Glossary
Here is a simple reference guide to some of the technical terms that you may come across as you explore your investment options.
A
Absolute return funds
Absolute return strategy
Active funds
An active fund has a manager at the helm (and usually a team of analysts and researchers) who will select the assets he or she believes will increase in value. Actively-managed funds have the capacity to outperform their peers and the market as a whole. They are usually slightly more expensive than passive funds because investors must pay for the manager’s expertise.
Active risk
Active share
Active management
Alpha
Alternatives
Annualised return
Annual Management Charge (AMC)
Annuity
Asset class
Asset allocation
Assets under management (AUM)
B
Balanced portfolio
Balance sheet
Bank of England
Bank of England base rate
Basis point
Below investment grade bonds
Benchmark
Beta
Bid-offer spread
Bonds
Bottom line
Bottom-up investing
C
Capital
Capital growth
Cash and cash equivalents
Cash flow statement
Closed-ended funds
Collective investment fund
Commodities
Compound interest
Contract for differences (CFD)
Consumer Price Index (CPI)
Contrarian
Corporate bond
Correlation
Coupon
Credit rating
Credit rating agency
Credit spreads
Cyclical
D
Defensive
Derivatives
Developed markets
Dilution adjustment
Discount
Diversification
Dividend
Dividend reinvestment
Dividend yield
Dual-priced fund
Duration
A measure of a bond’s sensitivity to changes in interest rates. The longer the duration, the more sensitive it is.
E
Earnings per share (EPS)
Economic cycle
Emerging markets
Entry Charge
Often referred to as an initial charge, this is the charge that may be taken from your investment before the deal is placed in your chosen fund.
Columbia Threadneedle Investments does not currently apply any entry charges on its UK domiciled fund ranges, but if you buy our funds through certain distributors they may apply an entry charge.
Equities
Esoteric investments
Ex-dividend date
Exchange-traded fund (ETF)
Exchange
Exit charge
This is the charge that may be taken from the proceeds of your investment when you choose to sell your investment. Columbia Threadneedle Investments does not apply an Exit Charge.
Exposure
F
Final salary pension
Financial Conduct Authority (FCA)
Financial Services Compensation Scheme (FSCS)
Fixed income
Fixed-term savings accounts
Forward transactions
Fund
Fund manager
Fund of funds
Fund volatility
Fundamentals
Futures
G
Gearing
Gilts
Government bond
Guaranteed income bonds
H
Hedge fund
Hedging
High yield bonds
Historical yield
I
Index/Indices
Individual Savings Account (ISA)
Inflation
Infrastructure
Investment Association
Illiquid assets
Initial public offering (IPO)
Investment grade bonds
Investment objective
Investment trust
Investment universe
J
K
Key Investor Information Document (KIID)
L
Leverage
Liabilities
LIBOR
Liquidity
Long exposure
Long position
Long/short
Long-term investing
M
Managed fund
Margin
Market capitalisation
Market risk
Market exposure
Market volatility
Maturity
Medium-term investing
Money market instruments
Multi-asset fund
Mutual fund
N
Near cash
Net asset value (NAV)
Net and gross exposure
Non-cyclical
O
Ongoing Charges Figure (OCF)
The cost of management of a fund represented as a percentage. It is usually based on the last year’s expenses and may vary from year to year. It includes charges such as the fund’s annual management charge, registration fee, custody fees and distribution cost but excludes the costs of buying or selling assets for the fund (unless these assets are shares of another fund).
In some cases, the ongoing charges figure may be based on an estimate of future charges, either because the share/unit class is relatively new and has an insufficient track record to be calculated exactly, or if historic figures are unlikely to accurately reflect future ongoing costs. The fund’s annual report for each financial year will include details of the exact charges applied. An OCF shown with an asterisk (*) indicates an estimated figure.
For a more detailed breakdown please visit www.columbiathreadneedle.com/fees.