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Investment jargon

Asset Allocation

Spreading money within a portfolio across different investments, including equities, bonds and cash.

Asset value

The market value of all securities and cash on a particular day.

Bid offer spread

The difference between the buying and selling price of a dual priced fund, such as a unit trust.

Dividend yield

Expressing dividend per share as a percentage of the share price. The yield gives the investor an indication of the income return she/he might expect on her/his shares.

Gearing

The debt of a company expressed as a percentage of its equity capital. A highly geared company is one with many loans compared to its equity.

Growth stock

A company share that has shown faster than average growth in earnings in recent years.

Investment trust

"Closed end" funds that are companies that trade on the stock exchange with a "fixed" number of shares. Therefore shareholders buy and sell existing shares quoted on the stock exchange.

Market capitalisation

The market value of a company’s issued share capital, shown by the quoted price of its shares times the number of shares in issue.

Offer to bid

The actual returns achieved after initial and annual management charges taken by a fund manager have been taken into account.

Open ended investment company (OEIC)

An OEIC is similar to a unit trust where your money is pooled with that of other investors and used to buy shares in other companies. An OEIC can be a single fund or an "umbrella fund" made up of separate sub-funds, offering different investment objectives. Unlike a unit trust that has a buy and sell price, an OEIC has a single price.

Price/earning ratio (p/e ratio)

The market price of a stock divided by its reported (or anticipated) earnings per share. The p/e ratio is a measure of the number of years it will take for the share purchased now to repay its purchase price to an investor if all its earnings are paid out as dividends.

Quartile ranking

Quartiles divide the funds in a sector into four intervals, each containing 25% of the funds. Quartile ranking typically shows the performance of the fund within its sector. For example, a fund with a 1^st quartile ranking is in the top 25% of all sector funds in that sector.

Unit trusts

A vehicle for pooling people’s investments into a managed fund whereby more units are created as more money is added.

Value investing

More about a frame of mind than specific investment technique, whereby a substantial difference exists between price paid for a share and the investors’ assessment of its true value.

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This web-site was last updated on 01/04/2008

Specialist Dental Accountants for over 27 years.

Copyright © 2003-2008 Mac Kotecha & Company. All rights Reserved. The information on this site is for general guidance only. It is essential to take professional advice on specific issues about their impact on any individual or entity. No liability can be accepted for any errors or omission or for any person acting or refraining from acting on the information provided on this site.

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