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 enquiries@willisowen.co.uk and they will be pleased to help.

     


I

In Specie Transfer

An In Specie transfer (also called a Stock transfer or Re-Registration of Assets) is when Funds or Shares that you own are transferred to a different intermediary or provider without the need to convert them to cash. There will be a change of nominee account but you remain the beneficial owner of the assets. Read more here

 

Income Unit/Share

Investors holding income unit/Shares are entitled to receive regular income payments. The payments are usually made twice a year, but can be quarterly or monthly. In the case of funds where only income units are available, you can choose to reinvest this income to buy further units free from the initial charge where applicable.

An income unit/ Share in an Investment Trust/investment company is entitled to all the income during the lifetime of the trust and receives a set amount at redemption, although this is sometimes only a nominal amount.

Index

An index is essentially a means of measuring the movement of a particular set of statistics over a period of time. In the financial world, an index is used to compare performance. An example of an index is the FTSE 100 Index.

Individual Savings Account (ISA)

A tax efficient savings vehicle for stocks and Shares (including corporate bonds and gilts) and Cash launched on 6th April 1999. There is no minimum holding period and eligible adults may invest in one each tax year.

Inflation

A general rise in the level of prices on the high street. This is measured by the retail price index (RPI).

Inflation Risk

The risk that the purchasing power of your money will fall.

If inflation rises but returns on your savings and investments don't keep pace, this will reduce the amount you can buy with your money.

A £1 coin will always be worth £1, but what you can buy with that coin will reduce with inflation. For example, when you save in Cash, if interest rates are lower than the rate of inflation your money will fall in real value.

Information Technology

This section covers:

  • Information Technology Hardware
  • Software & Computer Services

Initial Charge

A charge calculated when you first take out your investment in an applicable Fund. The initial charge is sometimes referred to as the ‘front-end load’.

Intermediary

A third party who may advise on or arrange the purchase or sale of Fund units or Shares for an investor.

Investment Grade Bonds

Corporate bonds issued by companies with high credit ratings and considered to offer lower risk.

Investment Trust/Investment Company

An Investment Trust or investment company is a listed public company that invests in other companies. Investment Trusts/investment companies have a fixed number of Shares that can be bought and sold on the stock market and may be ‘wound-up’ on a predetermined date.

ISIN Number

An International Security Identification Number is a unique number for any security traded on any stock exchange in the world. For UK stocks, the ISIN number is made up of the SEDOL number plus extra digits to bring it into line with the worldwide classification index. ISIN numbers (and SEDOL numbers) are also allocated to Unit Trusts which are quoted in the Financial Times.