Glossary - Investment Guides from The Share Centre

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  • Absolute Return

    22nd Oct 2012 | Absolute Return

    A change in value of an investment measured in absolute, not relative, terms. An absolute return fund looks to make positive returns in all market conditions.
  • Accrued Interest

    22nd Oct 2012 | Accrued Interest

    Interest earned but not yet paid.
  • Accumulation Units (ACC)

    22nd Oct 2012 | Accumulation Units (ACC)

    Units in a fund where the income from the fund's investments is reinvested in the fund rather than being paid out to its investors. This is either through enhancing the unit price or issuing additional units. Unitholders get the benefit of the distributions through the increased value of the fund's assets (and their share of those assets).
  • Active Management

    22nd Oct 2012 | Active Management

    An approach to investment management which seeks to do better than rather than match the return of a particular market index or benchmark. See also index-tracking fund and passive management.
  • Active Return

    22nd Oct 2012 | Active Return

    The portion of returns, gain or loss, that result from the active management of an investment portfolio. Also known as residual return.
  • Active Risk

    22nd Oct 2012 | Active Risk

    A type of risk arising from active management in excess of the risk that would be incurred if the portfolio were passively managed.
  • Actuary

    22nd Oct 2012 | Actuary

    A person trained and specialising in risk, statistics and finance. Calculations made by actuaries include such items as premiums, bonus payments and life expectancy etc.
  • Added Value

    22nd Oct 2012 | Added Value

    Performance in excess of a stated benchmark or index.
  • AIM

    22nd Oct 2012 | AIM

    Alternative Investment Market - for small, young and growing companies operated by the London Stock Exchange as a regulated market of a Recognised Investment Exchange. The market provides an opportunity for companies to raise capital for expansion, a trading facility and a way of establishing a market value for their shares. AIM companies tend to trade on wider spreads than companies on the main market, and liquidity can be a problem.
  • Alpha

    22nd Oct 2012 | Alpha

    The additional return generated by the managers' skill as opposed to general market movements. Historical alpha measures the returns achieved by active management over time.
  • Alternative Investments

    22nd Oct 2012 | Alternative Investments

    Investment in items other than stocks, bonds or other securities. Wine, art, antiques are examples.
  • American Depositary Receipts (ADR)

    22nd Oct 2012 | American Depositary Receipts (ADR)

    ADRs are receipts for the shares of a foreign company. The share certificates themselves are held by an American bank which issues the ADRs, then collects dividends and distributes them to ADR-holders after converting them into dollars. The holders of ADRs normally have all the rights of normal shareholders, including voting rights. The ADRs are tradable instruments in their own right.
  • Annual Allowance

    3rd Sep 2013

    The maximum that can be paid across individual’s pension plans each year and receive tax relief, including any contributions paid by your employer.
  • Annual Management Charge (AMC)

    22nd Oct 2012 | Annual Management Charge (AMC)

    Annual management charge levied by the fund manager to pay for their services in managing the funds, reflected in the price of units on a daily basis.
  • Annualised Returns

    22nd Oct 2012 | Annualised Returns

    The total annual return on an investment which includes dividend payments and capital gains/losses.
  • Annuity

    22nd Oct 2012 | Annuity

    An annuity is purchased with a lump sum, usually from a retirement fund, to generate a regular, guaranteed income that will last for the rest of retiree’s life.
  • Arbitrage

    22nd Oct 2012 | Arbitrage

    The simultaneous purchase and sale of two different, but closely related, securities to take advantage of a disparity in their prices. Alternatively, the purchase and sale of the same security in different markets.
  • Asset Allocation

    22nd Oct 2012 | Asset Allocation

    The process of deciding how to apportion investment capital between the various possible asset classes: bonds, stocks, property, cash etc.Having decided the asset classes, professional fund managers will also try to achieve the right risk/reward profile by choosing which geographical areas to invest in. (UK, continental Europe, Asia, America etc)
  • Asset Class

    22nd Oct 2012 | Asset Class

    Categories of investment classes, for example, equities, bonds, property and cash.
  • Asset-Backed Security (ABS)

    22nd Oct 2012 | Asset-Backed Security (ABS)

    A security backed by a pool of assets.