The collection of investments held by an investor or a trust.
    Premium When shares of an investment trust trade at a price above their net asset value, they are unsaid to trade at a premium.
    Prime unit A real estate investment regarded as the best in its class and location.
    Private equity      Investment in firms not listed on a stock exchange. Investors (which can include Investment Trusts or other funds) directly invest in private companies and then own a share of that company. Investors can also buyout public companies which results in the delisting of public equity.
    Prospectus A document required by law to be published on the occasion of an issue of shares or fixed interest securities to the public. A prospectus gives details of the company and the issue.
    PLC A Public Limited Company in the UK is a company limited by shares and having an authorised share capital of not less than £50,000.
    Quantitative easing Increasing the supply of money in a national economy by buying government (or other) securities from the market in order to promote greater lending and increased liquidity.
    Quartile A group containing 25% of the total. Trusts are often ranked by their quartile performance; a top-quartile fund has outperformed at least 75% of its peers.
    REIT Real Estate Investment Trust. A form of indirect property investment.
    Return The amount by which an investment may change due to a combination of capital growth and/or interest/dividend income. This is normally expressed as a percentage.
    Rights issue A method of raising extra capital through the issue of new equity shares. Existing shareholders can buy new shares in proportion to their current holdings, usually at a discount, or sell their rights to other investors.
    Risk The chance that there might be investment losses from the investment originally made, or the return that is expected.
    RPI Retail Price Index. The main measure of inflation used for calculating indexation for capital-gains tax and on index-linked gilts and National Savings products.
    Sector Investment trusts similar to each other in scope and objectives. A sector also refers to an industry or area of commerce in which a company operates (for example, mining).
    Small-cap These companies tend to exhibit higher volatility than large or medium cap companies, but can offer excellent growth potential.
    Spread The spread is the term used to describe the difference between the offer price and the bid price.
    Stamp duty A Government tax imposed on the buying of shares and property. Stamp duty only applies to purchases and not to sales.
    Stock A share of a company held by an invidivual or group.
    Stock exchange A place where stocks and shares are traded.
    Total return The growth in value of a share holding over a specified period, assuming that dividends are re- invested to buy additional units of the stock.
    Tracker fund A fund that aims to replicate the performance of a particular stock market index by buying all or a representative proportion of the stocks within that index. Tracker funds are passively managed.
    Underweight A portfolio holding less of a particular security (or sector or region) than the security’s weight in the benchmark portfolio.
    Unit trust Money from a number of investors pooled together and invested collectively in investments such as shares and bonds. Each investor owns a unit (or a number of them), the value of which relates to the value of those items owned by the fund.
    Warrants This gives the holder the right to buy shares at a fixed time in the future for a price that is set when the warrant is issued.
    Yield The annual dividend or income on an investment expressed as a percentage of the purchase price.
    Zero dividend preference shares A share with no right to receive a dividend. It is entitled instead to a fixed sum on a fixed repayment date. These are shares that aim to deliver pre-determined growth.

Information in this section of the Website is directed solely at persons who are located in the UK and can be categorised as retail clients. Nothing on this website is, or is intended to be, an offer, advice, or an invitation, to buy or sell any investments. Please read our full terms and conditions and the relevant Key Information Documents (“KID”) before proceeding further with any investment product referred to on this website. This website is not suitable for everyone, and if you are at all unsure whether an investment product referenced on this website will meet your individual needs, please seek advice before proceeding further with such product.



Cookie Policy

We have published a new cookie policy. To learn more about cookies, their benefits and how we use them on our website, please read our cookie policy.

By using the site you are accepting this policy.