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Financial jargon explained

Here you’ll find a simple explanation of some of the most commonly used investment terms. If there is any other financial jargon you want translated, please call our Customer Service Team free on 0800 597 2525 or email us at and they will be pleased to help.



Absolute Return

The return that an asset achieves over a period of time. Absolute return differs from relative return because it is concerned with the return of the asset being looked at and does not compare it to any other measure.

For example, if there has been a 5% increase in the price of Ford stock over the past year, then the holders of Ford stock have achieved an absolute return of 5% over the past year.

Accumulation Unit

Units where net income is automatically reinvested and is reflected in the price.

Active fund

Active funds have fund managers who use their expertise and large amounts of research to decide which investments the fund will hold. They adjust the fund's holdings on an ongoing basis, in response to performance and changes in market conditions.


Alpha is a financial metric that shows how an investment performs relative to a benchmark index. An investment that has positive alpha is outperforming the index.

Alternative Investment Market (AIM)

The Alternative Investment Market (AIM) is a sub-market of the London Stock Exchange (LSE) that is designed to help smaller companies access capital from the public market. AIM allows these companies to raise capital by listing on a public exchange with much greater regulatory flexibility compared to the main LSE stock market.


Annuities are usually used to provide an income in retirement. They’re long-term contracts from an insurance company which are purchased at a point in time, often at the point of retirement using pension savings. In return for your investment, you get income in the form of regular payments.

The income you will receive from an annuity is calculated by reviewing several factors, including your age, health, where you live and the size of your pension or lump sum.


A resource that a business owns or controls.

Asset class

An asset class is a group of financial instruments that have similar financial characteristics and behave similarly in the marketplace, for example shares, fixed income and cash are all different asset classes.

Often, assets within the same asset class are subject to the same laws and regulations; however, this is not always true.

Authorised Corporate Director (ACD)

An Authorised Corporate Director (ACD) is a regulated entity, looking after the day to day operations of a fund with an OEIC structure, a similar role to that of a manager of a Unit Trust scheme.


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