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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 email@example.com and they will be pleased to help.
Morningstar has developed a rating that is used to measure how likely a company is to keep competitors at bay for an extended period. It aims to look at the strength and sustainability of a company's competitive advantage.
There are three Economic Moat Ratings; None, Narrow and Wide. In order to earn a Narrow or Wide rating, a company would need to have the prospect of earning above average returns on capital and have some competitive edge that prevents these returns from quickly eroding.
Effective duration provides a measure of a fund’s interest-rate sensitivity.
The longer a fund’s duration, the more sensitive the fund is to shifts in interest rates.
The relationship among funds with different durations is straightforward: A fund with duration of 10 years is expected to be twice as volatile as a fund with a five-year duration.
The amount of any undistributed income already included in the price of the units/Shares at the time of investment. Read the full help article.
Another name for Shares.
See 'Exchange Traded Fund'.
Funds that consider the social and environmental impact of where they invest.
These Funds aim to avoid investing in activities that may be harmful to society or the environment, such as tobacco production, child labour or armaments. Some Funds also aim to invest in companies that promote ethical policies such as recycling.
This is also sometimes known as Socially Responsible Investments (SRIs) or sustainable investment.
Read more about Ethical Funds here.
Investment Funds which are listed and traded on a stock exchange. ETFs normally own Shares in, or track the performance of Shares of companies in, an index .
They are similar to Unit Trusts and OEICs. Most ETFs must comply with the European legislation for protecting Fund investors (UCITS). ETFs which are UCITS can be sold to private investors in the UK.
ETFs offer the benefits of exposure to a market or index relatively cheaply.
Many ETFs invest directly in the components of the underlying index. They are known as ‘physical’ ETFs. Others use derivatives to simulate the returns of the index or market and some active strategies are available. These are known as ‘synthetic’ ETFs.
Be careful not to confuse ETFs with other types of Exchange-Traded Products (ETPs) which are not UCITS. See also Exchange-traded products
Products, which own Shares in, or track the performance of Shares in, an index, or the price movements of other investments, such as oil. They are listed on a stock exchange.
Some, but not all, ETPs are Funds (ETFs) and may therefore not comply with the rules (known as UCITS) which protect retail investors. See also Exchange-traded Funds.
A service that is undertaken upon the instruction of a client but that does not provide advice.
Your explicit charge within : review consists of both your Broker and Platform fees, which are levied independently of the Fund Manager charge. You may wish to have cash available from within your Platform account(s) to pay these fees, in order to avoid the need for units to be sold from within your portfolio.
The proportion of a Fund that is invested in a particular asset class, or particular Share or bond or other investment, expressed as a percentage of the value of the Fund.
Authorised Funds are subject to rules that set limits on such exposures.
A resolution proposed at a meeting of unitholders or shareholders and carried if a majority of 75% of the total number of votes cast for and against the resolution vote in favour of it.