Glossary

The total gain or loss on an investment over a given period, expressed as a percentage. Unlike relative return, absolute return does not compare performance against a benchmark.

A type of fund share class in which income earned by the fund - such as dividends from equity holdings or interest from bonds - is automatically reinvested rather than paid out to investors. The reinvested income is reflected in a higher share or unit price over time. Accumulation classes are typically denoted with the suffix 'Acc'. The alternative is a distribution or income class, which pays income out as cash. See also: Distribution.

An investment approach in which fund managers select investments by relying to some extent on judgement, usually within a structured investment process. See also: Passive management.

A measure of how much a portfolio's holdings differ from its benchmark index, expressed as a percentage. A higher active share indicates a more differentiated portfolio.

A measure of the value a fund manager adds (or subtracts) relative to a benchmark, after adjusting for risk. Positive alpha indicates outperformance; negative alpha indicates underperformance.

Investments outside the traditional asset classes of equities, bonds and cash. Examples include private equity, hedge funds, commodities and real estate.

A return expressed as an equivalent annual rate, allowing comparison across investments held for different periods of time. For periods longer than one year, the annualised return reflects the compound rate of growth needed to achieve the cumulative return over the holding period.

The price at which a seller is willing to sell a security. Also known as the offer price. See also: Bid price.

The process of distributing a portfolio's investments across different asset classes, sectors or regions. Within an equity fund, the distribution among sectors or regions.

A broad category of investments that share similar characteristics and behave similarly in the market. The main asset classes are equities (shares), bonds (fixed income), cash and property.

The total market value of all investments managed by a fund management company or held within a specific fund, including cash. AUM is a commonly used measure of a firm's scale.

A summary measure of the overall creditworthiness of a fixed income portfolio, calculated by weighting each bond's credit rating according to its proportion of the portfolio.

The average time remaining until the bonds in a portfolio mature, weighted by the amount invested in each. A longer weighted average maturity generally implies greater sensitivity to interest rate changes.

The interest rate set by the Bank of England at which it lends to commercial banks. It is the primary tool of UK monetary policy and influences borrowing costs across the economy.

A sustained period of falling prices in a financial market, typically defined as a decline of 20% or more from a recent peak. Bear markets are usually accompanied by widespread pessimism and negative investor sentiment.

A standard - usually an index such as the MSCI World - against which a fund's or portfolio's performance is measured.

Restrictions on a fund manager's investment decisions that arise from the requirement to hold securities in similar proportions to a benchmark index. A fund with benchmark-driven constraints may be limited in how much it can deviate from the index.

A measure of how sensitive a fund or security is to movements in the broader market. A beta of 1.0 indicates the investment moves in line with the market; above 1.0 indicates greater volatility, below 1.0 indicates less.

The price at which a buyer is willing to purchase a security. See also: Ask price, Bid/Offer spread.

The difference between the price at which investors can buy (offer price) and sell (bid price) shares or units in a fund. Also known as the bid-offer spread. Most modern funds use single pricing instead.

A rare, unpredictable event with severe and widespread consequences for financial markets. Examples include the Global Financial Crisis of 2008 and the COVID-19 pandemic.

A term describing the largest, most established and financially sound companies listed on a stock exchange. The term originates from poker, where blue chips carry the highest value.

A debt instrument issued by a government, company or other institution to raise capital. The issuer typically pays the bondholder a fixed or variable rate of interest (known as a coupon) and repays the principal amount at a specified maturity date. In the context of asset allocation within fixed income, 'bonds' can refer to longer-duration securities.

A set of bonds offered for sale by an issuer. A new issue refers to bonds being sold to investors for the first time.

The value of a company's assets minus its liabilities as recorded on its balance sheet. Also known as net asset value. Comparing book value to market value can help assess whether a company's shares are attractively priced.

An approach to selecting investments that focuses on analysing individual companies based on their own merits - such as profitability, competitive position and management quality - as opposed to, or in conjunction with, an approach based on macroeconomic or sector-level views.

An acronym for Brazil, Russia, India and China - four large emerging market economies identified in the early 2000s as having the potential for rapid economic growth, and, at times, international cooperation.

An intermediary who executes buy and sell orders for securities on behalf of investors, typically earning a commission for each transaction.

A sustained period of rising prices in a financial market, typically characterised by investor optimism and confidence. A rise of 20% or more from a recent low is often cited as the threshold.

The financial resources available to a company or fund to finance its operations or investments. In a company context, capital refers to the combination of equity and debt used to fund the business.

The possibility that an investor may lose some or all of the money they have invested. All equity investments carry an element of capital at risk.

The profit realised when an investment is sold for a higher price than was paid to acquire it. Capital gains may be subject to capital gains tax depending on the investor's circumstances and the type of investment wrapper used.

An increase in the value of an investment over time, excluding any income received. Capital growth is one component of total return, alongside income.

The reduction in greenhouse gas emissions attributable to the adoption of sustainable practices or technologies. Used as a measure in ESG reporting and impact assessment.

A measure of the total greenhouse gas emissions - primarily carbon dioxide - produced directly or indirectly.

Short-term, highly liquid investments that can be readily converted to cash with minimal risk of value change. Examples include Treasury bills and money market instruments.

A profitability metric that measures the cash flow a company generates as a percentage of the capital invested in its business. Unlike accounting-based return measures, CFROI strips out non-cash distortions such as depreciation policies and asset age to provide a cleaner picture of economic returns.

Physical goods or raw materials that are traded on exchanges, such as oil, gold, copper, wheat and coffee. Commodities are sometimes categorised as 'hard' (metals, energy) or 'soft' (agricultural products).

An ordinary share of ownership in a company, typically carrying voting rights and entitlement to dividends if declared.

A measure of inflation that tracks changes in the price of a representative basket of goods and services purchased by households in a country. In most countries it is an official statistic. CPI is the UK government's primary inflation measure.

A bond that gives the holder the option to exchange it for a predetermined number of the issuing company's shares at specified times during its life.

A bond issued by a company to raise capital. Corporate bonds typically offer higher yields than government bonds to compensate investors for the additional credit risk.

The system of rules, practices and processes by which a company is directed and controlled. Strong corporate governance typically encompasses effective board oversight, transparent reporting and accountability to shareholders.

A decline of up to 10% in the price of a security, index or market from a recent peak. Corrections are considered a normal part of market cycles.

The interest payment made to bondholders, typically expressed as an annual percentage of the bond's face value. Most bonds pay coupons semi-annually.

In a fixed income context, a term used broadly to describe corporate bonds and the borrowing capacity of companies. Credit quality refers to the assessed likelihood that a borrower will meet its debt obligations.

A derivative contract that allows one party to transfer the credit risk of a bond to another party. The buyer pays regular premiums; the seller compensates the buyer if the underlying bond defaults.

An assessment of a borrower's financial strength and ability to meet its debt obligations. Credit quality is evaluated by independent rating agencies and is a key consideration in fixed income investing.

Companies or sectors whose performance is closely tied to the business cycle, tending to outperform when the economy is growing and underperform during downturns. Example sectors include industrials, financials and consumer discretionary.

A measure of a company's financial leverage, calculated by dividing total debt by total shareholders' equity. A higher ratio indicates greater reliance on borrowed funds, which increases both the potential returns and the financial risk.

The probability that a borrower - whether a company, government or individual - will be unable to meet its debt obligations.

A sustained decline in the general price level of goods and services, resulting in an inflation rate below zero, or a decrease in the quantity of money in an economy, which can cause this. Often deemed to cause, exacerbate or accompany an economic downturn.

A financial contract whose value is derived from the price of an underlying asset, such as a share, bond, commodity, currency or index. Common types include futures, options and swaps. Derivatives can be used for hedging risk or for speculative purposes.

A country with a mature, well-established economy characterised by high levels of industrialisation, infrastructure and per capita income. Examples include the US, UK, Japan and Germany.

The amount by which the market price of a security (such as an investment trust share) is below its net asset value per share. The opposite of a premium.

A payment of income - typically dividends or interest - from a fund to its investors. Distributions may be paid at regular intervals (monthly, quarterly, semi-annually or annually) and can be received as cash or reinvested.

The practice of spreading investments across different assets, sectors, regions or styles to reduce the impact of any single holding or area on overall portfolio performance. Diversification is a fundamental principle of portfolio risk management.

A distribution of a portion of a company's profits to its shareholders. Dividends are typically paid in cash at regular intervals and are a key component of total return for income-focused investors.

The ratio of a company's earnings per share to its dividend per share, indicating how many times over the dividend could be paid from current profits. Higher dividend cover suggests the dividend is more sustainable and there is greater capacity for future growth.

The rate at which a company increases its dividend payments over time, typically expressed as a year-on-year percentage. Sustained dividend growth is often viewed as a sign of underlying business strength and management confidence in future cash flows.

The annual dividend per share expressed as a percentage of the current share price. A useful measure for comparing the income-generating potential of different investments. Can be used as an indicator of value.

The peak-to-trough decline in value of an investment or fund during a specific period, usually expressed as a percentage. Drawdown analysis is commonly used to assess a strategy's defensive characteristics during periods of market stress.

A measure of a bond's or bond fund's sensitivity to changes in interest rates, expressed in years. The longer the duration, the more the bond's price will move in response to interest rate changes.

A company's net profit divided by the number of shares in issue. A key measure of profitability used to compare companies and calculate valuation ratios such as the price-to-earnings ratio.

Earnings per share divided by the current share price, expressed as a percentage. The inverse of the price-to-earnings ratio.

Earnings Before Interest, Tax, Depreciation and Amortisation - a measure of a company's operating profitability that strips out the effects of financing decisions, tax regimes and non-cash accounting charges. Widely used to compare profitability across companies and sectors.

A country or economy that is developing rapidly but has not yet reached the level of industrialisation and market maturity of developed economies. Emerging markets - such as China, India and Brazil - typically offer higher growth potential but also carry greater risk.

The process of engaging directly with a company's management or board on issues such as governance, strategy and sustainability, usually with the aim of protecting and enhancing long-term shareholder value.

A comprehensive measure of a company's total value, calculated as market capitalisation plus net debt (total debt minus cash). Enterprise value reflects what an acquirer would theoretically pay to buy the entire business, including its debt obligations. Often used in valuation ratios such as EV/EBITDA.

Assset class comprising shares of ownership in companies, also known as stocks. Holding equities gives investors a claim on a portion of the company's earnings and assets, as well as voting rights at shareholder meetings.

Environmental, Social and Governance - a framework used to evaluate how a company manages risks and opportunities related to environmental sustainability, social responsibility and corporate governance practices.

The date on or after which a buyer of a share or fund unit is no longer entitled to the next dividend payment. The share price typically falls by approximately the dividend amount on this date.

Securities that are bought and sold on a regulated stock exchange, as opposed to being traded privately between parties.

A fund that trades on a stock exchange like an ordinary share, typically designed to track the performance of a specific index or asset class. ETFs can be bought and sold throughout the trading day.

The nominal value of a bond, typically the amount that will be repaid to the bondholder at maturity. The market price of a bond may differ from its face value.

The UK's financial services regulator, responsible for overseeing the conduct of firms providing financial products and services to consumers. The FCA regulates investment managers, advisers and intermediaries operating in the UK.

The UK's statutory compensation scheme of last resort, providing protection to customers of authorised financial services firms. The FSCS may pay compensation if a firm is unable to meet its obligations.

Market sector consisting of businesses such as banks, insurance companies and asset managers.

Government decisions on taxation, public spending and borrowing. Taken together, these influence the economy, alongside monetary policy (set by central banks).

A broad term for investments that pay a regular, predetermined return, primarily bonds. Fixed income instruments are issued by governments and companies and typically pay interest at fixed intervals before returning the principal at maturity.

A bond or note with a variable interest rate that adjusts in line with a benchmark reference rate.

The cash a company generates from its operations after deducting capital expenditure. Free cash flow represents the money available to pay dividends, repay debt, buy back shares or reinvest in the business. Strong and consistent free cash flow generation is widely viewed as a hallmark of quality businesses.

A developing country with a financial market that is smaller and less established than an emerging market. Frontier markets may offer high growth potential but carry elevated risks including lower liquidity and weaker governance frameworks.

A pooled investment vehicle in which money from multiple investors is combined and professionally managed. Funds provide diversification and access to a broad range of assets that may be difficult for individual investors to access directly.

The total value of all assets held within a fund at a given point in time.

The underlying financial and qualitative factors that determine a company's intrinsic value, including revenue, profitability, balance sheet strength, competitive position and management quality. Fundamentals-driven analysis forms the basis of bottom-up stock selection.

Standardised contracts traded on an exchange that obligate the buyer to purchase, and the seller to deliver, a specified asset at a predetermined price on a future date.

Growth at a Reasonable Price - an investment strategy that seeks companies with strong earnings growth potential but at valuations that are not excessive. GARP combines elements of both growth and value investing.

Gross Domestic Product - the total monetary value of all goods and services produced within a country's borders over a specified period, usually a quarter or a year. GDP is the most widely used measure of an economy's size and a key indicator of economic growth.

The ratio of a company's debt to its equity or total capital. Higher gearing means greater reliance on borrowed money, which can amplify both gains and losses. In an investment trust context, gearing refers to borrowing to invest additional capital.

Fixed income securities issued by the UK government. Gilts are considered among the lowest-risk sterling-denominated investments and serve as a benchmark for UK interest rates.

Debt securities issued by national governments to finance public spending. Government bonds typically pay a fixed coupon and repay the principal at maturity. UK government bonds are called gilts; US government bonds are called Treasuries.

A bond whose proceeds are specifically earmarked to fund projects with positive environmental or climate outcomes, such as renewable energy or clean transport.

The total return on an investment before the deduction of fees, charges and taxes. Gross return reflects the underlying performance of the investment strategy and is useful for comparing the raw return-generating ability of different strategies.

An investment approach focused on companies expected to grow their earnings faster than the market average over time. Growth companies typically reinvest profits into their business rather than paying high dividends.

The highest level that a fund's net asset value has reached, used as a reference point for calculating performance fees. A fund can typically only charge a performance fee once the NAV exceeds this level.

A bond with a high coupon and a low or non-existent credit rating (below investment grade, e.g. below BBB-). Carries greater default risk but offers higher income potential.

A measure reflecting the distributions declared over the past 12 months, expressed as a percentage of the mid-market share price at the latest month end. It does not include any initial charges. Investors may be subject to tax on distributions.

Classification groups maintained by the Investment Association (IA) that categorise UK-authorised funds by investment objective and asset type, enabling peer group comparisons.

An investment approach that aims to generate measurable positive social or environmental outcomes alongside financial returns. Impact investing goes beyond ESG screening by actively targeting investments that contribute to specific goals.

Money received from investments, typically in the form of dividends (from equities) or interest/coupons (from bonds). Income is one component of total return, alongside capital growth.

An investment approach focused on building a portfolio of assets that generate regular income, such as dividend-paying shares or interest-bearing bonds.

A statistical measure tracking the performance of a defined group of securities representing a particular market or market segment. Common examples include the MSCI World, S&P 500 and FTSE 100.

A UK tax-efficient savings and investment wrapper. Income and capital gains earned within an ISA are free from tax. Annual contribution limits apply.

The rate at which the general level of prices for goods and services rises over time, reducing the purchasing power of money, or an increase in the quantity of money in an economy, which can have this effect. Inflation is typically measured by the Consumer Prices Index (CPI) in the UK.

A measure of a fund manager's ability to generate excess returns relative to a benchmark, adjusted for the consistency of those returns. A higher information ratio indicates more reliable outperformance.

The first time a private company offers its shares for sale to the public on a stock exchange, marking its transition to a publicly listed company.

An estimate of a company's true underlying worth based on fundamental analysis of its assets, earnings power, competitive position and growth prospects. Intrinsic value may differ from the current market price, and the gap between the two represents a potential investment opportunity.

A bond rated BBB- or above by Standard & Poor's (or equivalent by Moody's), indicating the issuer has a relatively strong ability to meet its debt obligations.

A closed-ended fund structured as a limited company and listed on a stock exchange. Investors buy and sell shares in the investment trust on the exchange, and the share price may trade at a premium or discount to the underlying net asset value.

Shares in companies with a large total market value. These tend to be well-established businesses with significant market presence. Definitions vary, but typically refers to companies valued above $10 billion.

The use of borrowed money or financial instruments to amplify potential investment returns. Leverage also magnifies potential losses.

The ease with which an asset can be bought or sold in the market without significantly affecting its price. Highly liquid assets, such as shares in large companies, can be traded quickly; illiquid assets, such as property, may take longer to sell.

The total market value of a company's outstanding shares, calculated by multiplying the current share price by the number of shares in issue. Market capitalisation is commonly used to categorise companies by size (large-cap, mid-cap, small-cap).

Shares in companies with a mid-range market capitalisation, occupying the ground between large-cap and small-cap. Definitions vary by market.

Central bank actions - such as lowering interest rates or purchasing securities - designed to increase the money supply and stimulate economic activity.

The actions taken by a central bank - such as the Bank of England or the Federal Reserve - to influence the money supply and interest rates in order to achieve economic objectives such as price stability and employment.

Central bank actions - such as raising interest rates or selling securities - designed to reduce the money supply and cool inflationary pressures.

The market for short-term debt instruments (typically maturing within one year), such as Treasury bills and commercial paper.

A fund or investment strategy that allocates capital across multiple asset classes - such as equities, bonds, cash and alternatives - to diversify sources of return and manage risk.

The total value of a fund's assets minus its liabilities. NAV per share is calculated by dividing the total NAV by the number of shares in issue. For open-ended funds, the NAV per share can determine the price at which investors buy and sell.

A company's total borrowings minus its cash and cash equivalents. Net debt provides a clearer picture of a company's financial obligations than gross debt alone. A negative net debt figure indicates the company holds more cash than debt.

The total return on an investment after the deduction of fees, charges and (where relevant) taxes. Net return represents the actual return received by an investor and is the most meaningful measure of performance from the investor's perspective.

An Open-Ended Investment Company - a type of UK or Irish investment fund structured as a company rather than a trust. OEICs issue and cancel shares in response to investor demand, and their price is based on the net asset value of the underlying assets.

A measure of the total annual costs of running a fund, including the management fee, administration and oversight charges, expressed as a percentage of the fund's average net asset value. The OCF excludes transaction costs.

A profitability measure calculated by dividing operating profit by revenue, expressed as a percentage. A higher operating margin indicates a company retains more profit from its sales after covering its operating costs.

Revenue or sales growth generated from a company's existing operations, excluding the effects of acquisitions, disposals and currency movements. Organic growth is a key indicator of underlying business momentum.

Financial transactions conducted directly between two parties rather than through a centralised exchange. OTC markets are typically used for derivatives, certain bonds and other customised instruments.

When a fund holds a larger proportion of a particular security, sector or region than the benchmark index.

An international accord adopted in 2015 in which world leaders pledged to limit global temperature rises to well below 2°C above pre-industrial levels, with efforts to limit the increase to 1.5°C.

An investment approach that seeks to replicate the returns of a benchmark index by holding the same securities in similar proportions, rather than attempting to outperform through active selection.

The date on which a fund's income distribution is paid to investors, typically the last business day of the relevant month.

A collection of investments held by an individual or institution, which may include equities, bonds, cash and other assets.

The costs incurred when a fund buys or sells securities, including brokerage fees, exchange charges, bid-offer spreads and taxes such as stamp duty.

A class of company shares that pay a fixed dividend which takes priority over ordinary share dividends. In the event of liquidation, preference shareholders are repaid before ordinary shareholders. Preference shares typically do not carry voting rights.

When a fund's weighted average valuation metric (typically the price/earnings ratio) is higher than that of a comparator such as a benchmark index, or when an investment trust's market price exceeds its net asset value. The opposite of a discount.

A valuation measure calculated by dividing a company's current share price by its book value per share. A P/B ratio below 1.0 may suggest the market values the company at less than the net worth of its assets.

Shares in companies that are not listed on a public stock exchange. Private equity investments are typically illiquid and accessed through specialist funds.

A comprehensive legal document providing full details of a fund's structure, investment objectives, policies, risks, fees and regulatory information, required before shares can be offered to investors.

The exercise of voting rights by a fund manager at company shareholder meetings on behalf of the fund's investors. Proxy voting forms part of an investment manager's stewardship responsibilities.

An investment style or systematic approach that selects companies based on measures of business quality - such as high returns on capital, strong balance sheets, stable earnings and consistent cash flow generation. The MSCI World Quality Index is one widely followed quality factor benchmark.

A monetary policy tool used by central banks to stimulate the economy by purchasing government bonds and other financial assets, thereby increasing the money supply and lowering longer-term interest rates. QE is typically deployed when conventional rate-cutting tools have been exhausted.

A publicly listed company that owns, operates or finances income-generating property, allowing investors to access property market returns through a tradeable security.

The process of realigning the weightings of holdings in a portfolio to maintain the desired allocation. In an equally weighted portfolio, rebalancing involves trimming positions that have appreciated and adding to those that have underperformed, instilling a natural valuation discipline.

The process of selling or cashing in fund shares or units, converting the investment back to cash. In open-ended funds, redemptions result in the cancellation of shares or units.

The practice of incorporating environmental, social and governance (ESG) considerations alongside traditional financial analysis in the investment decision-making process and of engaging in active ownership, or stewardship.

A measure of a company's profitability calculated by dividing net income by shareholders' equity. ROE indicates how effectively a company is using the capital contributed by its shareholders to generate profits. A high ROE can indicate strong management and competitive positioning, though it should be assessed alongside leverage levels.

A measure of how efficiently a company generates profits from the capital - both equity and debt - invested in its business. Calculated by dividing net operating profit after tax by total invested capital. A consistently high ROIC suggests a company has durable competitive advantages.

A fundraising mechanism in which an existing publicly listed company offers new shares to its current shareholders at a discount to the prevailing market price, typically to raise capital for expansion or to strengthen its balance sheet.

The possibility that an investment's actual return will differ from what is expected, including the potential for partial or total loss of capital. Different types of risk include market risk, credit risk, currency risk and liquidity risk.

A broad term for assets favoured by investors during periods of market stress or uncertainty, typically including government bonds, gold and the US dollar.

Greenhouse gas emissions directly produced by an organisation's own operations, such as from company-owned vehicles or on-site fuel combustion.

Greenhouse gas emissions indirectly caused by an organisation through the energy it purchases, such as electricity, heating and cooling.

A systematic process of filtering potential investments based on predefined criteria - either including (positive screening) or excluding (negative screening) companies or sectors.

A classification grouping companies with similar business activities. The widely-used Global Industry Classification Standard (GICS) defines 11 sectors, including Information Technology, Health Care, Consumer Staples and Industrials.

The process of pooling illiquid assets (such as mortgages or loans) and repackaging them as tradeable securities that can be sold to investors.

A tradeable financial instrument representing ownership (equity), a debt agreement (bond) or a derivative contract. The term is used broadly to refer to any investment that can be bought and sold in financial markets.

A systematic framework for deciding when to sell a holding from a portfolio. A clear sell discipline can be reinforced by an equally-weighted, one-in-one-out approach, where any new position requires the sale of an existing holding, ensuring the portfolio remains concentrated and that each position earns its place.

A unit of ownership in a company, entitling the holder to a proportion of the company's profits and assets. Also known as equity or stock.

When a company purchases its own shares from the market, reducing the number of shares in issue. This typically increases earnings per share and can support the share price.

A specific version of a fund's shares, differentiated by features such as fee level, currency denomination, income treatment (accumulation or distribution) and minimum investment.

A person, company or institution that owns shares in a company or fund.

A measure of risk-adjusted return, calculated by dividing the excess return of an investment over the risk-free rate by its volatility. A higher Sharpe ratio indicates better risk-adjusted performance.

The practice of selling borrowed securities with the intention of repurchasing them later at a lower price. If the price rises instead, the short seller incurs a loss.

Société d'Investissement à Capital Variable. An open-ended collective investment fund structure widely used in continental Europe, similar to a UK OEIC.

Companies, or shares thereof, with a relatively small total market value. Small-cap companies may offer higher growth potential but typically carry greater risk and lower liquidity than larger companies. Definitions vary, but small cap can refer to those below $1bn.

The Sterling Overnight Index Average - the benchmark interest rate for sterling overnight funding, set by the Bank of England. SONIA has replaced LIBOR as the primary reference rate for sterling financial markets.

A statistical measure of how widely an investment's returns vary from its average return over a given period. A higher standard deviation indicates greater volatility. Denoted by the Greek letter sigma. The square root of the variance, which is the average squared difference from the mean.

The responsible oversight and management of investments on behalf of clients, including active engagement with companies on governance, environmental and social issues, and the exercise of shareholder voting rights.

The process by which a fund manager chooses individual equity securities for a portfolio. In active management, typically based on screening, research, and analysis of issuers' fundamental characteristics.

A set of 17 interconnected global socioeconomic and environmental goals for 2030 adopted by the United Nations in 2015. The SDGs are frequently used as a framework for measuring the impact of responsible investments.

The four sustainability labels introduced by the FCA under the UK's Sustainability Disclosure Requirements (SDR), used to categorise funds by their sustainability approach: (1) Sustainability Focus - funds investing primarily in assets that focus on sustainability for people or planet; (2) Sustainability Improvers - funds investing in assets on a credible path to becoming more sustainable; (3) Sustainability Impact - funds aiming to achieve measurable positive sustainability outcomes; (4) Sustainability Mixed Goals - funds combining the above approaches.

A derivative contract in which two parties agree to exchange cash flows or returns from different financial instruments over a specified period. Common types include interest rate swaps and currency swaps.

The practice of adjusting the price of shares or units in a fund in order to cover the costs associated with the transaction. An anti-dilution mechanism that can be used to protect other shareholders from these costs and instead have them borne by the investor who buys or sells. See also: Bid/Offer spread.

The complete gain or loss on an investment over a given period, combining both capital growth (or decline) and income received (such as dividends). Total return provides the most comprehensive measure of investment performance.

The overall return earned by a shareholder from holding a company's shares over a given period, combining capital appreciation (or depreciation) with dividends received. Compared with Total Return, TSR is often used in the context of an individual company.

A measure of how closely a fund's returns follow its benchmark, calculated as the standard deviation of the difference between the fund's returns and the benchmark's returns. A low tracking error indicates the fund closely mirrors the benchmark; a high tracking error indicates significant deviation. Funds with high active share typically exhibit a relatively high tracking error.

The rate at which a fund's holdings are bought and sold over a given period, typically expressed as a percentage of total assets. Low turnover suggests a buy-and-hold approach with a long-term investment horizon.

Undertakings for Collective Investment in Transferable Securities - a European regulatory framework governing investment funds. UCITS funds can be marketed across the EU and must comply with rules on diversification, liquidity and investor protection.

A fund mandate that gives the manager freedom to invest according to their own strategy and without reference to the holdings or weightings of a specific benchmark index.

When a fund holds a smaller proportion of a particular security, sector or region than the benchmark index.

The United States Securities and Exchange Commission - the federal regulator overseeing securities markets and protecting investors in the United States. The SEC enforces federal securities laws and regulates exchanges, brokers, investment advisers and listed companies.

In an investment strategy, the process of determining the fair value or worth of an asset or company, based on analysis of its financial characteristics, growth prospects and comparable market data. In fund operations, the process of ascertaining the net asset value of a fund.

A tendency within a fund's investment approach to favour stocks that appear undervalued relative to their intrinsic worth, based on measures such as price-to-earnings ratios, free cash flow yields or dividend yields. A value bias may arise naturally from a bottom-up stock selection process that incorporates a valuation discipline alongside quality criteria, rather than from a top-down decision to invest in 'value' as a style.

A statistical measure of the degree to which the price of a security or fund fluctuates over time. Higher volatility indicates larger price swings and is generally associated with greater risk.

An independent fund services business providing management company (ManCo), authorised corporate director (ACD), and administration services to investment funds across multiple jurisdictions. Waystone Management Company (IE) Limited is authorised by the Central Bank of Ireland and acts as Manager to Irish-domiciled UCITS funds. Waystone Management (UK) Limited is authorised by the Financial Conduct Authority and acts as ACD to UK-domiciled funds.

The income generated by an investment, expressed as a percentage of its current value or cost. For equities, yield typically refers to the dividend yield; for bonds, it refers to the interest yield.

A graphical representation of the yields on bonds of similar credit quality across different maturities, typically government bonds. The shape of the yield curve - upward-sloping, flat, or inverted - reflects market expectations for future interest rates and economic conditions.