Investments Jargon Buster
We've provided simple definitions for industry jargon. If you can't find the term you need in our Top 20 list, click on the first letter of the word or phrase from the alphabet below.
For additional help with explanations of money terms, you can use the FSA’s Money Made Clear jargon buster
Investments A terms:
- Accumulation Units/Shares
Any unit or share of a fund that reinvests the income instead of paying it out to investors as an income. This is commonly abbreviated on fund names as ‘acc’. With an accumulation fund, any interest income earned will either be reinvested directly in the fund – resulting in an increased share or unit price – or where the fund is held within an investment ISA, income can be reinvested through the purchase of additional units or shares in the fund.
- Active Management
A traditional investment approach where fund managers monitor and then change, as deemed necessary, a portfolio of assets (eg stocks and shares) in order to take advantage of what they believe to be the best opportunities at any given time.
- Actively Managed Funds
Active management (also called active investing) refers to a strategy where the fund manager proactively buys and sells particular stocks or other investments with the goal of outperforming an investment benchmark index. Funds that do not aspire to create a return in excess of a benchmark index will attempt to track that index as closely as possible; this is called passive management. Actively managed funds tend to have higher charges than passively managed ones, because you are paying for the fund manager’s skills and expertise in (hopefully) selecting investments which will outperform the market.
- Allocation Rate
The percentage of a customer's money that is actually invested in an investment bond after any initial charges have been deducted.
A term used to describe a non-traditional investment such as a commodity (eg precious metals), a derivative, a hedge fund, or tangible and collectable assets (eg vintage cars, art, stamps or fine wine).
- Annual Management Charge (AMC)
The annual management charge (AMC) covers the costs involved with managing your investment, such as:
- Customer servicing (eg, keeping a record of investors, paying income)
- Operating the fund (eg, calculating the daily unit price, complying with investment rules)
- Investment management (eg, research & analysis to determine which assets to buy/sell, and the fee paid to the Fund Manager)
This charge is calculated daily by the Fund Manager and as such is reflected in the fund price. However, it doesn't appear as a deduction on a statement. Generally, you can expect to see a higher AMC for funds investing in riskier assets like equities, commodities and property than funds investing in lower risk assets like corporate bonds, gilts and cash.
- Asset Allocation
Asset Allocation refers to the spread of investments within a fund or portfolio. This could be a mix of equities (company stocks and shares), fixed income (corporate bonds and gilts), cash, property and alternative investments.
- Asset Class or Type
Capital can be invested in different types of assets. Examples are shares, bonds, property, cash and commodities. These assets usually have different behaviours and are often managed by different teams.
- Authorised Corporate Director
This is the person who is in charge of an Open Ended Investment Company (OEIC).