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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 firstname.lastname@example.org and they will be pleased to help.
Fair Value Estimate is a proprietary Morningstar data point. It is the Morningstar analyst's estimate of what the stock is worth. The Fair Value Estimate should be used in conjunction with the Economic Moat rating.
A financial adviser is an intermediary authorised by the FCA to sell or advise on financial products.
The Financial Conduct Authority (FCA) is an independent body with statutory powers who are responsible for supervising financial firms, maintaining confidence in the financial system, providing protection for consumers and reducing financial crime.
This scheme exists for claims against an authorised financial services company when it is unable to pay claims against because it is insolvent or no longer trading. For companies still in business, claims must be referred to the Financial Ombudsman Service (FOS).
This sector covers:
A fixed rate of interest payable each year.
A system of pricing where the price at which investors buy or sell is determined at the next valuation of the Fund. Investors are dealing blind in that they do not know the price they will pay or receive.
An index that measures the Share price performance of the UK’s largest 100 companies by market cap.
An index that measures the performance of around 700 UK companies.
A collective investment which brings together investors money to buy a portfolio of Shares, bonds or other financial instruments to achieve its investment objective. Funds aim to diminish the risk inherent in stock market investment by diversifying assets and sharing the cost of professional Fund management.
A well as regular statutory updates on Funds, providers will also issue notifications concerning one-off changes which may affect your investment. We have outlined some of the more common ones here.
Due to new regulations introduced in January 2018, the FMC aims to breakdown all the costs involved in the Fund and so it will typically be higher than the quoted AMC. The FMC will include the Ongoing Charge (OCF) as well as additional transactions cost and performance fees (if applicable).
Funds that are able to invest only in other authorised collective investment schemes or Funds.
Internet-based service that offers information on and dealing in investment options such as Funds offered by different firms.
This is the price at which investors buy ("bid price") units/ Shares from a Fund company and sell them ("redemption price") to a Fund company. It is derived by dividing the total value of all the Cash and securities in a Fund's portfolio, less any liabilities, by the number of Shares outstanding.
Read our article on Understanding Fund Prices
A future involves negotiating a price today for something to be delivered in the future. Most futures are traded and no physical deliver of the underlying securities takes place. The contract is legally binding.