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.