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Active ownership (Stewardship)
Keeping track of companies you invest in and trying to influence their decisions. Investors may do this by talking to company leaders, voting on company matters, or supporting policies that improve business practices.
Alternative investments
Investments that are not traditional stocks, bonds, or cash. These can include things like private companies, hedge funds, real estate, and raw materials like gold.
Annualized return
The average return an investment makes per year over a set period of time.
Asset classes
Categories of investments that share similar characteristics. Examples include stocks, bonds, cash, real estate, and commodities (like wheat, oil and gold).
Benchmark
A standard (often a market index like the FTSE 100) used to compare how well an investment or fund is performing.
Bonds
Loans that investors give to companies or governments. In return, the borrower pays interest over time and repays the loan at a set date.
Bond fund
A type of investment fund that pools money from many investors to buy bonds.
Cash equivalents
Investments that can quickly be turned into cash, such as short-term bonds or savings accounts with fixed interest.
Consumer Price Index (CPI)
A way to measure inflation by tracking the price changes of everyday goods and services, like food and transportation.
Corporate bonds
Bonds issued by companies to raise money. Investors receive regular interest payments in return.
Credit rating
A score given to a bond to show how risky it is. Higher-rated bonds are deemed safer, while lower-rated bonds have a higher chance of not being repaid.
Diversification
Spreading investments across different assets to reduce risk.
Dividend
Money a company pays to its shareholders, usually from its profits.
ESG (Environmental, Social, and Governance)
Factors used to evaluate how a company operates. These include environmental impact, worker treatment, and ethical leadership.
ESG investment
Investing in companies that follow good environmental, social, and governance practices.
Exchange-Traded Fund (ETF)
A fund that holds a mix of investments such as stocks / shares or bonds and trades on the stock market throughout the day like a regular individual stock or share.
Equities (shares or stocks)
Shares or stocks in a company. Owning equities means you own part of a business.
Equity fund
A type of investment fund that mainly buys company shares or stocks.
Fixed income
Investments like bonds that pay regular interest to investors.
FTSE 100 Index
The United Kingdom's best-known stock market index of the 100 most highly capitalised blue chip companies listed on the London Stock Exchange.
Gilts
Bonds issued by the UK government. They are considered safe investments because the government has always repaid them.
Government bonds
Bonds issued by governments to raise money. Similar to corporate bonds but backed by the government.
Hedge Fund
A fund that pools money from investors that is invested in stocks or shares and other assets with the aim of earning above-average returns. Hedge funds are generally riskier than mutual funds.
Illiquid
Something that is difficult to sell quickly, like real estate.
Infrastructure
Investments in essential facilities like roads, bridges, and power plants that provide steady income over time.
Investment-grade bonds
Bonds with high credit ratings, meaning they are considered low risk.
Investment risk
The chance that an investment will lose money or not perform as expected.
Liquidity
How easy it is to buy or sell an investment for cash.
Mutual fund
A fund that pools money from many investors to buy a mix of stocks or shares, bonds, or other investments. A mutual fund trades only once a day after the market closes.
OCIO (Outsourced Chief Investment Officer)
A company or person hired to manage an organisation's investments.
Performance
How much an investment has gained or lost over time.
Pooled funds
Investment funds that combine money from many investors to buy assets like stocks or shares, bonds, or property.
Private credit
Loans provided to companies by private investors instead of banks.
Private equity
Equity investments in companies that are not publicly traded on a stock exchange.
Private markets
Investments that are not traded on public stock markets, like real estate and hedge funds.
Property investments
Buying properties like offices, apartments, or hotels to earn rental income or sell for a profit.
Public markets
Markets where stocks or shares and bonds are bought and sold publicly, like stock exchanges.
Relative return
The performance of an investment compared to a benchmark.
Return
The profit or loss made on an investment.
Shares or stocks
A Share or stock represents partial ownership in a company, that investors can buy and sell, offering a claim on its earnings and assets.
Sovereign debt
Debt issued by a government (such as UK gilts).
Stock
Another term for shares in a company.
Volatility
How much the price of an investment goes up and down over time.
Yield
The income an investment generates, often shown as a percentage of its price. For stocks, it comes from dividends; for bonds, it comes from interest payments.