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.

     


O

Offer Price

The price at which you buy units.

Ongoing Charge

This is the cost of investing in a Fund, expressed as a percentage of the value of your investment. It is used to pay for administration investment management and independent oversight of the Fund. It may also include commission paid to your intermediary.

It has replaced the TER (Total Expense Ratio) for all UCITS Funds and is commonly shown in the Key Investor Information Document (KIID). However, the industry is breaking down the charges further to provide the most accurate cost to invest in a Fund which is known as the Fund Manager Charge (FMC).

Ongoing charges (OCF)

Cost of investing in a Fund, expressed as a percentage of the value of your investment.

Used to pay for administration investment management, and independent oversight of the Fund. May also include commission paid to your adviser.

It is shown in the Key Investor Information Document (KIID) and is the most accurate measure of what it costs to invest in a Fund.

It has replaced the TER (Total Expense Ratio) for all UCITS Funds.

Open Ended Investment Company (OEIC)

A form of pooled Fund with single pricing (no bid to offer spread).

Options

An option involves the right (but not the obligation) to dispose of (‘put option’) or buy (‘call option’) an asset at a fixed price on a specified future date. There is no legal requirement to exercise an option. Most options are traded without anything physical ever changing hands.

Ordinary Share

Also known as equity Shares.

Equity means an equal right to Share in the profits of a company. The rights of ordinary Shares are detailed in the company’s Articles of Association. Normally, ordinary Shares possess a right to vote at meetings held by the company.

The liability of shareholders is normally limited to the amount that they have agreed to contribute to the company (i.e. the amount that they have paid for the Share).

Overweight

When a Fund buys more Shares in a specific asset or sector than its benchmark. For example, if the UK General Fund invests 10% in utilities and its benchmark the FTSE All-Share invests 5%, it is said to be overweight.