Glossary

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Accumulation units/shares

A unit or share that accumulates the [amounts of] income payable to the holder within its unit price instead of that income being paid out to holders (see 'income unit/share').

The price of accumulation units or shares will be higher than those of income units or shares. The letters 'acc' after a fund's name indicate accumulation units or shares ('inc' indicates income units or shares).

Active management

Strategy used by investment managers to outperform the market through independent analysis of companies.  Annual management fees for actively managed funds are generally higher than those for passively managed or index tracker funds as active management involves more proactive analysis.

Read our page on 'How your money is managed'

Administration

Maintaining the register of units or shares: - sending distributions and other information to investors; - and fund valuation and accounting.Such activities may be undertaken by the firm that manages the fund or by a specialist administrator working under contract to the firm that manages the fund.

Alpha

In relation to investments, returns earned that are in excess of the return generally available from the market concerned on a risk adjusted basis.

Annual management charge (AMC)

Part of the ongoing charge / TER and expressed as a percentage of the fund’s value.

Read our page on 'Investment charges and costs' and 'paying for advice'

Annual Report and Accounts

The annual report prepared by the fund manager which includes the firms audited accountsand a report on the investments and results for the financial year. This is available from the fund manager within four months of the end of each financial year.

See also 'Half yearly report and accounts'.

Read our page on 'What the fund manager tells you'

Annualised rate of return

The net return (ie. profit or loss) for a basic rate taxpayer over a given period (e.g. the last 10 years) expressed as a percentage rate per year.

The values for each fund listed in the Fund Directory are updated at the end of every month.

See how to monitor your investment

Approved security

A transferable security that is admitted to official listing in an EEA State or is traded on or under the rules of an eligible securities market.

An eligible securities market is broadly one which is regulated, operates regularly and is open to the public.

Asia Pacific Excluding Japan sector

Funds that are at least 80% invested in shares of Asia Pacific companies, but excluding Japan.  

This is a summary definition. For the full technical version see Sector definitions

For more on IMA sectors see our Guide.

Asia Pacific Including Japan sector

Funds that are at least 80% invested in Asia Pacific equities (through shares or derivatives), including a Japanese equity content.

This is a summary definition. For the full technical version see Sector definitions

For more on IMA sectors see our Guide.

 

Asset allocation

The allocation of a sum of money (or a proportion of the fund) for investment in particular asset classes - for example, as between shares, cash, bonds (fixed interest securities) or property.

Asset classes

The different financial instruments or types of investment which investors, including fund managers can buy, e.g shares, bonds, commodities or property. Each asset classes has different characteristics in terms of income and capital generated - see below table. The choice of which asset class to invest in depends on your view of the wider economy, your risk appetite, and your investment needs and goals.

Read our page on 'Main types of investment '

Asset value

The value of the assets that a fund owns.

Assets of a fund

Used generally to describe the investments that a fund owns. 

Audit

An independent examination of an entity's financial statements.

Authorisation

Permission granted by the UK financial services regulator to an entity that meets the regulator's requirements to conduct a specified financial sector activity or range of financial services activities.

Those whose business it is to manage money for investors in the UK are required to be authorised, as are those who act as managers of investment funds, or as trustees or depositaries or custodians to funds. Funds that are offered to the public in the UK must also be authorised, as must entities providing financial advice.

It is illegal in the UK to undertake investment actvity by way of business unless authorised or exempted.

Authorised Corporate Director (ACD)

A fund that is created under UK law as an 'investment company with variable capital' (ICVC) - commonly called an OEIC - is required to have as a director of the fund a firm which is authorised by the UK financial sector regulator to manage such a fund. This firm is known as the 'Authorised Corporate Director' or 'ACD'.  The equivalent of the ACD for a ‘unit trust’ is the ‘unit trust manager’.

Read our page on 'Authorised investment funds'

Authorised fund

A unit trust or an open-ended investment company (OEIC) that meets the regulatory requirements for a fund allowed to be sold to the general public and is authorised by the FCA.

Read our page on 'Authorised investment funds'

Authorised Fund Manager (AFM)

see 'Fund  manager' and 'Fund provider'.