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 C terms:
- CITI Code
A code to enable the fund to be located for investment managers and stockbrokers to trade it.
The funds used to acquire any type of savings or investment product.
- Capital Gains Tax
A tax levied on the gain or profit you make when you sell, give away or otherwise dispose of something that you own, such as shares or property. Investors benefit from a tax-free allowance each year which may reduce an investor’s Capital Gains Tax bill. The annual tax free allowance for an individual investor is £10,900 for the 2013/14 tax year. This limit may change in the future.
- Closed Funds
Funds which no longer accept new investors, although the fund is still invested and managed in the usual manner.
- Collective Investments
These are funds which pool together investments from individual investors. This method of investment enables smaller and often retail investors to gain exposure to a larger number of investments than would otherwise be the case and therefore spreads their risk. Examples include Unit Trusts and OEICs.
A tradeable item that can generally be further processed and sold, for example metals, wheat, sugar, coal etc.
- Contract Note
A contract note is evidence that you've bought or sold shares or funds. It is an important legal document given that certificates are rarely physically issued these days.
- Convertibles (bonds)
Convertibles are a type of bond that the holder can convert into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price. Although it typically pays a low interest rate (or 'coupon'), a convertible carries additional value through the option to convert the bond to stock, and thereby participate in further growth in the company's value.
- Core Funds
Core funds are often considered the essential building blocks or cornerstones of a portfolio because they are focused on producing long-term results while also attempting to keep risk at a level that most investors would be happy to accept.
- Corporate Bonds
A debt instrument or ‘promise to pay’ which is issued by a company to raise funding, as an alternative to issuing new shares in the company. The company undertakes to make regular payments of interest at a fixed rate and to repay the capital at a future maturity date.
A counterparty can refer to brokers, investment banks, and other securities dealers that serve as the contracting party when completing securities transactions. The term is generally used in this context in relation to 'counterparty risk', which is the risk of monetary loss a firm may be exposed to if the counterparty in the trade encounters difficulty meeting its obligations under the terms of the transaction.
For example, in a structured product the organisation offering the protection that the funds you invest will be returned at the end of the fixed term is known as the counterparty, and the risk is that they default and hence the funds may not be repaid at the end of the period.
This is the interest rate paid by a fixed income security such as a corporate bond.
- Credit Risk
With a fixed income security the amount of interest (or coupon) that is paid is usually related to the credit risk that company poses. This is effectively the risk of the company going bankrupt and not being able to pay back some/all of the original capital or the interest/coupon payments for the duration. These securities are usually rated using letters such as AAA or AA+ by a credit rating agency such as Standard and Poors.
- Crown Ratings
Crown Ratings are just one of a number of measures used to rate past performance of funds within the market. They're provided by Financial Express, an independent rating agency, and are featured on all of our fund pages. You can find a full description on the Crown Ratings page.
- Cumulative Performance
Is the performance of a fund over a given period of time - usually in excess of one year. Positive performance is typically reflected in a higher fund price and is influenced by any dividends, capital gains and interest received
- Currency Markets
The primary purpose of the currency markets is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars.
In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency.