The 3rd Generation Partnership Project (3GPP) is a consortium of telecommunication standards organisations that develop and maintain standards for mobile telecommunications systems. It is made up of seven national or regional telecommunication standards organizations that serve as primary members, along with a variety of other organizations that serve as associate members. The consortium organises its work into three different areas: Radio Access Networks, Services and Systems Aspects, and Core Network and Terminals.
The project was originally established in December 1998 with the goal of developing a specification for a 3G mobile phone system based on the 2G GSM system and has continued from there. It is known for its work on GSM and related 2G, 2.5G, and 2.75G standards, including GPRS and EDGE; UMTS and related 3G standards, including HSPA and HSPA+; LTE and related 4G standards, including LTE Advanced and LTE Advanced Pro; and 5G NR and related 5G standards, including 5G-Advanced.
AAV is an acronym for Adeno-associated virus. They are the leading platform for gene delivery for the treatment of a variety of human diseases. The first AAV-based gene therapy drug, Glybera, was approved by the European Medicines Agency in 2012. This article has much more information.
When investors talk about absolute returns they are talking about the actual return an investment makes rather than how it does relative to an index or benchmark. Absolute return funds usually aim to make investors money rather than outperform an index or benchmark – after all the index / benchmark might be falling and, while it might be great that you’ve outperformed, you might still have lost money.
Click here to subscribe for free equity research on investment trusts, mining & healthcare companies.
An accordion is an option a company can obtain, giving it the right to increase a line of credit with a creditor.
Achondroplasia is the most common form of disproportionate short stature (height). It affects about 1 in 25,000 births.
You can read more about it here
The process of sprinkling acid over a heap of copper minerals to dissolve, or leach, the copper ions
Exchange-traded funds have been one of fastest growing fund structures created for investors in recent years.
An ETF is a basket of securities that you can buy or sell through a trading platform on a stock exchange. ETFs are normally offered on a wide range of asset classes from traditional investments to so called alternative assets like commodities or currencies. In addition, they sometimes allow investors to short markets, to gain leverage, and increasingly access to active management rather than just passive strategies. Increasingly active ETF strategies are used (active strategies are QuotedData’s raison d’etre), where a person/manager picks the portfolio, typically with the aim to outperform and index/benchmark. More information on active ETFs will be announced soon.
The active return is the return generated in excess of the return on the benchmark
Active risk relates to how large the active positions the investment manager has are relative to a benchmark. A perfect index-tracking fund will hold all the same stocks in all the same proportions as the benchmark – its active risk is zero. Every time the investment manager decides to not hold, underweight or overweight a stock relative to the benchmark, the active risk increases. BUT remember that doesn’t mean the fund is riskier in the real world. If the manager chose to not invest in any company that borrowed money or wasn’t backed by real assets, their active risk would be large and the risk of them underperforming the benchmark would be higher but the risk of you losing money would be far less.
Active share is a measure of active risk.
Active share is a measure of active risk. In other words it is a measure of how different a portfolio is from a benchmark. It is calculated by working out the difference in the percentage holding in each stock in a portfolio and its equivalent percentage weight in a benchmark. Summing the absolute differences (in other words making the negatives, positive) and dividing by two.
Activist investors tend to try to influence the strategy and management of companies by buying stakes in them and then agitating for change. They may try to co-opt other stakeholders to their point of view and may call for shareholder votes to impose their ideas on the company.
Leukaemia is cancer of the white blood cells. Acute leukaemia means it progresses quickly and aggressively, and usually requires immediate treatment.
Acute leukaemia is classified according to the type of white blood cells affected. The 2 main types of white blood cells are:
Acute myeloid leukemia is often abbreviated to AML and acute lymphoblastic leukemia to ALL.
more information on AML is available here and more information on ALL is available here
Additional Tier 1 or AT1
In addition to a bank’s core capital or Tier 1 capital, it may also use other additional forms of capital to ensure its capital adequacy.
Tier 1 capital is used to describe the capital adequacy of a bank and is the core capital that includes equity capital and disclosed reserves. Equity capital is inclusive of instruments that cannot be redeemed at the option of the holder (AT1s). Tier 1 capital is the money a bank has to keep it functioning through all the risky transactions it performs, such as trading/investing and lending.
Tier 2 capital is the secondary component of bank capital, in addition to Tier 1 capital, that makes up a bank’s required reserves. Tier 2 capital is designated as supplementary capital, and is composed of items such as revaluation reserves, undisclosed reserves, hybrid instruments and subordinated term debt. Tier 2 capital includes hybrid capital instruments, loan-loss and revaluation reserves as well undisclosed reserves.
In the event of a firm winding-up, the claims of AT1 instruments rank above ordinary shareholders but are subordinated to holders of Tier 2 instruments, senior creditors and depositors.
Additional Tier 1 or AT1 capital consists of capital instruments that are evergreen, in that there is no fixed maturity including:
These perpetual instruments must contain no incentive for the issuer to redeem them. CoCos are a major component of AT1 and their structure is shaped by their primary purpose as a readily available source of capital for a firm in times of crisis.
Subscribe for free equity research on investment trusts, funds and listed companies.
Adit is a term used in mining to refer to a horizontal shaft giving access to the mine
ADR is an abbreviation for “Accord relatif au transport international des marchandises dangereuses par route” or an acronym of “Accord Dangereux Routier”. It is the agreement that covers the transportation of dangerous goods by road. It came into force in 1968 under the United Nations Economic Commission for Europe. You can read more about it here.
agentic AI is a form of artificial intelligence that is designed to achieve a task set for it, without the need for step-by-step intructions from a human user. It will design its own route to meeting its objective and may use a variety of online tools to achieve it.
AGM is an abbreviation of Annual General Meeting
AHTS stands for Anchor Handling Tug Supply
aHUS is an acronym for atypical hemolytic uremic syndrome. aHUS describes a condition where the body’s immune system is attacking the lining of the blood vessels. The kidneys are most usually a casualty of this.
More information is available here
The Association of Investment Companies monitors investment companies’ dividend payments and awards dividend hero status to those investment companies that have grown their dividend every year for at least 20 years.
Those investment companies that have achieved consecutive years of dividend growth for at least 10 but less than 20 years are termed ‘next generation dividend heroes’.
AIC is an abbreviation for “all-in costs”, a measure, defined by the World Gold Council, as the cost of sustaining current mining operations and expanding production. It is expressed in terms of US$ per ounce of gold sold. It comprises AISC (see definition) plus permitting/community costs not related to current operations, reclamation costs not related to current operations, non-sustaining exploration and study costs, non-sustaining capital exploration/development and non-sustaining capital expenditure.
AIF is an abbreviation of Alternative Investment Fund
AIFM is an abbreviation of Alternative Investment Fund Manager
AIFMD is an abbreviation of Alternative Investment Fund Managers Directive
AIM is an abbreviation for Alternative Investment Market
AISC is an abbreviation for “all-in sustaining costs”, a measure, defined by the World Gold Council, as the cost of sustaining current mining operations. It is expressed in terms of US$ per ounce of gold sold. It comprises total cash costs (see definition) plus corporate G&A, reclamation costs, exploration and study costs, sustaining capital exploration/development and sustaining capital expenditure.
allogeneic – cells or tissues derived from outside the body of the person that is going to be treated
alopecia areata is a common cause of non-scarring (does not cause scarring to the scalp) hair loss that can occur at any age. It usually causes small, coin-sized, round patches of baldness on the scalp – read more here
The Alternative Investment Fund Managers Directive is a complicated piece of EU legislation designed to regulate the management, administration and marketing of Alternative Investment Funds or AIFs (which includes investment companies). Since it was brought in all investment companies have had to decide who is the manager or AIFM – a difficult decision for some funds. Self managed funds have tended to opt for being the AIFM. One major change was the need to appoint an independent depositary. Complying with the legislation has pushed up costs for AIFs a little but it is not obvious yet what the benefits are for shareholders
The Alternative Investment Market (AIM) is the London Stock Exchange’s junior market for companies that, for whatever reason, are not suited to the main market. Companies are quoted rather than listed on AIM. Until recently companies quoted on AIM did not qualify for inclusion in ISAs but they now do.
The term American depositary receipt (ADR) refers to a negotiable certificate issued by a U.S. depositary bank representing a specified number of shares—usually one share—of a foreign company’s stock. The ADR trades on U.S. stock markets as any domestic shares would. ADRs offer U.S. investors a way to purchase stock in overseas companies that would not otherwise be available. Foreign firms also benefit, as ADRs enable them to attract American investors and capital without the hassle and expense of listing on U.S. stock exchanges.
Amortisation is a term describing either, in accounting speak, the action of writing off an intangible asset over time or, in the debt world, repaying part of the principal of the loan on a regular basis (a bit like a repayment mortgage).
Amortising is the process whereby a loan is paid off gradually by making additional payments to the lender in addition to interest payments. Loans can amortise to zero or amortise to a balloon payment.
Amyloidosis is the name for a group of rare, serious conditions caused by a build-up of an abnormal protein called amyloid in organs and tissues throughout the body.
The build-up of amyloid proteins (deposits) can make it difficult for the organs and tissues to work properly. Without treatment, this can lead to organ failure.
read more here
Amyotrophic Lateral Sclerosis (or ALS) is a progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord. A-myo-trophic comes from the Greek language. “A” means no. “Myo” refers to muscle, and “Trophic” means nourishment – “No muscle nourishment.” When a muscle has no nourishment, it “atrophies” or wastes away. “Lateral” identifies the areas in a person’s spinal cord where portions of the nerve cells that signal and control the muscles are located. As this area degenerates, it leads to scarring or hardening (“sclerosis”) in the region.
you can read more about it here
Anaplastic large cell lymphoma is a rare type of non-Hodgkin lymphoma- a link here explaining what it is
Andesitic rock is a fine-grained type of rock formed when lava cools rapidly in air.
ankylosing spondylitis is a form of arthritis affecting the spine and sometimes other joints – read more here
Every quoted UK domiciled company holds a meeting each year – the Annual General Meeting or AGM – where shareholders get to vote on matters important for the company. The agenda usually includes approving the Annual Report and Accounts, approving the remuneration policy and the Directors’ remuneration report, reappointing the auditor and approving their fee, approving the dividend and re-electing some or all of the directors. For an investment company in particular, the Annual General Meeting also includes approval of the terms for share buy-backs and share issuance.
Shareholders are welcome to go to the Annual General Meeting (we have details of upcoming AGMs in our Events section) and, for many, it is the best chance they get to actually meet the company’s management and ask them questions.
Annual recurring revenue ( ARR) refers to all ongoing revenue for a product or business, projected over one year. Companies that offer yearly subscriptions use this metric to determine how much revenue they can expect each year.
The Annual Report is the Board’s main method of communication with a company’s shareholders. The layout and the contents of the report is determined by a variety of rules and regulations which, over the years, have made the report longer and longer and, to most shareholders, more incomprehensible. Usually though the Chairman’s Report near the front will contain a useful summary of what has happened to the company over its financial year. The accounts, further in, tell you how much profit or loss the company made, what its balance sheet looked like at the end of the year, how its cash balances moved around and also a report that tries to explain how shareholders’ equity changed over the year.
An annuity is a insurance contract issued and distributed by financial institutions with the intention of paying out invested funds in a fixed income stream in the future.
An abbreviation for ammonium paratungstate. APT is the main intermediate tungsten product between wolframite and cemented carbides.
Arbitrage is the practice of taking advantage of a difference in prices in two or more markets; striking a combination of matching deals to capitalise on the difference, the profit being the difference between the market prices at which the unit is traded
ARDS is an acronym for acute respiratory distress syndrome – a life-threatening condition where the lungs can’t provide the body’s vital organs with enough oxygen. You can read more about it here
FeAsS: Iron arsenic sulphide
arteritis is an inflammation of the arteries
ASCOTs is an acronym for Asset Swapped Convertible Option Transactions. They are an option to repurchase a convertible at a given price. They give exposure to the price of the underlying for a small cost.
The Association of Southeast Asian Nations (ASEAN) is a regional intergovernmental organisation comprising ten Southeast Asian countries which promotes Pan-Asianism and intergovernmental cooperation and facilitates economic, political, security, military, educational and socio-cultural integration amongst its members and other Asian countries, and globally. Since its formation on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand, the organisation’s membership has expanded to include Brunei, Cambodia, Laos, Myanmar and Vietnam. Its principal aims include accelerating economic growth, social progress, and socio-cultural evolution among its members, alongside the protection of regional stability and the provision of a mechanism for member countries to resolve differences peacefully.
Asset allocation is the art of deciding, at a high level, where you want your money invested. We normally distinguish between geographical asset allocation – choosing which countries and regions you want to invest in – industry sector asset allocation – choosing what types of businesses you want to invest in – and asset class allocation – choosing what types of investment you want to make.
Asset class is a term to describe different types of investment – this includes equities (shares), bonds and other forms of debt, cash, private equity, derivatives, property
Model where the company focuses on reducing the amount of capital that is invested in assets.
AT1 is an abbreviation for Additional Tier 1
Every quoted company has to have its accounts audited. The choice of auditor is approved at the AGM. The auditor’s job is to make sure the accounts have been prepared properly and give a true reflection of the company’s position at end of the financial year. As part of that process, most audits will include a review of the company’s internal controls.
ASX is an abbreviation for the Australian Securities Exchange, which is the Australian stock market.
Autologous – cells or tissues obtained from the same individual that they will be used to treat
Autonomous mobility is the development of transportation systems that operate without direct human control.
Read more about autonomous mobility here.
There is a common strategy which investors use when their investment decisions go against them. ‘Averaging down’ involves buying more shares after they fall in price, lowering the average cost of all the shares held, in the effort to add value to their portfolio.
B2B is an abbreviation used for business-to-business and it describes a company that sells to other companies rather than to ordinary consumers
B2C is an abbreviation for business-to-consumer – an expression used when companies are selling products direct to individual customers
A backwardation describes a situation where the price for a commodity now is higher than the price of that commodity in the future. Logically, that does not make sense as there is additional risk associated with waiting to get the commodity and, if the commodity is beng stockpiled, there are associated storage costs.
The opposite of backwardation is contango.
The balance sheet is a statement that shows the assets and liabilities of a company on a specific date
A balancing mechanism (BM) is the main mechanism used by electricity grid operators to balance electricity supply and demand close to real time. The balancing mechanism is crucial because it ensures electricity is produced and consumed simultaneously to maintain the stability of the power grid.
A ball mill is a rotating horizontal cylinder in which ore is ground by steel balls.
A balloon payment is a lump sum owed to the lender at the end of a finance agreement
Bareboat, in the context of shipping charters, refers to a charter of a boat that just includes the vessel and excludes crew and provisions etc.
Basel IV describes the changes agreed in 2016 and 2017 to the international banking standards known as the Basel Accords.
Basel IV introduces changes that limit the reduction in capital that can result from banks’ use of internal models under the Internal Ratings-Based* approach. These include:
*Internal TLAC applies to subsidiaries of a resolution entity not being resolved in the entity’s home jurisdiction and can include for example collateralised guarantees provided from the parent.
Baseload in the context of power means the minimum level of power needed for a power grid. To supply baseload power, generating plants need to be able to generate a constant level of output. This is doable for a nuclear, coal or gas-fired plant, but not possible with most forms of renewable energy generation. Suitable power plants may contract with the grid to supply baseload power. Often, this is done on a day-ahead basis – where generators and off-takers submit bids to an exchange such as Nord Pool.
Sales of non-baseload power in the spot market in the UK are made at the energy imbalance price. There is a system buy price for participant in need of energy and a system sell price for participants with excess power to sell. In times where power is in short supply, such as when the weather is cloudy but there are low wind speeds, these prices may be much higher than when there is too much power. Prices can be negative at times.
If you want a more technical explanation – this guide from Elexon may help.
A basis point is one hundredth of a percent. or 0.0001
It is often abbreviated to bp
A battery storage power station, or battery energy storage system (BESS), is a energy storage station that uses a group of batteries to store electricity.
A bear market is one in which a general mood of pessimism sees a trend of securities prices falling, over a sustained period (rather than a short term correction). The opposite condition is a bull market. Both bear and bull market spirals can become self sustaining. For example, in a bear market, falling confidence leads to selling, which leads to falling prices and losses, that can create further pessimism and further selling.
A bearish investor is one with a pessimistic outlook, while a bullish investor is one with an optimistic outlook.
Behind the meter (with demand user) refers to energy storage facilities that are connected to commercial and industrial users’ sites. They provide customers electricity bill savings and grid services (such as power supply if grid supply fails). Examples of this would be to cover the lag between the user requiring power when the grid isn’t supplying enough – frequency response, TRIAD (storing cheap rate electricity for use rather than buying peak rate from the grid) or uninterrupted power supply (USP)
see also “In front of the meter”
A way of measuring how well the company is doing – benchmarks can be indices (e.g. the FTSE 100 index), a level of return (e.g. the Bank of England base rate) or the performance of other competing companies.
Investment Managers often use the Benchmark as a reference point for the amount that they hold in stock in their portfolio and as a risk control. if the portfolio held the same proportions of stocks as the index, its performance would track that of the index. If the investment manager chooses to own more or less of the stock than the index he / she is taking an active position.
Beta is a measure of how volatile a company’s share price is relative to an index. A beta of one means that the share price moves in-line the index. A beta greater than one means the share price outperforms a rising market and underperforms a falling market. A beta less than one means that the share price doesn’t rise as fast as the rising market and doesn’t fall as fast as a falling one. Betas are worked out using historical data and, in our opinion, this means they don’t work well in the real world as companies’ circumstances change over time.
Beta thalassemia is the most commin form of thalassaemia, a group of inherited conditions that affect a substance in the blood called haemoglobin.
People with thalassaemia produce either no or too little haemoglobin, which is used by red blood cells to carry oxygen around the body.
This can make them very anaemic (tired, short of breath and pale).
more information is available here
The bid price is the price at which someone else is prepared to buy your shares. The price is only good for the number of shares they are willing to buy.
Biosimilar is a name for a biological medicine (one where the active substance – the key ingredient – is an organic compound) which is highly similar to another already approved biological medicine. These biosimilars need to go through the same approval process as the original medicine. They differ from generics in that they are not exact copies of the original compound.
A black box warning is the strongest form of warning that the FDA may insist on being displayed in relation to a drug. It means that the FDA believes that patients may be at risk of serious harm as a consequence of taking the drug. Nevertheless, doctors and patients may agree that the benefits of the treatment outweigh the dangers.
Black Swan events are events that were, in hindsight, unpredictable. They are named after Australia’s Black Swans, an animal so alien to European minds that its existence couldn’t be foretold.
Blastic plasmacytoid dendritic cell neoplasm, abbreviated to BPDCN, is a historically rare, highly aggressive disease affecting the skin most commonly, followed by the bone marrow or lymph nodes. It used to be seen as a form of acute myeloid leukemia but is now thought to be a separate condition. More information is available here
The board is the collective term for all the directors of a company. The Board is there to protect shareholders’ interests as well as ensure that the company does well. Read our guide to Boards and Directors
A board pack is the collected paperwork provided to a board ahead of a board meeting from all the different outsourced service providers
Bobl is an acronym for bundesobligationen – debt issued by the German government. The acronym crops up in a futures contract used to trade medium-term German debt. The contract has a notional value of €100,000.
On the Eurex exchange euro-bobl futures contracts exist for the months of March, June, September and December. The underlying deliverable product for this contract is German debt securities with remaining term of 4.5 to 5.5 years with a 6% coupon.
euro-bund futures contracts work in the same way as euro-bobl futures contracts except that the underlying deliverable product is German debt securities with a remaining term of 8.5 to 10.5 years and a coupon of 6%.
schatz-bund futures are the short-dated equivalent of the bobl and bund futures. Here the underlying deliverable product is German debt securities with a remaining term of 1.75 to 2.25 years and a coupon of 6%.
Germany hasn’t issued debt with a coupon as high as 6% for some time and so the contract values are adjusted to reflect the market price of a bond with a 6% coupon.
Subscribe for free equity research on investment trusts, funds and listed companies.
Another name for debt that can be traded
There are many types of debt instrument under the “catch-all” title of Bonds. They are also referred to as “Fixed Income”. They include sovereign or government debt (e.g. UK gilts, US treasuries, etc.), Supranational (e.g. The World Bank, ECB) and bonds issued by companies or institutions to raise capital.
Bonds are characterised as paying a fixed rate of interest (coupon) for a set period of time and then returning the initial loan amount.
Bonds appear all along the risk spectrum from government bonds issued by developed economies to large highly rated companies, emerging markets governments and companies through to high yielding lowly rated companies. It is not correct to see all bonds as “low risk”.
Book value is the sum of the amounts of all the line items in the shareholders’ equity section on a company’s balance sheet. You can also calculate book value by subtracting a business’s total liabilities from its total assets.
bottom up / top down – Some managers select individual investments that they like and assemble these into a portfolio – this is called bottom-up stock selection. Others may decide first what geographies, industry sectors and investment themes they like – this is called asset allocation – and then decide what investments will fit within those criteria. This is called top-down stock selection.
BRAF is a gene that encodes a protein called B-Raf. This protein is involved in cell growth. In some cancers it appears to have mutated and so some new cancer therapies target these BRAF mutations.
BRCA 1 and 2 are genes that produce proteins that help repair damaged DNA and, therefore, play a role in ensuring the stability of each cell’s genetic material. When either of these genes is mutated, or altered, such that its protein product is not made or does not function correctly, DNA damage may not be repaired properly. As a result, cells are more likely to develop additional genetic alterations that can lead to cancer.
Specific inherited mutations in BRCA1 and BRCA2 most notably increase the risk of female breast and ovarian cancers, but they have also been associated with increased risks of several additional types of cancer. People who have inherited mutations in BRCA1 and BRCA2 tend to develop breast and ovarian cancers at younger ages than people who do not have these mutations.
read more here
BREEAM is an abbreviation of Building Research Establishment Environmental Assessment Methodology. It was first used in 1990 and is a method of assessing, rating, and certifying the sustainability of buildings. You can access the website here.
A broker is an individual or firm that acts as an intermediary between an investor and a securities exchange. Because securities exchanges only accept orders from individuals or firms who are members of that exchange, individual traders and investors need the services of exchange members.
BTP is an acronym for Buoni del Tesoro Poliennali. Bonds issued by the Italian government with maturities of 3, 5, 7, 10, 15 and 30 years.
Euro-BTP futures are traded on the Eurex exchange. Each contract is for €100,000 of long-term euro-BTP. Futures contracts exist for the months of March, June, September and December. The deliverable product for these contracts is Italian debt securities with remaining term of 8.5 years with a 6% coupon.
A bull market is one in which a general mood of optimism sees a trend of securities prices rising, over a sustained period (rather than a short term correction). The opposite condition is a bear market. Both bear and bull market spirals can become self sustaining. For example, in a bull market, rising confidence can lead to buying, which leads to rising prices and financial gains, that can create further optimism and further buying.
A bullish investor is one with an optimistic outlook, while a bearish investor is one with a pessimistic outlook.
The fluctuations in an economy over a period of time.
Buy and build funding is provided to companies that want to consolidate their market by acquiring competitors. They can cut costs and take advantages of economies of scale, in addition to trying to generate organic growth.
Buy-ins involve backing a management team to take control of a business that they don’t already work for (can be abbreviated to MBI).
Buy-outs involve backing a management team to acquire the business that they work for. From this we get MBO (management buyout) and LBO (leveraged buyout, where debt funding forms a significant part of the finance for the deal).
BWIC, or Bid Wanted In Competition, is a formal auction where institutional investors send a list of securities they want to sell to a group of dealers. This gives investors a sense of how much the securities are valued at while maintaining privacy.
Read more about BWIC here.
Companies often classify different classes (=types) of shares using letters. C share is used most commonly to describe a new class of shares issued by an investment company. The C shares have their own portfolio while the money raised by issuing them is invested. When the Board judges that the C share portfolio is sufficiently invested, the C share portfolio will be merged with the normal portfolio and the C shares converted into ordinary shares (using a formula based on their respective net asset values). The reason for doing this is to avoid the old shareholders’ portfolio being diluted by a huge injection of cash and having to bear the costs of investing that cash.
C1 costs are a standard metric used in copper mining as a reference point to denote the basic cash costs of running a mining operation to allow a comparison across the industry. Although producers are not bound to adhere strictly to any convention, the most widely accepted definition is that from consultants Brook Hunt.
Under the Brook Hunt definition, C1 costs are direct costs, which include costs incurred in mining and processing (labour, power, reagents, materials) plus local G&A, freight and realisation and selling costs. Any by-product revenue is credited against costs at this stage.
Costs are reported in US dollars per pound of copper produced.
Subscribe for free equity research on investment trusts, funds and listed companies.
CAGR is an acronym for compound annual growth rate
The term “call”, usually used in relation to “call options” is the right to buy an investment from someone else at a predefined price within a predefined time frame.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Permanently destroying shares (as opposed to holding them in treasury)
Cap and Collar refers to the upper and lower limits set in a defined range. This term is generally found in the Finance sector.
The capacity market is a mechanism introduced by the UK Government to manage security of electricity supply in the UK and to safeguard against the possibility of blackouts. Capacity market participants are paid to ensure they are available to respond when there is a high risk that a system stress event could occur.
Electricity suppliers pay for the scheme in line with their market share through the winter months when electricity demand is at its highest. This tends to be between the months of November and February, on weekdays, between 4pm and 7pm.
Two capacity auctions take place each year:
The T-4 auction is used to buy most of the capacity that is anticipated to be needed for delivery in four years’ time. Contracts can run for 15 years.
The T-1 auction is used to top-up capacity for the forthcoming year. The price achieved reflects the degree of shortfall of capacity from earlier T-4 auctions.
Capital Expenditure, often abbreviated to capex, is the money a business spends on a one-off basis on long-lasting assets used for the business. This could include machinery for a factory or desks for an office.
Capital is a term used to represent the assets of the company usually as distinguished from its income.
The capital return reflects the return generated by the move in the share price or net asset value excluding dividends or income.
Performance is often quotes on a “Total Return” basis, where the dividend is included with the capital return.
Shares that get the left over assets on a winding up but do not get a dividend.
Capital structure describes the make up of a company’s balance sheet – i.e. all the sources of finance a company is using including the equity.
CAPM is an acronym for the Capital Asset Pricing Model. It suggests that the expected return on an investment is equal to the return on the risk-free rate of interest (usually the yield on a government bond with an equivalent life) plus the expected excess return of the market for that investment (in other words the expected return on the market less the risk-free rate of interest) multiplied by the beta of the investment.
From our GCP note published on 1 July 2021:
“However, where a renewable energy generator sells power in the spot market, it may not be able to obtain the baseload power price. Currently, it may often be the case that at times of peak renewable production, there is insufficient demand for the power generated. Consequently, spot prices may be considerably below baseload prices. The term ‘capture price’ describes the actual power price achieved.
If all energy produced could be stored when demand is insufficient, this problem could be solved. Addressing the UK’s deficiency in energy storage should help narrow, and in time perhaps even eliminate, the spread between capture prices and baseload prices.”
CAR-T is an acronym for chimeric antigen receptor T-cell. The idea is that the body’s naturally occurring T-cells are reprogrammed to attack cancer. The T-cells can be harvested from the patient or another donor. If the therapy is working correctly, only the cancer cells are targeted and healthy cells are unaffected.
A method of recovering gold and silver from fine ground ore by simultaneous dissolution and adsorption of the precious metals onto fine, activated carbon in an agitated tank of ore solids/solution slurry.
Carried interest or carry is a term used in the private equity world to describe the performance related fee that a general partner can earn from a successful investment. Often the limited partnership investors will agree a deal with the general partner whereby, if cash is freed up from an investment, the limited partnership investors first get the return of the money they invested, then a preferred return, and then any other profits are shared with the general partner in a fixed ratio. Often this is 80:20 limited partnership investors:general partner.
Carried Value or Carrying Value – the original cost of an asset, less the accumulated amount of any depreciation or amortization, less the accumulated amount of any asset impairments.
This is similar to MOIC, which is gross multiple of invested capital. This expresses how much a private equity company has made on the realisation of a gain, relative to how much they paid for it.
When part of a portfolio is invested in cash or cash-equivalent securities, as opposed to securities which are the portfolio’s main focus, the cash component has no market exposure. This effect is referred to as cash drag.
In a situation where markets are rising, cash tends to underperform markets and cash drag is negative. Conversely, where markets are falling, cash will tend to outperform the market and cash drag will be positive.
SnO2: Tin oxide. Commonly found in vein deposits, granitic rocks, pegmatites and in areas of contact metamorphism
CDMO is an acronym for contract development and manufacturing organisation. Biotech and pharmaceutical firms outsource jobs to CDMOs as a way of accelerating the research and development, and manufacturing process for new treatments.
An abbreviation for collateralised debt obligation
CDS is an abbreviation of credit default swap. In a credit default swap, the buyer of the CDS is looking for insurance that the borrower/issuer of the debt that the CDS relates to is not going to default. The seller of the CDS makes payments to the buyer over the life of the swap – usually a bit less than the money the buyer would have got by just holding the debt. The difference is the seller’s premium. This is the money that the seller will make provided that there is no default. However, if things go wrong with the borrower/issuer then the seller has to compensate the buyer. The riskier the borrower/issuer is perceived to be, the higher the premium that the seller will demand.
Centimetre-level positioning is a method of highly precise location tracking achieved by techniques that correct signals from global navigation systems to achieve accuracy of a few centimetres.
Read more about centimetre-level positioning here.
CFD is an abbreviation of contract for difference
Large, family-controlled conglomerates that dominate South Korea’s economy
Chairman of a Board – Highest ranking officer in a firm’s board of directors who presides over the board’s meetings, but may or may not have actual executive authority.
This title is often adapted from a diversity perspective. Versions include chairperson, chairwoman, chairman or just Chair.
Read our guide to Boards and Directors
CISX is an abbreviation for the Channel Islands Stock Exchange.
Chess Depositary Interests or CDIs are instruments traded on the Australian Stock Exchange (ASX) that allow non-Australian companies to list their shares on the exchange and use the exchange’s settlement systems. A CDI can be equivalent to one share traded on another exchange or it could be a multiple or a fraction of shares.
Subscribe for free equity research on investment trusts, funds and listed companies.
Chorea is a term for involuntary, random muscle movements of hands or feet. You can read more abut it here
Choroideremia is a rare inherited disorder that causes progressive vision loss, ultimately leading to complete blindness. The condition affects the retina and is caused by a genetic defect of the X-chromosome. More information is available here
Chronic inflammatory demyelinating polyneuropathy (CIDP) is a rare neurological disorder in which there is inflammation of nerve roots and peripheral nerves and destruction of the fatty protective covering (myelin sheath) of the nerve fibers. Myelin allows nerve fibers to transmit signals very rapidly (40-60 meters/second). Loss or damage to myelin can cause slowing or blockage of the nerve signals and can lead to loss of nerve fibers. This causes weakness, paralysis and/or impairment in motor function, especially of the arms and legs. Sensory disturbance may also be present. The motor and sensory impairments usually affect both sides of the body (symmetrical), and the degree of severity and the course of disease may vary from person to person. Some affected individuals may follow a slow steady pattern of symptoms while others may have symptoms that stabilize and then relapse.
you can read more about it here
Chronic myelomonocytic leukaemia or, in the US, chronic myelomonocytic leukemia, abbreviated to CMML, is a rare form of blood cancer. It happens when there are too many monocytes, a type of white blood cell in the blood – see here for more information
CIO is an acronym for chief investment officer. In an asset management business, this is usually an executive director with responsibility for setting the overall strategic thinking behind the firm’s investment approach and may be the person to whom all the investment personnel ultimately report.
An abbreviation of Collateralised Loan Obligation
Typically, a company controlled by five or fewer investors but in the definition of what constitutes an investment trust. It is a company where less than 30% of the shares are in public hands
A closed-end fund (CEF) is a form of collective investment vehicle whereby the number of shares in the fund is fixed. Usually, those seeking to invest in an existing closed end fund must purchase shares from existing holders. Similarly, to exit an investment in a closed end fund, an investor must find another party to sell the shares to.
In contrast, the size of an open ended fund is not fixed. New units are created when investors want to enter the fund. Similarly, units are destroyed when investors wish to exit.
Another term for closed-end fund is an investment company.
In in specific circumstances, a closed end fund maybe an investment trust, but it has to meet the legal requirements to do so. All investment trusts are investment companies (or closed-end funds) but not all investment companies are investment trusts.
An abbreviation for commercial mortgage backed security
CoCos are contingent convertible bonds issued typically by banks. They convert from debt to capital if a pre-determined event occurs and are a way of a bank shoring up its balance sheet in tough times.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Also known by the abbreviation CDO. A form of securitised debt where the portfolio contains debt other than loans or mortgages such as credit card debt or car finance
A form of securitised debt where a portfolio of loans, usually to businesses, is packaged together and then sold off in tranches.
The highest ranking tranche (the one that gets repaid first) may be rated as AAA or equivalent; that is to say, in the opinion of a rating agency, the chances of losing money on the AAA portion are the same as the chances of losing money lent to any other AAA rated borrower, like a well-financed government.
Below the AAA tranche, which is usually by far the largest, are a series of lower ranking tranches and the lowest is often called the equity tranche because it is as risky as holding highly geared equity.
The interest rate paid on the AAA tranche should be consistent with the interest rate paid on any other AAA rated security and this and the interest payable on other higher ranking tranches should be well below the interest being paid to the Collateralised Loan Obligation by the borrowers. This means the interest rates on the lower rated tranches can be a lot higher (but, to large extent, this just compensates them for the extra risk involved in holding the lower rated tranches since they bear the first losses in the portfolio if a borrower or borrowers cannot repay their loans.
A form of securitised debt where the portfolio contains commercial mortgages
comparitor – When a fund does not have a benchmark, investment companies and investment managers offer a comparitor or reference benchmark.
This helps investors / shareholders appreciate how the NAV and share prices have done and helps put that performance into context.
Funds that do not have a benchmark index are often absolute return funds, a total return funds or pure unfettered stock picking funds.
A fine, powdery product of the milling and flotation process containing a high percentage of valuable metal. Many base metals are produced in this form by mines and then sold for further treatment by smelting and refining to produce the metal.
The Takeover Code has a concept called ‘acting in concert’. Persons acting in concert form a ‘concert party’.
The technical definition (from the Takeover Panel’s website) is given below, but basically it means people or businesses that are acting together to control a company or block a takeover attempt.
This definition has particular relevance to mandatory offers and further guidance with regard to behaviour which constitutes acting in concert is given in the Notes on Rule 9.1.
Persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control (as defined below) of a company or to frustrate the successful outcome of an offer for a company. A person and each of its affiliated persons will be deemed to be acting in concert all with each other (see Note 2 below).
Without prejudice to the general application of this definition, the following persons will be presumed to be persons acting in concert with other persons in the same category unless the contrary is established:
For the purposes of presumptions (1) and/or (2):
congenital adrenal hyperplasia – is a condition present at birth where the adrenal glands are enlarged. The knock-on effects are production of an excess of androgen (male hormones) and problems producing cortisol – this is better explained here
A conglomerate is a large corporation made up of a number of different businesses, often operating in unrelated industries, which are owned and managed under one corporate group. Conglomerates typically grow through acquisitions and may include both core and non-core operations. Investors often apply a conglomerate discount, where the market values the group at less than the sum of its parts, due to perceived inefficiencies, lack of strategic focus, or difficulties in valuing the diverse businesses.
Contango describes a situation in the commodities markets where the current price of a commodity is lower than the price of the same commodity in the future. The opposite of contango is a backwardation.
A contract for difference is a form of derivative that allows an investor to have exposure to the change in value of an investment without having to take legal ownership of it. The contract for difference works as a legal agreement that the seller will pay the buyer the difference between the current value of the investment and its value at an agreed time in the future or vice versa if the value of the asset has fallen.
Convertible indicates an ability to swap one class (=type) of the instruments making up a company’s capital structure for another (usually on pre-defined terms)
A debt instrument that is convertible into the ordinary shares of a company at a fixed price at a date or within a range of dates in the future.
Convertible Unsecured Loan Stocks are a bit like debt and a bit like equity. They have a value based on the value of their debt (see debt at fair value) and an option or warrant value related to the price and price volatility of the ordinary shares.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
The long cylindrical piece of rock, that can be up to several inches in diameter, brought to surface by diamond drilling.
Core capital or Tier 1 capital is the reserves that a bank has to back its business activities. It composed of disclosed reserves and common stock/ordinary shares. It can also include non-cumulative, non-redeemable preferred stock.
As well as core capital, banks also use instruments to accumulate Tier 1 capital, such as preference shares and CoCos. However, such instruments must adhere to strict conditions. Capital acquired through these instruments can only account for 15% of the bank’s total Tier 1 capital. See also Additional Tier 1 or AT1
The tier one capital ratio is the ratio of a bank’s tier one capital to its risk weighted assets (all the bank’s assets – the loans that it has made – weighted according to a risk formula that is usually set by the local regulator).
Common Equity Tier 1 capital (CET1) is the highest quality of regulatory capital, as it absorbs losses immediately when they occur.
Additional Tier 1 capital (AT1) also provides loss absorption on a going-concern basis, although AT1 instruments do not meet all the criteria for CET1. For example, some debt instruments, such as perpetual contingent convertible capital instruments, may be included in AT1 but not in CET1.
In contrast, Tier 2 capital is gone-concern capital. That is, when a bank fails, Tier 2 instruments must absorb losses before depositors and general creditors do. The criteria for Tier 2 inclusion are less strict than for AT1, allowing instruments with a maturity date to be eligible for Tier 2, while only perpetual instruments are eligible for AT1.
Total available regulatory capital is the sum of these two elements – Tier 1 capital, comprising CET1 and AT1, and Tier 2 capital. Each of the categories has a specific set of criteria that capital instruments are required to meet before their inclusion in the respective category. Banks are required to maintain specified minimum levels of CET1, Tier 1 and total capital, with each level set as a percentage of risk-weighted assets.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Correlation refers to the relationship between the values of two separate assets. Positive correlation means that the prices of the two asssets move together in the same direction. Negative correlation means that the prices move in opposite directions. The price of something that is uncorrelated does not make any measurable reaction to the price of the thing that it is uncorrelated with.
Correlation, low Correlation, un-correlation or negative correlation are an important factor in multi-asset investing and diversification.
A cost curve plots the cost of production of individual mines within the industry on a cumulative basis on the X axis against operating costs on the Y axis. The curve can be used by analysts to demonstrate how much of an industry’s production is below the spot price of the commodity (and thus profitable) or by mining companies to highlight the relative cost position of a particular mine. Cost curves are most often used for gold, copper and iron ore. Costs are usually cash costs in US$/oz (gold), USc/lb (copper) or US$/t (iron ore).
Coupon is a word used for interest payments on bonds. It comes from the days when paper bond certificates used to have tear-off coupons for each interest payment that the holder would exchange for cash on the pay date.
Generally, a covenant is an agreement by lease, deed, or other legal contract. However, it is usually associated with a debt. In this context, a covenant is a condition the lender puts into the terms of the loan which, if breached, triggers a penalising action, maybe even immediate repayment of the debt.
CPI is an abbreviation of consumer price index. This is a measure of inflation in the UK and is based on a notional basket of goods and services used by the average family excluding most costs associated with housing including mortgage payments, council tax, ground rent, buildings insurance and costs associated with buying houses including estate agents’ fees. It is calculated based on the change in the geometric mean of the basket (as opposed to the arithmetic mean used to calculate the RPI Index which the CPI replaced).
In the investment world, Credit is used more or less interchangeably with debt. Thus credit markets and debt markets means much the same thing and a credit fund invests in debt in various forms.
Credit is also a short hand term for corporate bonds, which are bonds issued by companies
Credit Rating refers to a judgement on how risky a debt is -or in other words how likely it is that the borrower will pay back the debt and pay the interest on time. Credit ratings are issued by ratings agencies such as Moodys, Standard & Poors and Fitch. There are small differences in the ratings that they give, as follows.
Moodys rates bonds from Aaa to C. Standard & Poors’ ratings mirror Moodys with ratings running from AAA to D.
| Moody’s | S&P | Fitch | Rating description | ||||
|---|---|---|---|---|---|---|---|
| Long-term | Short-term | Long-term | Short-term | Long-term | Short-term | ||
| Aaa | P-1 | AAA | A-1+ | AAA | F1+ | Prime | Investment-grade |
| Aa1 | AA+ | AA+ | High grade | ||||
| Aa2 | AA | AA | |||||
| Aa3 | AA− | AA− | |||||
| A1 | A+ | A-1 | A+ | F1 | Upper medium grade | ||
| A2 | A | A | |||||
| A3 | P-2 | A− | A-2 | A− | F2 | ||
| Baa1 | BBB+ | BBB+ | Lower medium grade | ||||
| Baa2 | P-3 | BBB | A-3 | BBB | F3 | ||
| Baa3 | BBB− | BBB− | |||||
| Ba1 | Not prime | BB+ | B | BB+ | B | Non-investment grade speculative |
Non-investment grade AKA high-yield bonds AKA junk bonds |
| Ba2 | BB | BB | |||||
| Ba3 | BB− | BB− | |||||
| B1 | B+ | B+ | Highly speculative | ||||
| B2 | B | B | |||||
| B3 | B− | B− | |||||
| Caa1 | CCC+ | C | CCC | C | Substantial risks | ||
| Caa2 | CCC | Extremely speculative | |||||
| Caa3 | CCC− | Default imminent with little prospect for recovery |
|||||
| Ca | CC | ||||||
| C | |||||||
| C | D | / | DDD | / | In default | ||
| / | DD | ||||||
| D | |||||||
Many institutional investors are not allowed to own non-investment grade bonds.
Credit Spread refers to the difference between the yield on a bond and the yield on an equivalent government bond (one with a similar life). The idea is that the extra yield available on the non-government bond reflects how risky the market thinks it is – the credit in credit spread is a reference to the bond’s credit rating.
A Creditor is a person or an entity that you owe money to
Crowdfunding involves a number of people coming together to fund a project or a business. The process of fundraising is usually coordinated on a website and promoted through social media.
CRR is an abbreviation for Capital requirements regulation – a piece of legislation from the EU associated with CRD IV – the Capital requirements directive. These rules implement Basle III – the EU’s standards for ensuring that the banking sector has adequate capital.
A crusher is a machine designed to reduce large rocks from a mine in a dry process into smaller rocks , which can then be further reduced in size by a mill to produce a sand that can be treated to recover valuable materials.
CSPP is an abbreviation for Corporate Sector Purchase Programme – the European Central Bank’s programme for buying bonds issued by companies – a policy that extends Quantitative Easing beyond purchases of government debt. The CSPP was announced on 10 March 2016 and activity started at the end of June 2016.
CTAs or Commodity Trading Accounts are a form of systematic macro fund that specialise in trading commodities such as oil and wheat.
An abbreviation of Convertible Unsecured Loan Stock
Cum = With (Latin)
A share price described as cum dividend means the dividend is included in the share price. It is also used a prefix with other sorts of corporate activity.
Currency hedging is an attempt to reduce the effects of currency fluctuations on investment performance. To hedge an investment, investment managers will set up a related currency investment designed to offset changes in the value of the currency. In general, currency hedging reduces the increase or decrease in the value of an investment due to changes in the exchange rate
Currency movement – Often, in reports, companies and investment managers will give the reason for performance to to be the strengthening or weakening of one currency against another.
Currency movements (unless hedged) can have a significant impact on the performance of a portfolio.
Taken from the point of view of a UK based investor who holds sterling-denominated shares in an investment company with US dollar investments:
Therefore:
Current assets is an accounting term used to describe the assets of a business that are cash or can be turned into cash within a year. It includes cash, short-term bank deposits, amounts owed to the company (debtors) that should be received within a year, stock (inventory) and products that they have started to make but aren’t yet available for sale (work in progress).
Current liabilities is an accounting term used describe the short-term debts of a business that fall due to be paid within the next year. It includes creditors as well as things like bank overdrafts, short-term loans and tax liabilities.
CUSIP is an acronym that refers to Committee on Uniform Security Identification Procedures. The CUSIP Code (or number) is made up of nine characters (alphanumeric) and are used to identify securities.
CVA is an acronym for Company Voluntary Arrangement. It is a mechanism whereby an insolvent company (one with more liabilities than assets) can come to an arrangement with its creditors (the people it owes money to). As long as 75% of the creditors agree to a plan, the rest of the creditors are bound to go along with it. CVAs have become quite common for tenants that want to reduce their rent.
cytokinesis is part of the process of cell division relating to the division of the cytoplasm – the part of the cell excluding the nucleus
DACH is an abbreviation for Germany (Deutschland), Austria, and Switzerland
Day trading is a strategy which involves buying and selling shares of stocks within the same day with the intent of profiting from price movements. For example, a day trader may open a new position of a stock at 9 a.m., then close that same position at 2 p.m. These traders rarely hold positions overnight.
DCF is an abbreviation for discounted cash flow
A DCM or discount control mechanism is a policy put in place by a Board in an effort to control the discount on an investment company. Discount control mechanisms come in different forms. Many are promises to buy back shares if the discount exceeds a certain level in normal market conditions. Some measure the discount over a period and if the average discount exceeds a certain level this may trigger a tender offer, a continuation vote or even a liquidation vote.
DDA is an abbreviation for the Disability Discrimination Act. For buildings that are used to provide a service or employment, the Disability Discrimination Act 2005 gives disabled people important rights of access to everyday services. Everyday services include services provided by local councils, doctors’ surgeries, hotels, banks, pubs, theatres, hairdressers, places of worship, courts, voluntary groups and non-educational services provided by schools. The DDA Act 2005 continues to apply in Northern Ireland but was replaced in 2010 by the Equality Act in England Wales and Scotland.
In finance, a dead cat bounce is a small, brief recovery in the price of a declining stock. Derived from the idea that “even a dead cat will bounce if it falls from a great height”
A form of debt that can be traded after it has been issued.
In the UK, this is a corporate bond that is secured against an asset, such as commercial property. In the US, a debenture is a form of loan note issued by a company.
Some companies borrow money with long maturities . The people who have lent the company this money know they can rely on a defined income until the loan matures. They could sell the debt on to someone else but, if the market rate of interest has changed since they lent the money, the debt is more (if interest rates have fallen) or less (if interest rates have risen) valuable in the eyes of the buyer.
The fair value of the debt is simply its value if you adjust the price of the debt so that a buyer would be earning the market rate of interest.
For example,
Say I borrow £100 for a year at 10% interest, then say the market rate of interest immediately halves to 5%. If I now sell the loan, a buyer is going to get £110 from owning my loan compared to £105 for making a loan in the open market. My loan is worth more to the buyer so he should pay me more. The price he should pay is 110/105 = £104.76.
This is important as investment companies that borrow money for long periods have to publish NAVs that reflect their debt at par (the value as though the market rate of interest hadn’t changed) and debt at fair value.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Another term for debt at fair value
The face value of a loan – see debt at fair value
A Debtor is a person or an entity that owes money to you
Default refers to when a borrower does not make a scheduled payment of interest or a repayment of the principal
Credit ratings agencies rate companies on their likelihood of companies or governments defaulting on their payment of interest or a repayment of the principal. The rating can have an impact on the valuation of a bond and as a result, bonds with a poorer credit rating (sub investment grade) tend to have higher yields than those with high credit ratings.
When prices decline for goods and services
Delta is a measure of risk – it represents the rate of change – for example, how the price of a derivative will change relative to the price of the underlying security
Depreciation is an accounting item that is supposed to represent the wear and tear of assets that a company owns. The value of the asset is written off over time by making a charge against profits. Some things don’t depreciate – things like cash, land and buildings. Some depreciate quite fast – things like computers. Companies set depreciation rates for different types of asset that are designed to write off the value of the asset over its useful life. The depreciation charge is only a notional accounting item though – no cash is moving around – and depreciation is added back onto profits when calculating tax.
Derivative refers to a security whose value depends on the value of another asset. For example a warrant is a derivative based on the value of the equity that the warrant can be used to buy.
Derivatives can be used to get exposure to the underlying asset without having to put up all of the cost of buying the asset itself – they can be a lot riskier than buying the asset but this is not always the case.
For example, different combinations of derivatives can be used to protect the downside on an investment or benefit from volatility in the price of the asset. They can be hard to understand, however, and sometimes hard to value.
DFS is an abbreviation for Definitive Feasibility Study.
Diluted Net Asset Value or Diluted NAV – Diluted NAV per share shows the net assets per common share after assuming the exercise of all outstanding warrants and stock options, and the conversion of convertible bonds, preferred stock, and any security that needs to be taken into consideration.
Diluted Net Asset Value or Diluted NAV
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
The discount rate is a notional rate of return used to try to value future cash flows in today’s money. It can try to incorporate an estimate of the riskiness of those cash flows. A higher discount rate produces a lower net present value and vice versa.
Discount to NAV – The amount by which the net asset value (NAV) exceeds the share price, calculated as the share price divided by the net asset value and expressed as a percentage. Read our guide to discounts
The share price of an investment trust can differ from the net asset value (NAV). If the current share price is below the NAV, the investment trust is said to be trading at a discount.
When a discount gets bigger, it is said to “widen”. When the discount has “narrowed”, it has got smaller.
Discount to NAV
Some investors use Discounted Cash Flow (DCF) to value companies. The methodology involves forecasting future net cash flows into a business and discounting them using a discount rate.
As an example, Company A has forecast cash flows of £10 in year one, £20 in year two, £50 in year three and £500 in year 4 (as it is planned to be sold to another company). For this exercise, the discount rate is 5%. The discounted cash flow valuation today (the net present value) is
10 / (1+5%) + 20 / (1+5%) x (1+5%) + 50 / (1+5%) x (1+5%) x (1+5%) + 500 / (1+5%) x (1+5%) x (1+5% )x (1+5%)
= £482.21
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Discretionary macro funds try to form a view of the state of the world, analyse the implications of this for asset prices and construct a portfolio to take advantage of the situation. For example, a discretionary macro fund may decide to bet that the Euro will fall in value relative to the US dollar and may try to take advantage of that by being short of Euros and long of US dollars. The discretionary part of the description refers to the manager’s ability to make these decisions for the fund themselves.
Multi-Strategy and Diversified Growth funds also fall into this category.
This is a legal agreement that allows a client to hand over their investment portfolio to a financial expert, who then manages the portfolio on their behalf
A slowing of the pace of price inflation
Dispatch down is a term used by the Irish power grid – EirGrid, as the transmission system operator – it refers to power that is produced but cannot be used. Renewable generation is prioritised by the power grid’s control centres. However, there will be times when it is not possible to accommodate all priority dispatch generation while maintaining the safe, secure operation of the power system. Security-based limits must be imposed due to both local network and system-wide security issues. It is necessary to reduce the output of renewable generators below their maximum available level when these security limits are reached. This reduction is referred to as ‘dispatch-down’ of renewable generation.
There are two reasons for the dispatch-down of wind and solar energy: constraint and curtailment.
Distressed investing involves taking control of or making a significant investment in a failing business and turning it around. This may involve injecting additional funding into the company.
When portfolio managers talk about diversification they are describing holding assets that are not correlated with each other (i.e. their values do not move in tandem). As an example, a portfolio entirely full of shares in oil companies is not very diversified (and so is risky because something might happen that makes the whole portfolio fall in value, like a collapse in the oil price) but adding a technology company to the portfolio increases its diversification. The more different sorts of assets you add the more diversified the portfolio becomes and the less risky it is. But a portfolio that is too diversified will just perform like an index.
A distribution of money from a company. Most investment companies try to pay dividends from income but they are now allowed to pay dividends from capital.
Measures the number of times that a company can pay shareholders its announced dividend using its net income.
Some companies operate dividend reinvestment plans that buy you shares with the money you would have got from a dividend. The idea is that it is easier and cheaper for you than getting the dividend and buying the shares yourself. Remember though that the taxman will still tax you as though you got the cash dividend.
DLBCL or diffuse large B-cell lymphoma is a common type of fast-growing non-Hodgkin lymphoma. It develops when B-cells (also called B-lymphocytes) become abnormal. B-cells are white blood cells that fight infection. The abnormal B-cells (lymphoma cells) usually build up in lymph nodes, but they can affect other parts of the body. More information is available here
DNO is an acronym for distribution network operator. These are the companies that are responsible for the transmission of power from the national grid to homes and businesses. Confusingly, they don’t supply the energy, your chosen power supplier uses the DNO’s transmission network to supply you energy.
Where a company or an individual is based legally. The term Domicile is generally applied to the country or jurisdiction where a company is listed (e.g. a UK domicile investment company)
A doré is Bullion bar produced at a mine smelter. It is usually about 90-95% gold and 5-10% silver.
DPS is an abbreviation of dividend per share. It is the total cash cost of the dividend divided by the number of shares that are eligible to receive the dividend.
Dry age-related macular degeneration (AMD) is a slow deterioration of the cells of the macula, as the retinal cells die off and are not renewed often over many years. The term dry does not mean the person has dry eyes, just that the condition is not wet AMD. The progression of dry AMD varies, but in most people it develops over many months or years. People often carry on as normal for some time.
The macula is part of the retina at the back of the eye. It is only about 5mm across but is responsible for all of our central vision, most of our colour vision and the fine detail of what we see.
more information is available here
Duchenne muscular dystrophy is a genetic disease that causes muscle weakness and wasting.Children born with the disease have a fault, known as a mutation, on their dystrophin gene. The fault on the gene means that they cannot produce dystrophin, which is a protein that protects muscles. Without dystrophin, muscles get damaged more easily and so muscle strength and function is weakened.
Duchenne muscular dystrophy almost always affect boys, and they tend to be diagnosed before the age of 5.
more information is available here
A dump is usually a pile of waste rock on surface. The waste is usually separated from ore at the mining stage but it can also be separated at an early stage of processing. The waste may be used for base construction of a tailings dam, for road construction or utilised at the end of the mine’s life for reclamation. A dump can sometimes refer to a pile of ore but that is usually known as a stockpile.
Duration, in the context of a bond, is used as a measure of the sensitivity of a bond to changes in interest rates. Expressed in years, it represents the weighted average of the time it will take to receive all the cash flows from a bond. A bond with most of its cash flows due many years from now is more sensitive to changes in interest rates than a bond where all the cash flows will be received in the near future. Duration can also be calculated for a portfolio of bonds or debt instruments.
The expectation of interest rates rising in the future would point investors to shorter-duration bonds, which have less interest-rate risk.
If a bond has a duration of 6 years, for example, its price will rise about 6% if its yield drops by a percentage point (100 basis points), and its price will fall by about 6% if its yield rises by that amount.
A bond’s duration changes with time and as its price and yield change, however. Duration measures the time it takes to recover half the present value of all future cash flows from the bond. The discount rate for calculating the present value of the cash flows is the bond’s yield. So as a bond’s price and yield change, so does its duration.
Modified duration is a formula that expresses the measurable change in the value of a security in response to a change in interest rates. Modified duration follows the concept that interest rates and bond prices move in opposite directions.
To compare debt funds, click here
dyskinesia is an uncontrolled/involuntary abnormal muscle movement
Early stage funding is for companies that have done the groundwork to get their business established but maybe haven’t progressed past proof of concept. It should be slightly less risky than venture capital
Earnings are the amount of profit that a company produces during a specific period. Its important because it gives investors and idea of how a company has performed in terms of profit generation over that time period, given the market conditions during that time. From there, one can see how the company may handle similar conditions in the future.
See also Earnings per share, EBIT, EBITDA and EV/EBITDA
EBIT is an abbreviation that stands for Earnings Before Interest and Tax. It is similar to EBITDA but misses out Amortisation.
EBITDA is an abbreviation that stands for Earnings Before Interest, Tax, Depreciation and Amortisation. It is a close approximation for the cash generated by a company before it pays any interest and tax bills that it owes. It is useful as a profitability measure, although it doesn’t tell the whole story.
Econometric analysis or econometrics is the application of quantitative analysis to economic data. It tries to derive predictive relationships from factors like unemployment and economic growth so that you can use one measure to predict another.
Structural features of a business model that allow a company to maintain profitability and fend off competitors.
EFTA or European Free Trade Association is the intergovernmental organisation of Iceland, Liechtenstein, Norway and Switzerland. It was set up in 1960 by its then seven Member States for the promotion of free trade and economic integration between its members and the benefit of their trading partners around the globe.
The four EFTA States are all open, competitive economies committed to the progressive liberalisation of trade in the multinational arena as well as in free trade agreements.
For more on EFTA click here
EGM is an acronym for extraordinary general meeting – a one-off meeting of shareholders that takes place between AGMs
Electrorefining is a process that uses electrolysis to increase the purity of a metal that has previously been extracted from its ore. In the process the anode, or positive electrode, is the impure metal to be purified. During electrolysis, the purified metal collects on the cathode or negative electrode. The metal is deposited in a form that can be readily smelted easily into a more usable form.
Electrowinning (or electroextraction) is a process of whereby metals, such as gold, silver and copper,are recovered from a solution by means of electrolytic chemical reaction. This takes place when an electric current is passed through the solution. During the process, electrons from the electric current chemically reduce the metal ions, to form a solid metal compound on the cathode (the negatively charged electrode). The metal is deposited in a form that can be readily smelted easily into a more usable form. The metals will frequently have been put into the solution, from the ores, using a leaching process.
Electrorefining using a similar process of electrolysis to remove impurities from a metal.
Elution is a process used to extract one material from another by washing it with a solvent.
EMA is an acronym for European Medicines Agency, which is the agency responsible for the scientific evaluation, supervision and safety monitoring of medicines within the EU. You can visit its website here.
EMEA is an acronym for Europe, Middle East and Africa
Endometriosis is a condition where tissue similar to the lining of the womb starts to grow in other places, such as the ovaries and fallopian tubes. More information is available here
Enteral nutrition involves providing nutrition to the body through the digestive system (administered by a feeding tube). It is used where a patient is having difficulty swallowing and/or chewing.
Enterprise Value (EV) is the value of a company’s equity plus its debt, i.e. all the money invested in the business regardless of who is funding it
EPC is an acronym for engineering, procurement and construction. An EPC contractor may be used to design and build a mine or a renewable energy asset, for example
EPRA is an abbreviation of European Public Real Estate Association. EPRA is involved with and represents the interests of the European REIT sector as well as Pubic commercial property in general. It sets standards for the calculation of important measures in the property sector such as EPRA NAV.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
EPRA Earnings per share or EPRA EPS – EPRA Earnings is a measure of the underlying operating performance of an investment property company excluding fair value gains, investment property disposals and limited other items that are not considered to be part of the core activity of an investment property company.
EPRA earnings per share are the earnings divided by the number of shares in issue
EPRA Earnings per share or EPRA EPS
Subscribe for free equity research on investment trusts, funds and listed companies.
The EPRA NAV is a net asset value per share calculated in accordance with EPRA’s methodology i.e. net assets on the balance sheet excluding the effects of hedges, debt adjustments associated with the hedges and deferred taxation. It also adjusts the share in issue for the potential dilution of shares issuable under employee share schemes.
The industry now tends to refer to it as EPRA net tangible assets or EPRA NTA.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
EPS is an abbreviation of earnings per share. It is the profit or loss attributable to shareholders for a particular period divided by the number of shares at the end of the period.
Equity is an alternative word for shares in companies. Also a term for all the net assets owned by the shareholders.
Equity Discount Rate is the cost of capital refers to the actual cost of financing business activity through either debt or equity capital. The discount rate is the interest rate used to determine the present value of future cash flows in standard discounted cash flow analysis.
Subscribe for free equity research on investment trusts, funds and listed companies
Equity hedge funds can be long/short funds that have a portfolio where the long positions are more or less offset by short positions, or equity long bias, funds that are almost always net long. These funds may seek to sell an investment they think is going to fall in value and buy a corresponding investment that they think is going to rise in value, using the short position to help finance the long position and thereby to create leverage.
ERV is an abbreviation of estimated rental value
esg is an acronym for environmental, social and governance – issues that are seen as increasingly important when assessing potential investments.
The estimated development value is the projected value of a development project once a building is complete and rented (after adjusting for rent free periods and any other incentives needed to get the building fully let and taking account of how long the valuer thinks it might take to let the building)
Estimated Rental Value or ERV – ERV is the estimated annual market rental value of lettable space as determined biannually by a property group’s valuers. This will normally be different from the rent being paid.
Estimated Rental Value or ERV
Subscribe for free equity research on investment trusts, funds and listed companies.
ETF is an abbreviation for Exchange Traded Fund. These are funds, traded on an exchange (like an investment company), that issue and redeem shares to match supply and demand (like a zero discount mechanism), and generally track an index which could be based on a range different asset classes. The manufacturers of ETFs have become more inventive over the years and they now offer funds, for example, which are net short of the market, or geared, or based on a subset of the market selected on qualitative grounds. Now active fund management has got involved, offering Active ETFs, more can be found here. The more complex these funds get, the more wary you should be of them. If you are not completely sure how these funds will perform in any given scenario, it might be best to ask an adviser before investing in them.
Euribor is the abbreviation for Euro Interbank Offered Rate.
The Euribor rates are based on the average interest rates at which a large panel of European banks borrow funds from one another. There are different maturities, ranging from one week to one year.
In total, there are 8 different Euribor rates.
EV, depending on the context, may be an abbreviation of Enterprise Value or of Electric Vehicle
EV/EBIT is an acronym for enterprise value divided by earnings before interest and tax. This is a ratio that is often used to value businesses.
EV/EBITDA (or EBITDA Multiple) is a valuation tool that looks at how a company’s cash flow compares to the assets being used to generate the cash flow and is simply EV (or Enterprise Value) divided by EBITDA (earnings before interest, tax, depreciation and amortisation).
Investors mainly use a company’s enterprise multiple to determine whether a company is undervalued or overvalued. A low ratio indicates that a company might be undervalued, and a high ratio indicates that the company might be overvalued.
Event driven, in the context of hedge fund strategies, refers to a strategy that seeks to take advantage of an event such as a take-over or a bankruptcy. It assumes that investors over or under react to published news rather than seeking to predict what the news will be.
Ex ante and ex post – latin terms for ‘from the before’ and ‘from the after’ – are used to describe different types of analysis. Ex-ante analysis tries to predict what might happen (often based on past behaviour in similar circumstances) while ex-post analysis looks back at events to see what went wrong, what went right and what the causes of this were.
The price at which an option, warrant or subscription share gives the right to buy an ordinary share also known as the strike price
This is a measure used to estimate the value at which an investor exits from an investment made into a business entity at the end of an investment cycle.
Expansion capital is funding for companies that want to grow, by selling in a new location, for example, or building a new factory.
Fabry disease is a rare genetic disorder caused by a defective gene (the GLA gene) in the body. In most cases, the defect in the gene causes a deficient quantity of the enzyme alpha-galactosidase A. This enzyme is necessary for the daily breakdown (metabolism) of a lipid (fatty substance) in the body called globotriaosylceramide abbreviated GL-3 or GB-3. When proper metabolism of this lipid and other similar lipids does not occur, GL-3 accumulates in the majority of cells throughout the body. The resulting progressive lipid accumulation leads to cell damage. The cell damage causes a wide range of mild to severe symptoms including potentially life-threatening consequences such as kidney failure, heart attacks and strokes often at a relatively early age.
Much more information is available here
Familial Chylomicronaemia Syndrome (FCS) is the name for a group of rare genetic disorders that cause very high levels of triglycerides in the blood.
Triglycerides are a kind of fat, and high levels of triglycerides can lead to serious health problems in the long term, including pancreatitis and diabetes. With a very low fat diet, you can help to avoid these problems.
You might also hear FCS called Lipoprotein Lipase Deficiency (LPLD) – which is the most common type of FCS – or chylomicronaemia.
FCS is very rare, around one to two in a million people have it.
read more here
FCA is an abbreviation of Financial Conduct Authority
FDA is an acronym for Food and Drug Administration. It is the government body in the US that regulates Food (things like dietary supplements but also bottled water), Drugs (medicines), Biologics (things like vaccines), Medical devices, any electronic product that emits radiation, cosmetics, veterinary products and tobacco.
A Feasibility Study is an economic evaluation of (for example) a mining project to assess whether the reserves contained within the mineral deposit can be mined profitably. The valuation includes estimates of capital and operating costs as well as expected revenues from sales of products.
When a Feasibility Study is used to secure debt funding from a bank it is often referred to as a Bankable Feasibility Study.
The Feed-in-tariff (FIT) scheme ceased to apply for new projects after April 2019. Ahead of this it was only available for projects capable of producing less than 5MW. New projects attracted a subsidy per KWh for electricity produced. The overall cost of new accreditations under the FIT scheme to the government was capped however. FITs awarded before the end of July 2012 are paid for 25 years and, after 1 August 2012, for 20 years. These subsidies are index-linked.
A mineral or rock that is relatively rich in the elements that that form feldspar and quartz. Usually light in colour these can also include feldspathoids and muscovite.
A fiduciary is a person or an organisation that acts on the behalf of another party (this could be a person or persons or another organisation). However, a fiduciary is required to put their clients’ interest before their own. A fiduciary has a duty to preserve good faith and trust.
The Financial Conduct Authority is the successor to the FSA in the UK and is the main regulator for the UK’s investment industry.
Financials instruments is a term that refers collectively to shares, bonds, units in collective investment schemes and derivatives.
A financial windfall is the reception of a large amount of money, sometimes unexpectedly so.
The financial year is the period over which a company measures its performance. It can but does not have to correspond to a calendar year. At the end of the financial year the company will prepare its annual report to shareholders. All quoted companies also have to prepare interim reports and companies listed on the main market currently have to publish quarterly reports as well. A company may change its financial year end and so, from time-to-time and especially when a company is new, the company may report on a period longer or shorter than 12 months so, when comparing one financial period to the next, remember to check you are comparing like with like.
When we refer to first lien or second lien when referring to debt, we are talking about the security that the lender has taken to back up the loan – otherwise known as the collateral. First lien has the highest ranking legal right to that security. Second lien ranks below first lien.
Tightening is a form of monetary policy whereby central banks such as the Bank of England attempt to slow down overheated economic growth, to constrict spending in an economy that is seen to be accelerating too quickly, or to curb inflation when it is rising too fast.
A process by which some mineral particles are induced to become attached to bubbles and float, and other particles to sink, so that the valuable minerals are concentrated and separated from the worthless gangue.
A Canadian think tank that produces an annual survey of mining and exploration companies to assess how mineral endowments and public policy factors, such as taxation and regulation, affect exploration investment.
Free Cash Flow is the cash generated by a business that is available after all expenses. from a debt investor’s point of view, it can be calculated by taking the EBIT (earnings before interest and tax), taking off tax payable and deducting capital expenditure and any change to working capital. For an ordinary shareholder, it’ll be the same calculation but taking off interest cost as well.
All the shares that are available to trade, i.e. excluding shares locked up for various reasons.
Examples of where shares may be locked up include those held by Directors, Investment managers, Distributors (Brokers) and governments.
FRI – abbreviation – FRI is an abbreviation of fully, repairing and insuring – it is a term used in the property world to describe the nature of a rental agreement that passes responsibility for repairing and insuring the property onto the tenant.
A weighted average index of the 100 largest companies by market capitalisation quoted on the main market of the London Stock Exchange (adjusted to reflect their free float)
FTSE ET100 Index – The FTSE Environmental Technology Index Series measures the performance of companies globally whose core business is in the development and deployment of environmental technologies as defined by the FTSE Environmental Markets Classification System (EMCS). These include Renewable & Alternative Energy, Energy Efficiency, Water Infrastructure & Technology, Waste Management & Technologies, Pollution Control, Environmental Support Services, and Food, Agriculture & Forestry. Forming part of the overall FTSE Environmental Markets Index Series, the FTSE Environmental Technology Index Series requires companies to have at least 50% of their business derived from environmental markets and technologies (as opposed to at least 20% for the FTSE Environmental Opportunities Index Series).
The FTSE Environmental Markets Index Series has been developed in collaboration with Impax Asset Management and under the direction of the independent FTSE Environmental Markets Committee, providing investors with a robust set of Environmental Markets tools.
The FTSE Environmental Technologies Index Series includes the FTSE ET50 Index and the FTSE ET100 Index, which, respectively, comprise the 50 and 100 largest pure play environmental technology companies globally, by full market capitalisation. The indices are designed to measure the performance of companies that have a core business in the development and operation of environmental technologies.
FTSE ET100 Index
Funds from operations – FFO refers to the figure used by real estate investment trusts (REITs) to define the cash flow from their operations.
FFO is calculated by adding depreciation and amortization to earnings and then subtracting any gains on sales. It is sometimes quoted on a per-share basis. The FFO-per-share ratio of a REIT is more often quoted, rather than earnings per share (EPS).
FFO – Funds from operations – FFO
G&A is an abbreviation of General & Administrative and is an accounting term for a business’s expenses that don’t relate directly to their operations or to the financing of the company – also often called overheads.
The fraction of ore rejected as tailing in a separating process. It is usually the valueless portion, but may have some secondary commercial use.
GCP stands for Good Clinical Practices – GCP is the international ethical, scientific and practical standard to which all clinical research is conducted. Compliance with GCP provides public assurance that the rights, safety and wellbeing of research participants are protected and that research data are reliable.
Gross domestic product (GDP) is a monetary measure of the value of all goods and services produced in a country during a specific time period.
A GDR or Global Depositary Receipt is essentially a certificate issued by a bank that represents ownership of a share or a fixed number of shares in a company. Companies that are listed on one stock exchange can ask a bank to issue them to investors on another exchange, where they can be traded, as a cheaper alternative to getting a full listing on that exchange. “GDR” tends to refer to issues on a non-US exchange. An issue on an American exchange is called an ADR or American Depositary Receipt.
Remember that a GDR / ADR can represent more than one share. Also, if you buy a GDR / ADR you may have credit exposure to the issuing bank.
The issuing bank controls the supply of these by creating and cancelling them.
An equivalent instrument, often used in Emerging markets equity investing is the Participation or P-Note, which “participates in the performance of a share of a company on a market that the Investment manager can not access.
Shares that get a dividend and get what is left of the assets on a winding up. Also known as Ordinary income shares.
Gearing – A measure of how much a company has borrowed, calculated as debt (excluding other short-term liabilities) divided by net assets and expressed either as a percentage or as a number where 100 = no gearing and 110 = 10% gearing. NB if in doubt, it is recommended that the investor should check.
G&A is an abbreviation for general and administrative expenses.
General Partner (often abbreviated to GP) refers to a person or a company that is in partnership with one or more other partners. All general partners in a partnership share equally in the responsibility and liability for the actions of the partnership. General partners have unlimited liability which means that, if the partnership’s liabilities exceed its assets, the general partners are legally obliged to make up the shortfall.
In a partnership that includes both general partners and limited partners, the general partners usually have the right to act on behalf of the entire business without asking permission from the limited partners, although the full scope of their actions may be constrained by a partnership agreement. For a partnership that is making investments, the GP’s role is often analogous to the role of an investment manager.
The Global Financial Crisis (2007–2009), the most severe worldwide economic downturn since the Great Depression. It was triggered by the collapse of the US housing market and a crisis in the banking system, which spread quickly through global financial markets. The GFC led to major bank failures, government bailouts, sharp falls in asset prices, tighter lending conditions and a deep global recession.
Gilts are a form of tradable debt issued by the UK government. They usually have a fixed life but there are some undated gilts. They usually carry a fixed rate of interest but there are some where the returns are linked to inflation. These are called index-linked gilts
GLA is an acronym for gross leasable area
GLP stands for Good Laboratory Practice – a set of principles intended to assure the quality and integrity of non-clinical laboratory studies that are intended to support research or marketing permits for products regulated for government agencies.
GMP is an acronym for Good Manufacturing Practice – which are the practices required to conform to guidelines set out by agencies that control manufacturing licensing and authorization.
Goodwill is an accounting term that describes the difference between what a buyer is prepared to pay for a business and the value of that business’s tangible assets. In theory it is made up of things like brand values and the value of patents.
Grading under review notices are issued by the Regulator for Social Housing on all Registered Providers than own 1,000 or more units. The following is an extract from a paper produced by the regulator.
All providers should seek to be assessed at G1. Where we judge a provider to be G2 this will be because we have identified some deficiencies in its governance which it needs to address. Although material, the deficiencies are not judged to affect our overall assessment of compliance. Our expectation is that providers assessed at G2 will take timely remedial action to address the issues identified. For this reason, we describe movement between the compliant governance grades in terms of upgrades and downgrades.
A G3 judgement means that the provider is not compliant with governance requirements. In these circumstances we will be actively involved with the provider as it works to address the failures in governance and move back into compliance with regulatory requirements. A G4 judgement also signifies that the provider is noncompliant with governance requirements but it is applied where the severity of the governance failures are such that we are actively intervening or taking enforcement action.
We reflect the level of assurance that we have on a provider’s compliance with the Value for Money Standard through our published governance judgement.
Providers at V1 will have supplied the regulator with sufficient assurance that they have met the viability requirements of the Standard. Typically they will have a strong financial profile, built on robust and prudent assumptions, good headroom on their financial covenants and appropriate levels of liquidity. The level of financial risk being taken on by the organisation will not be considered to be unreasonable and the regulator will have assurance that the crystallisation of the identified risks can be mitigated successfully by the organisation in most circumstances.
Providers at V2 will also have provided the regulator with sufficient assurance that they have met the viability requirements of the Standard. However, we may judge that these providers’ financial profiles leave them relatively more vulnerable to the crystallisation of significant downside risks, potentially including changes in market conditions beyond the provider’s control.
Providers at V2 can often share some of the following characteristics, amongst others:
Providers at V3 will have been unable to provide the regulator with sufficient assurance that they meet the requirements of the Standard. In these circumstances the regulator will be working closely with the provider to try and remedy the issue as soon as possible.
Providers at V4 are in serious financial difficulty and the regulator will be working with the provider and others (as appropriate) to remedy the situation, potentially using the regulator’s full range of intervention powers.
In some cases, as well as publishing a provider’s grades, we will also issue a narrative regulatory judgement report. We will usually do this where, for any reason, our assessment of that provider has changed, or there are new issues we want to make public. If our assessment of a provider’s grades has not changed since the last publication, we will normally only re-publish its grades, unless the provider remains
non-G1/V1 following completion of an IDA.
A coarse-grained intrusive igneous rock consisting of quartz, feldspar and mica.
A method by which mineral particles are separated with the aid of water or air, according to the differences in their specific gravities
A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for environmental projects. These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.
A greenfield development site is one that has not been built upon previously. It is often agricultural land but it can be undeveloped land in a city or rural location. Greenfield sites offer developers a blank canvas and tend to be cheaper to develop versus brownfield sites, as nothing has been built on them previously. However, greenfield sites maybe subject to legal and planning constraints and may require associated infrastructure investment (for example providing new roads and utility connections).
A brownfield development site is one that has been used before. Frequently these are disused or derelict land that have been used previously for industrial and commercial purposes but have since become abandoned. Brownfield sites often require expensive clean up operations, for example, knocking down existing buildings or decontaminating land due to its previous use, and so may be cheaper to purchase as a result. However, such sites often suffer from restricted access as they tend to be surrounded by other buildings that are still in use, but may benefit from access to infrastructure that is more likely to be in place versus a greenfield development.
Greenstone refers metamorphosed volcanic rocks with a green hue that are important hosts of gold deposits.
GRESB (Global Real Estate Sustainability Benchmark) assesses and benchmarks the Environmental, Social and Governance (
Gross multiple of invested capital (MOIC) expresses as a multiple how much a private equity company has made on the realisation of a gain, relative to how much they paid for it.
E.g; if a private equity company reports a MOIC of 1.8x. the gain is 1.8 times greater than the original invested capital.
This is similar to Carrying value, which is the original cost of an asset, less the accumulated amount of any depreciation or amortization, less the accumulated amount of any asset impairments.
Subscribe today for free equity research on investment trusts, funds and listed companies
Gross redemption yield or GRY is a measure of the rate of return offered by an investment up until the date it matures. It is usually expressed as an annualised percentage – a bit like an interest rate.
Subscribe for free equity research on investment trusts, funds and listed companies.
Growth investing – Investing in companies that are growing by more than the market appreciates
A growth company is anticipated to grow at a rate equal to or greater than the average for the market. These companies generally pay little or no dividends, as the companies usually want to reinvest any earnings in order to accelerate growth in the short term. Investors then earn money through capital gains when they eventually sell their shares.
Growth investing often looks for companies that are valued as such but where there may be greater growth than the market expects. A growth stock may either disappoint or positively surprise investors with their results. The outcome can be negative or positive until the valuations are perhaps deemed to be too expensive.
See also Value investing
Growth investing
GRY is an abbreviation of gross redemption yield
The Gulf Cooperation Council (GCC), is a political and economic alliance of six Middle Eastern countries—Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. The GCC was established in Riyadh, Saudi Arabia, in May 1981. The purpose of the GCC is to achieve unity among its members based on their common objectives and their similar political and cultural identities, which are rooted in Arab and Islamic cultures. Presidency of the council rotates annually.
haematology refers to the study of the blood and bone marrow
hATTR Amyloidosis – Hereditary transthyretin amyloidosis – is a rare disease that affects multiple organs and body systems, such as the heart, nervous system, gastrointestinal tract, and kidney. With this condition, there are problems with the way that proteins fold and these misfolded proteins aggregate into amyloid fibrils. These amyloid fibrils then accumulate in multiple organs throughout the body, blocking their effective function.
much more information is available here
HCOB PMI is an acronym for the Hamburg Commercial Bank Purchasing Managers’ Index – a measure of economic activity. PMI is defined here. HCOB is now endorsing PMI’s produced for the Eurozone, Germany, France, Italy and Spain.
Headline rent is the rent that will be achieved once any short-term incentive given to the tenant has expired.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Heads of Terms agreement is a document that sets out the terms of a commercial transaction agreed in principle between parties in the course of negotiations.
Heads of terms shows serious intent and have moral force, but do not legally compel the parties to conclude the deal on those terms or even at all. However, provisions relating to confidentiality and costs may be binding on the parties.
Heads of Terms agreements may also be known as letters of intent, memoranda of understanding, heads of agreement, letters of potential interest, term sheets or protocols
The term hedge fund covers a multitude of different investment strategies. They tend to be structured as limited liability partnerships or companies. A few will allow an investor to enter or exit on a daily basis but most commonly this will be monthly or quarterly, some are even longer. They invest in all sorts of assets. They will often include an element of hedging within the investment strategy.
hidradenitis suppurativa is a condition that causes abscesses and scarring on the skin – you can read more about it here
High grade serous ovarian cancer (or high grade serous carcinoma) are thought to originate in the fallopian tube – see here for more info
A term often used in the wording of a performance fee that refers to a level below which a performance fee is not payable (e.g. no fee is payable if the share price at the end of the performance measurement period is below the share price the last time a performance fee was paid).
A high-revisit Earth observation is a satellite system that captures images of the same location on Earth multiple times per day via constellations of smaller satellites in complementary orbits.
Read more about high-revisit Earth observations here.
A holding company is a company that owns a controlling interest in one or more other companies, usually referred to as subsidiaries. It typically does not produce goods or services itself but exists to own shares of other companies, allowing it to control or influence their operations. In investment terms, holding companies are often valued at a discount to the net asset value of their underlying assets due to issues such as limited liquidity, poor corporate governance, or complex ownership structures.
HSE is an abbreviation of Health Service Executive – the Irish equivalent of the NHS. you can access its website here.
A target rate of return, often used in the wording of a performance fee.
A hyperscaler is a data processing business that can very quickly scale up or down the volume of data it is processing. Hyperscale computing is a responsive method of processing data that adjusts to volumes of data traffic. Hyperscalers use this computing method to manage data centres and cloud computing infrastructure.
IBD is an acronym for inflammatory bowel disease
ICAV is an abbreviation for Irish Collective Asset-Management Vehicle.
It is a corporate structure created especially for the Irish funds industry. The structure is flexible and can be used to establish both UCITS and alternative investment funds.
The Irish Collective Asset-management Vehicles Act 2015 (No. 2/2015) was enacted on 12 March 2015. This act gave the ICAV its own legislative regime to ensure that these funds are distinguished from ordinary trading companies and are not subject to those aspects of Irish company law that are not relevant or appropriate to a collective investment scheme.
ICAV should not be confused with SICAV, which is a different fund structure altogether. A SICAV is a type of open-ended fund, found typically in continental Europe.
ICR is an abbreviation for interest cover ratio – a measure that shows how a company’s interest bill relates to its earnings before interest
IFRS – Shorthand for International Financial Reporting Standard (IFRS)
IFRS 9 is an International Financial Reporting Standard (IFRS) of the the International Accounting Standards Board (IASB).
It lays out the standard for investment companies for financial instruments for:
All asset managers must use the same standard of accounting for financial instruments, allowing investors to appraise investment companies on the same basis
ILAT is an acronym for Indice des loyers des activités tertiaires – a French measure of inflation specific to property.
see liquidity
IMF is an acronym for International Monetary Fund.
The International Monetary Fund (IMF) works to achieve sustainable growth and prosperity for all of its 190 member countries. It does so by supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being. The IMF is governed by and accountable to its member countries.
The IMF has three critical missions: furthering international monetary cooperation, encouraging the expansion of trade and economic growth, and discouraging policies that would harm prosperity. To fulfill these missions, IMF member countries work collaboratively with each other and with other international bodies.
You can read more about it here
IMI in an acronym for investable markets index. The MSCI Investable Market Indexes cover all investable large-, mid- and small-cap securities across the developed, emerging and frontier markets, targeting the inclusion of approximately 99% of each market’s free-float adjusted market capitalisation.
These indexes are based on the MSCI Global Investable Market Indexes (GIMI) Methodology, which aim to provide exhaustive coverage of the relevant investment opportunity set with a strong emphasis on index liquidity, investability and replicability.
ITP (immune thrombocytopenia) is an autoimmune condition that causes a low platelet count. Platelets are a type of blood cell needed to form a blood clot after a cut or injury to prevent bleeding and bruising. In ITP, your body’s immune system mistakenly targets platelets and starts to break them down. Fewer platelets are also made by the body. This results in lower numbers of circulating platelets.
You can read more about it here
In front of the meter (standalone) refers to energy storage facilities that are directly connected to the power grid and mainly provide various grid services. Example of this would be to cover the lag between the grid requiring power whilst a gas fired power station comes on line. – Frequency response or Capacity Market.
see also “Behind the meter”
Income -Income is money that an individual or business receives in exchange for providing a good or service or through investing capital. Income is used to fund day-to-day expenditures.
Income can refer to a company’s remaining revenues after paying all expenses and taxes. In this case, income is referred to as “earnings.”
Shares that give a preferential right to income, this might be all the income or a percentage, these may have a fixed entitlement on a winding up.
A measure of the performance of a group of investments. Indices can be calculated on an equal weighted basis (taking the performance of each investment and multiplying it by one, divided by the number of investments, then adding together all of the results) or on a weighted average basis (usually done by taking the performance of each investment and multiplying it by the total value of the investment, divided by the total value of all the investments in the index, then adding together all of the results). Most indices are calculated on a weighted average basis.
Indices are often used by Investment Managers as Benchmarks and by investors to compare performance.
That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
An individual savings account is a tax advantageous savings vehicle for UK savers over the age of 18. The amount of money you can contribute each year is limited. Once inside the account and capital gains and income earned is tax free.
For the 2017/18 tax year the ISA allowance has increased from £15,240 to £20,000. You can split your allowance across a Stocks & Shares ISA and Cash ISA or invest it all in either one. The Junior ISA allowance for investing for children is £4,128.
In the 2018/19 tax year the ISA savings limit will be frozen at £20,000.
That part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
This is a moment when significant change occurs or may occur
Dividing the active return by the tracking error gives you the information ratio. This is supposed to be a measure of how good the manager is at outperforming without taking too much risk. This is similar to the Sharpe Ratio, which is the portfolio return less the risk free rate divided by the standard deviation.
An Initial Public Offering (IPO) is the first time that the share of a company is offered to the public. IPOs, in the context of an investment company, are the point at which new funds are launched, floated and traded on the Main Market.
For the latest news and research on IPOs.
The state of being unable to pay the debts, by a person or company (debtor), at maturity.
How much a company’s interest bill is covered by the company’s income
The interest rate is the amount a lender charges a borrower and is a percentage of the principal – the amount loaned
An interest rate can also apply to the amount earned at a bank or credit union from a savings account or certificate of deposit (CD). Annual percentage yield (APY) refers to the interest earned on these deposit accounts.
Interest rate arbitrage funds or interest rate relative value funds invest in debt and seek to profit from predicting moves in interest rates (yields). They are often market neutral and may be quite highly leveraged as they seek to exploit small changes in value.
The interim report is a report prepared for shareholders that covers the first six months of a company’s financial year. It is less comprehensive that an annual report and usually is not audited. Companies listed on the main market currently have to publish quarterly reports as well.
The internal rate of return is an annualised (yearly) measure of the profit or loss generated on an investment. It is often abbreviated to IRR.
Say I invest £100 and two years later I sell my investment for £150. I have made a £50 profit or a 50% rate of return but it took me two years to do it so the internal rate of return is the rate of the return which, when compounded over two years, generates a return of 22.47%.
Occasionally you may see IRRs calculated for periods of less than one year – treat these with caution. If I invest £100 today and sell my investment tomorrow for £101 I have made a profit of 1% but I have made an IRR of 3678% – the calculation assumes you can keep reinvesting and making profit of 1% every day for a whole year.
IFRS is an abbreviation for International Financial reporting Standards. These are a set of accounting standards developed by the International Accounting Standards Board (IASB). The IASB is an independent not-for-profit organization.
A company that is set up to make investments on behalf of its shareholders (also called a closed-end fund and, in specific circumstances, an investment trust).
Legally, an investment company is any company whose business consists wholly or partly in the making of investments. All investment trusts are investment companies but not all investment companies are investment trusts – they would have to satisfy the additional criteria listed above.
As companies, shares in investment trusts are issued as publicly traded shares that are listed on stock exchanges. A closed-end fund raises a prescribed amount of capital through an IPO by issuing a fixed number of shares.
The person or people who have been given the job of managing the company’s assets by the Board of the investment company.
The Investment Objective is what an investment company is aiming to achieve (e.g. growth of income or growth of capital).
The Investment strategy is the way that the investment company will meet its Investment Objective.
The Investment Strategy is how an investment company intends to achieve its investment objective (e.g. by investing in UK equities).
An investment trust is a company domiciled in the UK. (see Investment Company )
Investment trusts must:
Additionally:
IPCEI is an acronym for Important Projects of Common European Interest, EU State aid that represents a significant contribution to economic growth, jobs, the green and digital transition and competitiveness for the Union industry and economy.
IPO is the abbreviation for Initial Public Offering
IRR is an abbreviation for internal rate of return
ISA is an abbreviation for individual savings account
ISIN is an abbreviation of International Securities Identification Number – a unique number assigned to each quoted security so that it can be easily identified
ISO is an acronym (sort of anyway) for the International Organization for Standardization – which you can read more about here
a space-based intelligence, surveillance, and reconnaissance unit.
JORC stands for Joint Ore Reserves Committee, which is an Australian committee that produces a professional code of practice that sets minimum standards for reporting of exploration results, mineral resources and ore reserves (‘the JORC Code’).
A junior ISA is a version of an individual savings account aimed at people in the UK under the age of 18. It has the same characteristics as an ISA but has lower contribution limits and the assets can be switched back and forth between cash and stocks and shares. The Junior ISA allowance for 2018/19 for investing for children is £4,128.
satellite communication that uses the Ka frequency band – a high-frequency (26.5–40 GHz) portion of the electromagnetic spectrum – to send signals down to Earth. The use of high frequency communications works better for transmitting more data. It has applications in providing high bandwidth internet connectivity in aircraft, for example.
The product of the alteration of the feldspar minerals within granite by the action of groundwater. Also known as China Clay.
KID is an abbreviation for Key Information Document – see here for QuotedData’s guide to KIDs
The term used in Cornwall and Devon for country rock, or host rock; the general mass of usually barren rock adjacent to an orebody.
Korea Composite Stock Price Index – the main equity index of South Korea
kt is an abbreviation for thousands of tonnes (metric) or tons (imperial). kt/y is an abbreviation for thousands of ton(ne)s per year.
NB a tonne = 1.12 tons and a ton = 2000 pounds
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
In the US, large cap tends to mean companies with a market capitalisation in excess of $10bn. However, in the UK we tend to think about large cap stocks being those in the FTSE 100 Index. The market cap threshold to qualify for that varies over time but it is roughly £4bn. For QuotedData’s purposes – where we are classifying investment companies as either small or large – we use a cut off of £1bn.
LDI is an acronym of Liability Driven Investing. The idea is that pension schemes use LDI to match their investments with their long-term pension liabilities. Many went about that by buying leveraged portfolios of government bonds. Famously, in September 2023, the Liz Truss/Kwasi Kwarteng budget crashed the UK government bond market and LDI magnified the problem as panicked pension funds sold their bonds. In the end the Bank of England had to step in to provide liquidity and calm markets.
A leach curve charts the progress of the leaching process by plotting the metal grade of the pregnant leach solution against time, usually in days.
Some materials leach quicker than others. The leaching profile of a particular orebody or deposit describes the phases that comprise the process of leaching. There is usually an initial ‘bloom’ phase, where most of the in-situ metal is dissolved over a relatively short period of time and the solution, pregnant with leached metal, is high grade. Thereafter, the leaching process enters a steady phase and finally a long ‘tail’ phase, when any remaining metallic ions go into solution.
Leaching is a process whereby metallic compounds are dissolved by chemicals. Leaching is a common method of treating ore mined from low grade deposits, particularly copper or gold ores. For these type of ores, material from the mine is stacked in ‘heaps’ on surface and a chemical solution is then dripped onto the heaps The chemical leaches the valuable metals as its percolates through the material and the pregnant solution is collected in drains at the bottom. From there the solution is pumped to a plant (in the case of copper, an SX-EW plant) for further processing to recover metals by precipitation.
Re-gearing a lease is the practice of renegotiating the lease terms during the course of the lease on a property. The practice of re-gearing can be advantageous to both tenants and landlords.
Low-Earth-Orbit-based navigation, or LEO-based navigation, is a method of navigation using signals from satellites to provide position, navigation, and timing services to supplement or complement global positioning systems (GPS).
Read more about LEO-based navigation here.
Leverage is basically using debt or sometimes derivatives to magnify returns.
What the company owes, its debt and unpaid bills – liabilities can be classified as short-term (payable within one year) or long-term (payable after one year).
LIBOR is an abbreviation for the London Interbank Offered Rate. It is the average interest rate that banks charge each other for borrowing money. Lots of different LIBOR rates are calculated each day for a range of currencies and time periods – everything from an interest rate for borrowing Pounds (Sterling) for one day to borrowing Japanese Yen for a year.
These rates are used as the basis for calculating all sorts of things including interest rates on some mortgages.
LIDAR is an acronym for “laser imaging, detection, and ranging” or “light detection and ranging”. Pulses from a laser bounce off objects and help determine their shape and their distance from the source of the laser.
A Limited Liability Partnership is one which has no General Partners. Each partner is liable only to the extent of their investment. Therefore the Limited Liability Partnership is only liable to the extent of its available capital – creditors cannot recover more than the capital in the Limited Liability Partnership.
A Limited Partnership is one that has at least one General Partner plus a number of Limited Partners. The Limited Partners are like shareholders in a limited company – they are only liable for the debts of the partnership to the extent of their investment.
Bringing the company’s life to an end by distributing all the net assets to those entitled to receive it. Also known as Winding Up.
Refers to the ease of turning an asset into cash. The opposite of liquidity is illiquidity. In the case of shares, liquidity often decreases if you want to trade a lot of shares. Bonds and shares are usually considered more liquid than private equity and property. Some investments may be subject to a lock-up. In that regard, Liquidity is also applied to the buying or selling of the shares of investment companies.
Listed, when used to describe a UK company, means a company that is listed on the main market of the London Stock Exchange. All listed companies can be described as quoted companies but not all UK quoted companies are listed.
A lithium ferro-phosphate battery (LFP), also knows as a lithium iron phosphate battery, is a lithium-ion battery. LFP’s are known for their high power density, longevity, and decent performance at high temperatures.
A lithium-nickel-manganese-cobalt-oxide battery (NMC) is a lithium-ion battery. NMC’s have a high power density, and are commonly used in small devices, tools, and electric vehicles.
A Large Language Model, or LLM, is a type of artificial intelligence system trained on vast amounts of text to understand and generate human-like language. LLMs can answer questions, summarise information, draft written content, translate text and support research by identifying patterns in language. They are widely used in tools such as chatbots, search assistants and business productivity software.
Examples of LLMs are OpenAI’s ChatGPT, Anthropic’s Claude, Google’s Gemini, and Deepseek
LLP is an abbreviation for Limited Liability Partnership
The London Metal Exchange where base metals are traded and metal prices set
The load factor in renewable energy refers to the average output of the plant divided by its theoretical maximum output
A loss made by a bank when money it has lent is not paid back
Loan To Value or LTV is a ratio of a company’s debts to its total assets. It differs from gearing, which is a measure of a company’s debts to its net assets.
For example, if my company has assets of £100 and them borrows another £100 it now has total assets of £200.
Its Loan to value ratio is 0.5 or 50% = 100/200.
Its gearing is expressed as 100% = 100/(200-100) though remember this can also be expressed as 200 – see the gearing definition.
A condition where an investment cannot be sold except under pre-defined circumstances. (See Free Flout and Liquidity)
The active life of a mine
LSE is an abbreviation for the London Stock Exchange.
Long investing refers to a positive holding of something. It is the opposite of short investing. A portfolio that does not take short positions is referred to as a “traditional long only” strategy. In this model, if you do not like a stock you either don’t own it, or, if that is too risky, you underweight it (own less of it).
For example, in a ten stock portfolio , where the neutral weighting is 10%, a 12% position A would be 2% overweight. Another holding B of of 8% is deemed to be underweight.
If Stock A goes up by more than the neutral weighting, its contribution is said to be positive. If underweight holding B falls, the position has fallen less far than the neutral weighting.
However, most long-only portfolios are invested relative to stocks’ weightings in a benchmark.
Net long refers to a portfolio that, on balance – adding up the long positions and deducting the short positions – still has a positive exposure to the group of assets that the portfolio is invested in.
Amounts that are owed that have to be paid after one year
LP is an abbreviation for Limited Partnership
An abbreviation of loan to value
M&A is an abbreviation for mergers and acquisitions and refers to the act of a company buying or selling another company or division or combining its business with a similar sized company.
Macro, in the context of investment, is usually a reference to a world view of economics and politics and is short for macroeconomics.
Mafic refers to a mineral or rock rich in magnesium and iron, such as olivine and pyroxene. Mafic takes its name from Magnesium (Ma) and from Ferric (fic). Ultramafic rocks have low silica content and 90% plus mafic minerals. They are dark in colour.
The companies with a full listing on the London Stock Exchange.
The term Managed Futures is used by hedge fund managers to describe a strategy where the fund manager holds a range of futures contracts rather than direct investments. The contracts can be exposed to a diverse range of assets including currencies, interest rates, commodities, indices and equities. The positions may be long or short. The portfolios are usually designed to have a low correlation with equity and bond markets.
Margin, in the context of accountancy, refers to the difference between the cost of providing a good or service and the price received for that good or service. Gross margin is that simple calculation. Net margin is the same calculation but adjusted for the businesses other day-to-day running costs.
Margin, in the context of derivatives trading, refers to an amount the holder of the derivative is required to pay as collateral so that the person on the other side of the contract can be sure of getting at least some of the money due to them.
A margin account involves borrowing funds from your broker-dealer to purchase securities, using the account as collateral. You will also be required to pay a periodic interest rate to the broker. A margin account can increase your purchasing power however it can also expose you to greater losses.
Mark to market is an accounting practice that involves adjusting the value of an asset to reflect its value as determined by current market conditions
The value of all the shares in issue of a company, calculated by multiplying the share price by the number of shares in issue.
Funds that seek to match long and short positions exactly are called market neutral funds. Part of the transaction may involve an index or futures and options based on an index or a basket (selection) of stocks
Markets in Financial Instruments Directive (MiFID) is the framework of European Union (EU) legislation for investment intermediaries that provide services to clients around shares, bonds, units in collective investment schemes and derivatives (collectively known as ‘financial instruments’)
MiFID was applied in the UK from November 2007 and was revised by MiFID II, which took effect in January 2018, to improve the functioning of financial markets because of the financial crisis and to strengthen investor protection.
MiFID II extended the MiFID requirements in several areas including:
Investment companies often refer to the third requirement in news releases and report & accounts, as it is a major change.
Investment managers can no longer take research from investment banks and research houses in return for the placing of trades (the buying or selling of assets) through their trading desks and can no longer be covered from broker dealing commissions. This is considered an “inducement”. Investment companies must now pay for research and disclose to shareholders how much they pay. They must also disclose with which brokers they traded and the cost of trading.
A phenomenon where interest payments are deferred due to the size of the loan or bond being large enough to significantly impact the company’s finances.
The date when something expires or has to be paid/repaid (depending on the context). So, for example, the maturity of a bond would be the date bondholders are due to be repaid by the company.
That part of a mineral resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
melanoma is a form of cancer of the skin (it occurs in the melanocytes – the cells in the skin that produce melanin which gives skin its colour)
A mezzanine is an investment in a structured financial product that carries moderate risk and offers moderate returns.
MG is an acronym for myasthenia gravis. It is a disease of the autoimmune system that weakens muscles – often in the face and eyes, it can also affect the ability to swallow.
More information is available here
The ability to detect and image thermal radiation emitted from objects at the 3 to 8 micrometre (infrared) range. Infrared imaging is useful for penetrating smoke, dust, and fog, but mid-wave infrared is better suited to observations made at long distances than short-wave (1–3 micrometres).
MiFID II is the acronym for the second Markets in Financial Instruments Directive
A naturally occurring inorganic element or compound having an orderly internal structure and characteristic chemical composition, crystal form, and physical properties. The term includes base and precious metals.
A mineral resource (resource) is a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable and realistic prospects for eventual economic extraction. The location, quantity, grade, continuity and other geological characteristics of a mineral resource are known, estimated from specific geological evidence and knowledge, or interpreted from a well-constrained and portrayed geological model. Mineral resources are subdivided, in order of increasing geological confidence, into inferred, indicated and measured categories.
A Mineral Resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.
Mineral Resources, or simply Resources, are categorised as Measured, Indicated and Inferred in decreasing order of confidence.
The presence in the earth’s crust of a mineral
Minimum Requirement for own funds and Eligible Liabilities (MREL) is a term used in EU legislation for the loss absorbing capital (LAC) of certain financial institutions.
MREL figure comprises the total of a bank’s loss absorption amount and recapitalisation amount.
The MREL amounts is the amount of that a bank must have on its balance sheet to meet its liabilities.
mitosis is part of the process of cell division – relating to the division of the cell’s nucleus
The Modified Dietz method is a way to measure a portfolio’s historical (or ex-post) return. The result of the calculation is expressed as a percentage return over the holding period. Modified Dietz is considered to be an accurate reflection of an individual’s personal rate of return from holding an investment and is sometimes referred to as the modified internal rate of return (MIRR). The approach, which is based on a weighted calculation of the portfolio’s cash flows, takes into account:
The method assumes that there is a constant rate of return over a specified period of time, and is designed to exclude external factors that might otherwise affect the results. Modified Dietz is increasingly used by investment companies in reporting results to clients. It is considered to be a step forward in improving the reporting of investment portfolio performance.
The approach is named after Peter O. Dietz. Dietz was an academic and author of a number of influential works, during the 1960s, which looked at the measurement of returns from pension fund investments. His original aim was to find a quicker way of calculating an internal rate of return (IRR). With modern computing power, it is relatively simple to calculate an IRR today. However, at the time that Dietz was writing, IRR calculations relied on computers that were very limited by today’s standards. These were also expensive and therefore less widely available.
The Modified Dietz return is calculated by dividing the gain or loss in value of the portfolio, net of external flows, by the average capital in the portfolio over measurement period. The average capital weights individual cash flows by the length of time between those cash flows and the end of the measurement period. Consequently, flows that occur towards the beginning of the measurement period have a higher weight than flows occurring towards the end.
MOIC is an abbreviation for gross multiple of invested capital. This expresses how much a private equity company has made on the realisation of a gain, relative to how much they paid for it.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
A set of actions to control a nation’s overall money supply and achieve economic growth, including the adjustment of interest rates.
Memorandum of Understanding, or a document outlining the intentions and expectations shared between two or more parties.
MREL is the abbreviation for Minimum Requirement for own funds and Eligible Liabilities.
An abbreviation for “metric ton units”. One mtu is 1% of a metric ton and so equates to 10 kg. The term is used as the pricing basis for tungsten products, wolframite and APT.
Multi Strategy Relative Value are arbitrage strategies that try to benefit from changes in the relative values of a range of different types of asset. As an example, they might seek to exploit the link between the oil price and the Japanese stock market (Japan imports most of its oil so benefits when the oil price falls).
MWDC is an acronym for MegaWatts defined conditions – power output given a specific set of circumstances
MWh is an abbreviation of megawatt-hour. It is a unit of energy production or usage. Mega = million, so one MWh is equivalent to one million watts produced/consumed over one hour. Most commercial power plants are described in terms of their potential power output over one hour in MWh. Residential solar installations and the like are more likely to be described in KWh.
1000 watt-hours = 1 kilowatt-hour (KWh)
1000 kilowatt-hours = 1 megawatt-hour (MWh)
1000 megawatt-hours = 1 gigawatt-hour (GWh)
1000 gigawatt-hours = 1 terawatt-hour (TWh)
MWp is an abbreviation for Megawatt peak – a unit of measurement for the output of power from a source such as solar or wind where the output may vary according to the strength of sunlight or wind speed. MWp is a measure of the maximum potential output of power. A Megawatt is 1,000 kilowatts. A kilowatt is 1,000 watts. A watt is one amp flowing through one volt. The average UK house consumed about 4,700kwh of electricity in 2010.
myelofibrosis is a disorder of the bone marrow that affects the production of blood cells and may lead to blood cells being produced in the spleen or liver instead of the bone marrow – you can read more here
myeloma is a form of cancer of the white blood cells made in bone marrow. Often it occurs in multiple sites in the body – hence multiple myeloma. Cells that are supposed to produce antibodies instead produce paraproteins. More information is available here
NAMA is an abbreviation for Ireland’s National Asset Management Agency. This body was set up to take assets off struggling Irish financial institutions after the credit crisis of 2009
The National Grid Electricity System Operator (NGESO) is the entity, generally a company or the government, responsible for overseeing the operation of the national electricity grid. Their job is to ensure that the grid manages a continuous and reliable balance between supply and demand of electricity, and remains stable.
National Grid ESO is the electricity system operator for Great Britain. It owns the high voltage transmission lines that move power around the country. It is also responsible for balancing the supply and demand of power across the grid. You can read more about it here.
NAV Total Return or NAV Total Return per Share
NAV Total Return is the return of all the assets of the company less any money owed, including dividends
NAV Total Return per Share is the return of all the assets of the company less any money owed, including dividends, divided by the number of outstanding share in issue. See NAV per share
Net Asset Value per share (NAV per share) – The Net assets divided by the number of shares in issue (often just abbreviated to net asset value or NAV). Read our guide to net asset values
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
All the assets less any money owed
See NAV
Net equivalent yield is a term used in the property market to describe the weighted average income a property produces after allowing for costs associated with buying the property and assuming the rent is paid annually in arrears.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Net initial yield is a term used by property companies to describe the rental yield they expect to receive on the total price of a property allowing for the costs associated with buying the property such as stamp duty – may be abbreviated to NIY
The difference between the interest income generated and the amount of interest paid out to lenders.
The net present value is the value of future cash flows discounted by a discount rate
The Net Zero Asset Managers initiative is an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to supporting investing aligned with net zero emissions by 2050 or sooner.
neutral weight – when a portfolio holds the same amount of an asset as the index
Neutral weight is used as a relative term, generally regarding an index and in the context of a benchmark.
See overweight and underweight
Stock A is 10% of an index. A portfolio holds 10% of Stock A. The portfolio has a neutral weight to Stock A
Germany is 10% of the European Index. Portfolio holds 10% and is neutral weighted
If stock A’s share price rises, the portfolio performs in line with the index because it holds the same as the index
If German markets fall, the portfolio performs in line with the index because it holds the same as the index
NYSE is an abbreviation for The New York Stock Exchange.
NICE – the UK body providing guidance and advice on health and social care – was established in 1999. NICE is an acronym for the National Institute for Health and Clinical Excellence.
NICE provides evidenced based guidance and advice for health, public health and social care practitioners; develops quality standards and performance metrics for those providing and commissioning health, public health and social care services, and provides a range of information services for commissioners, practitioners and managers across the spectrum of health and social care.
NIY is an abbreviation of net initial yield – a term used by property companies to describe the rental yield they expect to receive on the total price of a property allowing for the costs associated with buying the property such as stamp duty.
Subscribe for free equity research on investment trusts, funds and listed companies.
NMPI is an abbreviation of non mainstream pooled investment
Nomad is an abbreviation for “nominated advisor”. This is a company that has been approved by the London Stock Exchange to act as a corporate finance advisor to companies that want to allow their shares to be traded on the AIM market.
A Nomad is responsible for advising and guiding a company on its responsibilities in relation to its admission to AIM as well as its continuing obligations once on market.
Every company on AIM needs to have a Nomad – if not its shares can no longer be traded.
Nominee is a term used to describe an organisation that holds securities on behalf of someone else
Nominee or Custodian institutions are regulated entities that are subject to high levels of controls, rules and regulation.
Non Fossil Fuel Obligations were the precursor to ROCs. Renewable energy supplies attracted a technology specific premium to the market price. The subsidies were funded by the Non-Fossil Fuel Levy.
The concept of a non-mainstream pooled investment (NMPI) was created by the FCA at the end of 2013.
Funds that are classified as non mainstream pooled investment cannot market themselves to private investors.
The FCA exempted investment trusts (and overseas investment companies that would qualify as investment trusts), REITs and VCTs if they were domiciled in the UK.
QuotedData provides information on investment companies classified as NMPIs. We do not market them.
We post information on this site because professional advisers may put them into their clients’ portfolios. This will give both advisers and their clients the ability to keep informed on their respective advice and investments.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Usually applied to debt. Non-recourse debt is debt that has been lent to a particular entity (maybe a company or special purpose vehicle) where the lender cannot recover the debt from the parent company of that entity.
Shares that do not get to vote at company meetings. Generally these trade at a discount to equivalent voting shares. (refer to a company’s prospectus)
Normalised Income Profit or NIP is used by some REITs as a way of describing profits excluding profits or losses from the sale of properties, essentially the recurring earnings of the business
Normalised Total Profit or NTP is NIP plus profits and losses from property sales and realised profits from one-off items
NPL is an acronym for non-performing loan
Net smelter return royalty. A defined percentage of the gross revenue from a resource extraction operation,
less a proportionate share of transportation, insurance, and processing costs.
A non-terrestrial network is a communication system using space or airborne infrastructure to provide connectivity.
Read more about NTN here.
BTANs and OATs are debt instruments issued by the French government.
Bon à Taux Annuel Normalisé or BTANs (Treasury notes with annual coupons) are medium-term treasury securities with a maturity of 2-5 years. They have a par value of €1 and their settlement is at par value on the maturity date. For streamlining purposes, as of 1 January 2013, new benchmark medium-term securities (2-year and 5-year maturities) have been issued as OATs, as have long-term securities with 7-year maturities or longer. No more new BTANs will therefore be created. Tap issues will continue for existing BTANs to guarantee their liquidity.
Les Obligations Assimilables du Tresor or OATs for short are medium- and long-term Treasury bonds with a maturity of 2-50 years.
Euro-OAT Futures are traded on the Eurex Exchange. Each contract is for €100,000 of euro-OAT.
Euro-OAT Futures contracts exist for the months of March, June, September and December. The deliverable product for the euro-OAT futures contract is French debt securities with remaining term of 8.5 to 10.5 years with a 6% coupon.
OBR is an acronym for the Office for Budget Responsibility, a UK non-departmental government body which was created in 2010 to provide independent and authoritative analysis of the UK’s public finances.
Occupancy rate is a term used in the property market to reflect the estimated rental value of let properties as a percentage of the total estimated rental value of the portfolio (excluding development properties).
ODFM is an acronym for Optional Downward Flexibility Management. In its role as the Electricity System Operator, National Grid needs to balance supply and demand across its network. ODFM allows it to pay renewable energy generators to stop supplying power to the network at times of excess supply.
OECD or The Organisation for Economic Co-operation and Development is an intergovernmental economic organisation with 36 member countries, created to stimulate economic progress and world trade.
Its mission is to promote policies that will improve the economic and social well-being of people around the world and provides a forum in which governments can work together to share experiences and seek solutions to common problems.
The OECD works with governments to understand what drives economic, social and environmental change. They measure productivity and global flows of trade and investment and analyse and compare data to predict future trends.
A key role is the setting of international standards on a wide range of things, from agriculture and tax to the safety of chemicals.
The OECD works with business, through the Business and Industry Advisory Committee to the OECD (BIAC), and with labour, through the Trade Union Advisory Committee (TUAC).
The OECD also recommends policies to member countries that better or protect the quality of citizens’ lives.
To find out more about the OECD please click here
The current member countries are:
Australia
Austria
Belgium
Canada
Chile
Czech Republic
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Israël
Italy
Japan
Korea
Latvia
Lithuania
Luxembourg
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Slovak Republic
Slovenia
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
OECD or The Organisation for Economic Co-operation and Development
OEIC is an abbreviation for Open-Ended Investment Company.
OEM is an acronym for original equipment manufacturer
The offer price is the price at which someone else is prepared to sell shares to you. The offer price is only good for the number of shares they are prepared to sell
A closed-end fund that is domiciled outside the UK, usually in a country with a more favourable tax regime like Guernsey, Jersey or the Cayman Islands
OFTO is an acronym for offshore transmission owner – this is the entity responsible for the transmission line between an offshore wind site and the mainland grid connection.
OIS is an acronym for overnight indexed swap. Banks and other financial institutions swap exposure from fixed interest rates to floating interest rates and vice versa. The swap is for the same period (tenor). So a swap of a known fixed rate of interest for a period is for a best estimate of what the average floating rate of interest will be for that period. That gives a good indication of the market’s best guess of the future direction of market rates of interest. This in turn can be used, on the one hand, as a predictor of the future direction of official interest rates, and on the other, as an indicator of the health of the financial system.
Oncology is the study of tumours. In other words, it is the branch of medicine that deals with most types of cancer. People who specialise in the subject are oncologists.
To compare the running costs of different investment companies the industry has devised a measure called the ongoing charges ratio which is a measure of the all the regular annual fees charged to the fund, the largest of which is usually the annual management fee. It excludes one-off items like performance fees.
The Key Information Document (KID) has been created to further synchronise information put out on charges by investment companies. Please read our Guide on the KID by clicking here
OPEC+ or OPEC plus is a group of oil-producing countries.
The Organisation of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries namely Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They were to become the Founder Members of the Organisation. These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975), Angola (2007), Equatorial Guinea (2017) and Congo (2018). Ecuador suspended its membership in December 1992, rejoined OPEC in October 2007, but decided to withdraw its membership of OPEC effective 1 January 2020. Indonesia suspended its membership in January 2009, reactivated it again in January 2016, but decided to suspend its membership once more at the 171st Meeting of the OPEC Conference on 30 November 2016. Gabon terminated its membership in January 1995. However, it rejoined the Organisation in July 2016. Qatar terminated its membership on 1 January 2019.
OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
An open-end fund or open-ended fund is one which can expand or contract by issuing or cancelling units in exchange for cash. Examples are unit trusts, OEICs, SICAVs, US Mutual Funds/40 ACT and UCITS funds. Read our note – a bit about wrappers for more detail. Investors have frequent chances to deal in the fund, usually on a daily basis but other frequencies are common. Managers of these funds have to ensure they can fund cancellations (also called redemptions) and so have to keep cash to hand for this.
Operational expenditure is the ongoing cost that a business incurs through its normal business operations. Some examples are rent, salaries, insurance, and inventory costs.
Operating Leverage measures the proportion of a company’s cost structure that consists of fixed costs rather than variable costs. Companies with high operating leverage can expand profit margins more quickly when revenues rise.
Ophthalmology is the branch of medicine that deals with diseases of the eye. A person who specialises in the field is known as an ophthalmologist.
An option is a derivative contract that gives the holder the right but not the obligation to buy a security at a fixed price (the exercise price or strike price) at a date or within a range of dates in the future
This should not be confused with a Warrant, which specifically relates to equities.
Option to Lease (OtL), sometimes known as a lease option, is a contractual agreement between two parties, usually a developer and landowner, that allows the developer to pursue their development project during a specified period.
Option to Lease (OtL), is a contractual agreement between a landlord and renter that gives the renter a choice to purchase the property during or after specified period of time.
Shares that get a dividend and get what is left of the assets on a winding up. Also known as Geared ordinary shares.
The most simple form of shares (most companies only have ordinary shares).
An orebody refers to a connected mass of ore, which is either located in a mine or suitable for mining.
organic growth, used in the context of growth in a company’s revenue/sales, profits/earnings, describes growth that the company has generated from its own resources as opposed to growth that has come from buying other businesses
Over rented is a term used in the property market to describe when the passing rent is more than the estimated rental value
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
overweight – when a portfolio holds more of an asset than in the index
Overweight is used as a relative term, generally to something neutral, generally an index and in the context of a benchmark.
The opposite is underweight
See also neutral weight
Stock A is 10% of an index. A portfolio holds 12% of Stock A. The portfolio is overweight Stock A by 2%
Germany is 10% of the European Index. Investment manager likes Germany. Portfolio holds 12% and is 2% overweight
If stock A’s share price rises, the portfolio performs well relative to the index because it holds 2% more than the index
If German markets fall, the portfolio performs badly relative to the index because it holds 2% more than the index
A private finance initiative (PFI) is a way of financing public-sector projects through the private sector. PFIs alleviate the government and taxpayers of the immediate burden of coming up with the capital for these projects.
Palmoplantar pustulosis (“palmo” meaning palm of the hand, “plantar” meaning sole of the foot) pustulosis is a persistent (chronic) condition which causes blisters filled with fluid on the palms and the soles of the feet.
you can read more about it here
In the context of investing, par means the face value of a security. Bonds are often said to be redeemable at par.
Parenteral nutrition or intravenous feeding involves delivering nutrients and fluid directly into a patient’s bloodstream, bypassing the digestive system (i.e. enteral nutrition)
pari passu is Latin for equal in all respects
Parkinson’s disease psychosis or PDP may be a side effect of Parkinson’s medication. But not everyone who takes Parkinson’s drugs will experience them. It depends on the exact type of medication, the dose and the person taking them. Sometimes, the higher the dose of medication, the more chance there is of experiencing hallucinations.
Research shows that hallucinations and delusions often happen when someone with Parkinson’s also has problems with memory, thinking problems or dementia.
read more here
PARP inhibitors are a type of targeted cancer drug. PARP is a protein found in cells, it stands for poly-ADP ribose polymerase. It helps damaged cells to repair themselves. you can read more here
Participation notes are a form of derivative, issued by a counterparty such as a bank or a broker, which give an investor the same exposure as buying the underlying security would. For example, for an investor who isn’t allowed to hold shares in an Indian company directly, a bank or a broker can create a participatory note that has the same risks and rewards as holding the underlying share would EXCEPT that there is a risk that the bank or broker could go bust and the note become worthless.
Subscribe for free equity research on investment trusts, funds and listed companies.
Passing rent is the gross rent, less any ground rent payable under head leases
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
PCE is an acronym for Personal Consumption Expenditures. The PCE price index is a US index a bit like the UK’s consumer prices index (CPI) – the US also has a separate consumer prices index – just to keep life confusing! The main difference is that the weights of different expenditure items in the PCE price index are rebalanced each quarter. The idea is that consumers will adjust their spending habits to reflect changing prices and so rebalancing tghe index provides a better insight into what consumers are actually consuming. Core PCE or CPCE is a variation of this index which excludes seasonally variable items such as food and energy.
PD is an acronym for Pharmacodynamics – which is the study of the biochemical and physiologic effects of drugs.
PDMR is an acronym for persons discharging managerial responsibility. Such people – directors and senior management of companies – need to disclose to the market when they deal in the shares of the company that they run.
A peer group is a selection of similar funds or companies.
Peer group returns and rankings are often used to see if the investment managers are doing as good as or better job than their competitors. This is often done with reference to a benchmark that they may or may not share.
A PEG ratio is calculated by dividing the price/earnings (P/E) ratio on a stock by its earnings growth. It is generally used as a measure of how much you are paying for faster than average earnings growth.
An extra fee the manager gets for doing a good job. This might be a percentage of all the money the company makes above its benchmark (see Hurdle)
The way that the fee is calculated should be clearly stated in the investment company’s prospectus, Key Information Document (KID) or factsheet. It is often calculated relative to the portfolio’s performance over a set period of time relative to a benchmark.
All exploration and mining activities require prior approval from the relevant government agency. The process to receive a permit, often referred to as permitting, will usually require a detailed assessment of environment issues in a report known as an Environmental Impact Study. The permitting process is extremely rigorous in most jurisdictions around the world and can often take many years.
A perpetual bond, also known colloquially as a perpetual or perp, is a bond with no maturity date therefore allowing it to be treated as equity, not as debt. Issuers pay coupons on perpetual bonds forever.
A preliminary feasibility study
Phase – in drug trials
What is the difference between Phase 1, Phase 2 and Phase 3 when it comes to drug trials?
New therapies for treating disease need to be tested, mainly to ensure that they do what they claim to do and that there are no unwelcome side effects. Drug trials in humans are preceded by a pre-trial / preclinical phase where the drug is tested in animals.
Some trials may have a Phase 0, where the therapy is tested on a very small number of people while it is still in development.
Phase 1 trials are used to check that the therapy works, does it have any side effects, what is the correct dose and how the body interacts with the therapy. Phase 1 trials usually involve just a few patients. Patients are recruited into the trial in small batches. The first patients are given a low dose and the dosage is gradually increased for new recruits. These used to be described as ‘first in human’ trials.
In phase 2 trials, the number of patients in the trial is higher – maybe around 100 people. They are used to refine the results of the phase 1 trial.
They might sometimes be used to check whether the new therapy works better or has less side effects than an existing therapy – so patients might be split into two groups, one on the old therapy and one on the new. The patients might be assigned to these two groups on a randomised basis (to avoid doctors skewing the results of the trial).
Alternatively, the new therapy might be compared to a placebo (a harmless, inactive substance). In such a trial, the patient is unaware of which therapy they are taking.
In the Phase 3 trial, the new therapy is compared against the standard treatment for the condition using the methodology we outlined for phase 2 but using a much larger group of patients.
Once a therapy has succeeded in a phase 3 trial it may be put forward to be approved for use. In the US, approval is granted (or not) by the FDA, in Europe the licencing authority is the European Medicines Agency (EMA).
Sometimes testing will continue even after a licence has been granted. This would then be described as phase 4. These are useful in assessing a drug’s long-term effects.
Some trials will test more than one therapy and/or more than one dosage at a time – each with its own group of patients. These are termed multi-arm trials. Sometimes parts of multi arm trials are abandoned (usually because the therapy isn’t working) and sometimes a new patient group is added to the trial. These are termed multi stage trials.
PID is an abbreviation of Property Income Distribution – it is the technical term for a dividend paid by REIT out of its property rental business. REITs have to pay out 90% of the net income they own from property rentals. If they earn income from other sources they can pay this out as a normal dividend if they choose.
PK stands for Pharmacokinetics – a branch of pharmacology dedicated to determining the what happens to substances administered to a living organism.
Phenylketonuria (commonly known as PKU) is a rare but potentially serious inherited disorder.
Our bodies break down the protein in foods, such as meat and fish, into amino acids, which are the “building blocks” of protein.
These amino acids are then used to make our own proteins. Any amino acids that are not needed are broken down further and removed from the body.
People with PKU cannot break down the amino acid phenylalanine, which then builds up in their blood and brain. This can lead to brain damage.
read more about it here
Placing is a method of raising capital where new shares or securities are issued directly to a small group of investors rather than all shareholders.
Platinum refractory cancers are cancers that do no respond to treatment with cancer therapies containing platinum such as carboplatin and cisplatin
PMI is an acronym of Purchasing Managers’ Index.
Senior managers at selected companies fill out a survey each month, recording measures of business output, new orders, employment, costs, selling prices, exports, purchasing activity, supplier performance, backlogs of orders and inventories of both inputs and finished goods.
However, the headline measure is a measure of sentiment – will your company’s output be higher, the same or lower in a year’s time? Higher is scored as 1, the same as 0.5 and lower as 0. If everyone was positive, the average score would be 100; if everyone was neutral, the score would be 50; and if everyone was negative, the score would be zero. Therefore, a score below 50 is indicative of an economy in contraction and vice-versa. Although the figures can range from 0 to 100, they typically come in at a range between 40 – 60.
S&P, which compiles these indices, also produces separate PMIs for the services and manufacturing sectors, as well as a range of sub-indices based on the metrics listed above.
PNH is an acronym for paroxysmal nocturnal hemoglobinuria. With PNH, the body’s immune system attacks and destroys red blood cells which can cause anaemia.
More information is available here
Poison pill is a term used in the investment world to describe a legal rule built into a company’s structure that effectively prevents it from being taken over. This could take the form of shares that have different voting rights or situations that trigger a change of ownership, or even clauses that trigger the issuance of vast numbers of new shares.
From the point of view of the company, they can look like a good idea as it could protect jobs. Often though these are the jobs are those of highly-paid managers not workers. protected from take-overs, the management can become lazy and complacent to the detriment of the company, its shareholders and its workers. Generally poison pills are a bad idea.
A composite index in the Fraser Institute’s annual mining survey that measures the effects of government policy on attitudes toward exploration investment.
polycythaemia vera is a condition that results in bone marrow producing too many red blood cells- a link with more information is here
A deposit of disseminated copper minerals in or around a large body of intrusive rock.
The invested assets of a fund such as an investment company, investment trust or OEIC.
postpartum is a another term for postnatal – it is the period where the body is readjusting to not being pregnant
PPA is an abbreviation of power purchase agreement – the agreement that an electricity producer puts in place with a buyer of electricity – usually for the supply of a fixed amount of energy at a fixed price for a fixed period.
Pre-emption rights give existing shareholders in a company the right to subscribe for their pro rata share of any new shares in that company issued for cash, providing them with protection against inappropriate dilution of their investments.
Pre-emption rights are very important. The rules that govern how listed companies behave say that, unless you agree otherwise, companies can’t issue stock to new investors without offering it to existing shareholders first (pro-rata in proportion to the size of your investment). These are pre-emption rights.
For investment companies, pre-emption rights wouldn’t matter if any new shares were being issued at a premium to asset value, as the excess paid over asset value benefits the whole fund (although really big shareholders might worry about a reduction in their voting rights). However, issuing new shares at a discount transfers part of the value of your investment to the new investor – not something an existing shareholder would be happy about.
Mining project owners subject their projects to several stages of progressively more detailed and rigorous evaluations before giving the go-ahead to spend money and build a mine. A project will typically advance from a Preliminary Economic Assessment, through a Pre-feasibility Study to, finally, a Feasibility Study.
A Pre-feasibility Study is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.
pre-IND – is an acronym for pre-investigational new drug. As new therapies are being developed, they reach a stage where testing is ready to begin. In the US, the FDA requires that an IND application be filed before testing begins.
Preference shares earn a preferred return, usually a fixed dividend, and usually also have a fixed entitlement on a winding up. They will usually get paid out before the ordinary shares on a winding up.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Preferred return – a preferred return is a return that needs to be earned by an investor before lower ranking (often ordinary shareholders or, in the private equity world, General Partners) can earn a return. In some contexts this is also referred to as a hurdle rate.
A solution containing dissolved copper minerals. Often abbreviated to PLS.
The amount by which the share price exceeds the net asset value, calculated as the share price divided by the net asset value and expressed as a percentage.
The share price of an investment trust can differ from the net asset value (NAV). If the current share price is above the NAV, the investment trust is said to be trading at a premium, i.e. it costs more to buy the shares than the underlying investments are worth.
The London Stock Exchange operates a premium listing segment where companies are obliged to comply with higher compliance and disclosure requirements than the EU-minimum (imported into UK post Brexit) standards necessary for a standard listed company. The most important distinction between this and a standard listing is that – at admission to this segment – at least 75% of the business must have a track record of earning revenues over a three-year period.
Price discovery is the overall process of setting the price of an asset. The process of price discovery looks at a number of tangible and intangible factors, including supply and demand, investor risk attitudes, and the overall economic and geopolitical environment.
The price to book ratio (P/B) is calculated by dividing a company’s market capitalization by its book value of equity as of the latest reporting period.
Price-Earnings ratio – P/E ratio – it is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The price-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
The P/E ratio can be calculated by dividing the share price by the earnings per share.
PRIIPs is an abbreviation for Packages Retail Investment and Insurance Products. It is a term created by EU legislators as a “catch-all” for investment and insurance products that bring together different investments. These “products” are then sold to retail investors.
PRIIPs legislation is being implemented across the EU and requires that every “manufacturer” of a PRIIP (essentially the investment manager of an open-ended fund and maybe the Board of a closed-ended fund) produces a KID. These KIDs have to be drawn up in accordance with strict guidelines, published on their websites, made available free of charge to the investor before they conclude any transaction in the PRIIP, and updated regularly. The manufacturer also has to have a complaints procedure to handle customers comments on the PRIIP.
The legislation was passed in 2014 and comes into force in 2016. In classic EU style, the detail of how the law works in practice is thrashed out after the legislation is passed so it is not clear yet what the impact will be.
In an investment context, “primary” usually refers to new issues – as opposed to secondary which refers to trading shares or bonds that have already been issued
Principal, in the context of debt, refers to the amount originally borrowed. The borrower has to repay the principal plus interest. The term is also used by brokers to distinguish between dealing as principal (meaning on their own behalf) or dealing as agent (on behalf of someone else).
All the things that rank above the equity in a winding up. (i.e. these will get paid out first and there may or may not be anything left for the equity holders).
For example, debts and liabilities must first be settled before the final payout can be calculated.
Private Equity refers to investments made wholly or mainly in companies that are not traded on a stock exchange. This means that private equity portfolios can be a lot less liquid (harder to turn into cash) than an equivalent equity fund. Some private equity companies invest directly, some make investments in funds (usually limited partnership or LP funds), and some invest in a mixture of the two.
The private finance initiative (PFI) is a United Kingdom government procurement policy. Its aim was to create “public–private partnerships” (PPP) to deliver public sector infrastructure and/or services according to a specification defined by the public sector. The PFI/PPP model allowed private firms are contracted to complete and manage public projects.
Material for which tonnage and grade are computed partly from specific measurements, samples or production data and partly from projection for a reasonable distance on geological evidence; and for which the sites available for inspection, measurement and sampling are too widely or otherwise inappropriately spaced to outline the material completely or to establish its grade throughout.
Profit is the net income of the business. In general, profit equals revenue less expenses. However, companies typically calculate multiple measures of profit on an income statement.
Gross profit shows the total revenue minus the variable costs, or cost of goods sold.
Operating income and non-operating activities are added or subtracted to gross profit to determine total profit for a given period
Progressive Supranuclear Palsy (PSP) is a neurological condition caused by the premature loss of nerve cells in certain parts of the brain. A protein called tau builds up in certain areas of the brain and forms into clumps (neurofibrillary tangles), which are believed to damage the nerve cells. Over a period of time, this can lead to difficulties with balance, movement, vision, speech, and swallowing.
more information is available here
A Prospectus is a formal legal document that is required by and filed with Stock Exchange Authorities and Regulators that provides details about an investment offering for sale to the public. See Initial Public Offering (IPO).
The prospectus is the first offering document provided by a company and includes most of the details of the business and legal structures. An investment Company Prospectus contains details on its objective, investment strategy, risks, performance, distribution policy, fees and expenses and fund management.
Some hedge fund strategies are designed to make money when other assets are falling in value. Collectively these can be referred to as protection strategies. The simplest of these is a net short equity or credit fund but other types exit including Negative Correlation funds that seek out investments that benefit when certain asset prices fall.
Tail Hedging Funds are designed to benefit when extreme events occur. So-called Black Swan events (named after Australia’s Black Swans, an animal so alien to European minds that its existence couldn’t be foretold) could impact the value of all assets (when assets fall or rise in tandem they are said to be positively correlated). Tail Hedging Funds are supposed to protect against that risk. They do things like buying very out of the money derivatives (derivatives that won’t have any real value unless the value of the underlying changes significantly).
Material for which tonnage and grade are computed from dimensions revealed in outcrops, trenches, underground workings or drill holes; grade is computed from the results of adequate sampling; and the sites for inspection, sampling and measurement are so spaced and the geological character so well-defined that size, shape and mineral content are established.
PSD2 or Payment Service Directive 2 enables bank customers, both consumers and businesses, to use third-party providers to manage their finances.
Third party providers will be able to link straight into banks, pension providers and life assurance companies’ records and individuals’s accounts to provide a full integrated services to individuals.
The term “put”, usually used in relation to “put options”, is the right to sell an investment to someone else at a predefined price within a predefined time frame.
PV is an acronym for photovoltaic – a system that converts light into electricity
QT is an acronym for quantitative tightening – the reverse of quantitative easing. Central banks can shrink their balance sheets through QT, either passively – by allowing bonds to mature and not replacing them – or organically – by selling them.
Qualitative analysis looks at the touchy-feely elements of what makes a business work – things like the quality of management, business ethics and corporate governance standards. Its counterpart is Quantitative analysis.
Often investment managers employ a mix of the two methods. For example, quantitative screens are useful to reduce the investment universe to a size that allows qualitative analysis to be more focused.
Quantitative or quant models or analysis refers to a way of analysing something that is based entirely on numbers / statistics. Its counterpart is qualitative analysis.
Often investment managers employ a mix of the two methods. For example, quantitative screens are useful to reduce the investment universe to a size that allows qualitative analysis to be more focused.
Quantitative Easing, often abbreviated to QE, is a term used to describe the purchase of debt, usually government debt, by central banks (such as the Bank of England, the European Central Bank (ECB) and the Federal Reserve). The idea is that, buy buying this debt from commercial banks, this frees up the commercial bank’s balance sheets and allows them to lend – boosting the economy. The purchased debt ends up on the balance sheets of the central banks.
Quoted, when used to describe companies, means a company that is dealt on an exchange.
R&D is an acronym for research and development
The R-number (or R-ratio, basic reproductive number, basic reproduction number, basic reproduction ratio or basic reproductive rate) is the number of people that one infected person will pass the virus on to. It can be thought of as the expected number of cases directly generated by one case in a population where all individuals are susceptible to infection.
The R-number is not considered to be a biological constant for a given infection. It is affected by other factors such as environmental conditions and the behaviour of the population that has been infected. As such, lock down provisions that reduce the rate of transmission, reduce the R-number.
RA in medicine is used as an acronym for rheumatoid arthritis
A radioisotope, or radioactive isotope, is an unstable form of a chemical element that releases radiation as it decays into a more stable form.
Read more about radioisotopes here.
An acidic solution that is sprinkled over mineral heaps (usually copper bearing) to dissolve the valuable mineral (thus resulting in a pregnant solution).
A rally is a period of sustained rises in the prices of stocks, bonds, or other indexes. This typically involves quick or substantial upside moves over a considerably short period of time.
Rare earth is a name given to a group of chemical elements that, despite their name, are relatively plentiful on earth but are well dispersed and so harder to extract in meaningful quantities. The 17 rare earth elements are scandium (Sc), yttrium (Y), lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm), samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb) and lutetium (Lu). The elements from lanthanum to lutetium, with atomic numbers 57 to 71, are called lanthanides. Scandium (21) and yttrium (39) sit above lanthanum in the periodic table.
A firm paid to make a hierarchical judgement about how risky an asset, usually debt in some form, is. Different rating agencies use different terminology. Three firms dominate the market – Moodys, S&P and Fitch.
| Moody’s | S&P | Fitch | Rating description | ||||
|---|---|---|---|---|---|---|---|
| Long-term | Short-term | Long-term | Short-term | Long-term | Short-term | ||
| Aaa | P-1 | AAA | A-1+ | AAA | F1+ | Prime | Investment-grade |
| Aa1 | AA+ | AA+ | High grade | ||||
| Aa2 | AA | AA | |||||
| Aa3 | AA− | AA− | |||||
| A1 | A+ | A-1 | A+ | F1 | Upper medium grade | ||
| A2 | A | A | |||||
| A3 | P-2 | A− | A-2 | A− | F2 | ||
| Baa1 | BBB+ | BBB+ | Lower medium grade | ||||
| Baa2 | P-3 | BBB | A-3 | BBB | F3 | ||
| Baa3 | BBB− | BBB− | |||||
| Ba1 | Not prime | BB+ | B | BB+ | B | Non-investment grade speculative |
Non-investment grade AKA high-yield bonds AKA junk bonds |
| Ba2 | BB | BB | |||||
| Ba3 | BB− | BB− | |||||
| B1 | B+ | B+ | Highly speculative | ||||
| B2 | B | B | |||||
| B3 | B− | B− | |||||
| Caa1 | CCC+ | C | CCC | C | Substantial risks | ||
| Caa2 | CCC | Extremely speculative | |||||
| Caa3 | CCC− | Default imminent with little prospect for recovery |
|||||
| Ca | CC | ||||||
| C | |||||||
| C | D | / | DDD | / | In default | ||
| / | DD | ||||||
| D | |||||||
RCC is an acronym for renal cell carcinoma. This is a cancer of the kidneys.
Real Estate Investment Trust or REIT – A REIT is a listed property company in a tax efficient structure:
Conversion to REIT status can carry substantial tax benefits. REITs are property companies that manage a portfolio of real estate to earn profits for shareholders, and their special tax status means that they pay no corporation tax on the profits of their rental business, but they need to comply with a number of conditions set out in tax law.
The record date is used as the day when the company will use the share register as a guide to who is entitled to whatever action the company is taking (usually paying a dividend).
When a company declares a dividend they will announce a record date two days after the XD date. Any trades that took place around the XD date will be reflected in the share register by then.
Shares designed to be bought back easily by a company (in practice, as rules around buy-backs have eased, Redeemable Shares are not much different to ordinary shares).
reference benchmark – When a fund does not have a benchmark, investment companies and investment managers offer reference or a comparitor benchmark.
This helps investors / shareholders appreciate how the NAV and share prices have done and helps put that performance into context.
Funds that do not have a benchmark index are often absolute return funds, a total return funds or pure unfettered stock picking funds.
REFIT is an acronym for renewable energy feed-in tariff. It was the Irish government’s subsidy scheme for renewable energy but closed to applications at the end of 2015, to be replaced by RESS in 2019.
The REFIT schemes were designed to provide certainty to renewable electricity generators by providing them with a minimum price for each unit of electricity exported to the grid over a 15 year period. The first scheme ran until the end of 2009, the second ran from 2012 to 2015 and the third was specifically for bioenergy schemes. It ended in 2015. The schemes are funded by the Public Service Obligation, paid for by all electricity consumers. Ireland’s aim is 40% of electricity coming from renewable sources by 2020.
Refractory refers to a material or substance that is resistant to heat and retains its strength at high temperatures.
REGO is an acronym for Renewable Energy Guarantees of Origin – under the scheme (which was established by the EU), consumers of power pay a premium to use renewable energy and the producer of renewable power benefits.
An abbreviation for Real Estate Investment Trust
Eligible installations, such as anaerobic digestion plants, can receive subsidies under the non-domestic renewable heat incentive (RHI). RHI payments are made quarterly over 20 years and vary according to the amount of heat generated, depending on the build date. Tier one subsidies apply to plants producing less than 40,000 MWh, tier two applies to production between 40,000 MWh and 80,000 MWh and tier three applies to production in excess of 80,000 MWh.
Applications for RHI submitted before 1 April 2016 have their tariffs adjusted in line with the Retail Prices Index (RPI). Applications submitted on or after 1 April 2016 have their tariffs adjusted in line with the Consumer Prices Index (CPI). The scheme is scheduled to close to new plants in 2021.
Renewables Obligation Certificates or ROCs – these are the UK government’s support mechanism for renewable energy projects in the UK (except for small schemes which are supported by Feed-in Tariffs).
The scheme started in 2002 in England, Wales and Scotland and 2005 in Northern Ireland.
Renewables Obligation Certificates are tradeable. They get awarded to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Producers of renewable energy get given ROCs and every power producer must be able to produce ROCs in proportion to the power they produce. Fossil fuel power producers are forced to buy ROCs from the renewable energy producers and this provides a subsidy to the renewable energy producers.
The number of Renewables Obligation Certificates awarded to each producer varies according to how they produce electricity and when their plant was first commissioned. Early on in the life of the scheme the system was much more generous for producers of power from solar than it is today. Nowadays the most generous grants are available for wave and tidal power (up to a 30MW limit)- an area the government wants to encourage.
You can read more about the scheme here
Repo rate is effectively the interest rate at which central banks lend money to banks. ‘repo’ is an abbreviation used for repurchase agreement. It is used as a form of short-term borrowing by the banks who sell government securities (usually short-term securities) to the central bank and agree to buy them back at a slightly higher price at a fixed time in the future. Usually it is used as a way of borrowing money overnight. The central bank sets the repo rate.
Central banks may also operate a reverse repo facility.
A form of securitised debt where the portfolio contains residential mortgages
Resilient satellite communication systems are satellite systems that maintain reliable connectivity despite facing potential attacks or damage.
Read more about resilient SATCOMs here.
RESS is an acronym for renewable electricity support scheme. It replaces REFIT as Ireland’s mechanism for providing subsidy to renewable energy projects. Subsidies are, in effect, ‘auctioned’ off to whoever bids for the lowest level of subsidy to deliver a particular type of project.
Shares that either only get to vote in certain circumstances or, more commonly, shares that have less than one vote per share. (refer to a company’s prospectus for details)
Retail, when used as a description of a type of investor, refers to an investor who isn’t a professional investor
Retrocession refers to reinsuring the reinsurer. Insurance companies set off some of the risk that they take on through reinsurance. Reinsurance companies do the same thing with retrocession. The bar for retrocession to kick in is set pretty high – catching only the worst-case losses.
Rett syndrome is a rare neurological disorder affecting mainly females and very few males. It is present from conception and usually remains undetected until major regression occurs at around one year of age, when children may lose acquired skills and become withdrawn. Genetic but largely not inherited, Rett syndrome is usually caused by a fault on a gene called MECP2 which is found on the X chromosome. People with Rett syndrome have profound and multiple physical and communication disabilities and are totally reliant on others for support throughout their lives. Read more here
A measure of financial performance calculated by dividing net income by shareholders’ equity
Revenue – Every time a company sells a product or service for cash or credit it earns revenue. Revenue is the total amount received from goods and services sold.
see also Income
Reversionary yield is a term used in the property market to describe the yield that should be achieved if the passing rent adjusts to the level of the estimated rental value
Subscribe for free equity research on investment trusts, funds and listed companies.
The frequency in which a satellite passes over a specific area.
Revolving Credit Facility or RCF – A revolving credit facility is a type of credit that does not have a fixed number of payments, in contrast to fixed term loans. An example of this for members of the public is the credit card. Corporate revolving credit facilities are typically used to provide liquidity for an investment company’s day-to-day operations.
Revolving Credit Facility or RCF
Subscribe for free equity research on investment trusts, funds and listed companies.
REVPAR is an acronym for revenue per available room – a widely used measure of trading success in the hotel industry. REVPAR is a factor of average room rates and occupancy and trading one off against the other to optimise REVPAR is the main goal of any hotel manager.
A rights issue is an issue of new shares to investors that gives existing shareholders preferential, transferable rights to buy the new shares. Only if they don’t want to take up their rights will other investors get a chance to join in.
Rights issues are usually carried out at a share price that is lower than the prevailing market price. The company wants to make sure that it will raise the money it is looking for so it offers investors a bargain that is hopefully too attractive to turn down.
However, because the new shares are being issued at a discount, a transfer of value will occur from the holders of shares before the rights issue takes place to the incoming investors. To prevent existing shareholders from being diluted, they are given the first option to buy the new shares, in proportion to their existing holding, and if they cannot or won’t take up the offer, they can sell on the right to buy the new shares to someone who is interested.
For example, say there is a company with 1,000 shares valued at £1 each and it wants to raise £500. It could launch a rights issue that offered every holder of one share the right to buy one more (a one-for-one rights issue) at 50p. That 50p price is a long way below the £1 price before it made the announcement. That makes this a “deeply discounted right issue”.
As a holder of 100 shares (10%), if I took up my rights, I would pay the company £50 (100 x 50p) and end up with 200 shares. They would theoretically be worth about 75p each or £150 as I still own 10% of a company that was worth £1000 in total before the rights issue and now has £500 more of assets, so £1,500 in total, but there would now be 2000 shares, so £1,500/2000 = 75p per share.
That 75p has a technical name – the theoretical ex-rights price.
As you can see from this, the value of my original 1,000 shares has fallen from £100 to £75, but I have made that money back on the rights that I took up, so net, I come out of this even.
But what if I didn’t want to take up my rights? Well, in theory, I could sell my right to buy 100 shares at 50p each to someone who did want to take up the rights. That person ought to be willing to pay up to £25 for them (or 25p per right) – the theoretical profit that they are going to make on those shares. In theory then, I would be no worse off, my original shares would be worth less but I would have cash to make up the loss.
The rights change hands as “nil paid rights” and usually, for the brief time that they exist, they trade on the stock exchange as a separate class of shares. In the way that they are priced, they are a lot like warrants or subscription shares.
Risk is really all about two things – the chance of losing some or all of your money and the chance that, over the short-term, the value of your investment might change dramatically (volatility). When investment managers talk about risk they are often talking about how big their bets are relative to their benchmark or their peer group – this is the risk of them getting sacked for performing badly which is not the same thing at all.
Most measures of risk are talking about volatility.
To reduce the chance of losing some or all of your money, it is best to diversify your portfolio.
A risk premium is the investment return an asset is expected to yield in excess of the risk-free rate of return. An asset’s risk premium is a form of compensation for investors. It represents payment to investors for tolerating the extra risk in a given investment over that of a risk-free asset.
An abbreviation for Residential Mortgage Backed Security
Ribonucleic acid (RNA) is a polymeric molecule (see below) that is essential in various biological roles in coding, decoding, regulation and expression of genes. RNA and DNA (Deoxyribonucleic acid) are both nucleic acids. Nucleic acids, along with lipids, proteins, and carbohydrates, are the four major macromolecules that are essential for all known forms of life.
Note: a polymer is a large molecule, or macromolecule, that is composed of millions of repeated linked units. Each link being a relatively light and simple molecule.
Robo advisers are wealth management platforms where investment decisions are based on computer programmes or algorithms with no or hardly any input from a human financial adviser.
ROC is an abbreviation for renewables obligation certificate
ROE is an acronym for return on equity. It is calculated by dividing net profits/income by shareholders’ equity (the figure on the bakance sheet that represents the value of the company that shareholders own after deducting all debt and anyone else’s interests in the company.
RPI is an abbreviation of Retail Prices Index, a measure of inflation in the UK. It is based on the change in value of the arithmetic mean of a notional basket of goods and services bought by the average family in the UK (which is adjusted over time to reflect changes in people’s spending patterns). It used to be the main official measure of UK inflation but has been supplanted by the CPI or Consumer prices Index.
Variations of RPI include RPIX (which excludes mortgage payments), RPIY (which is RPIX excluding taxes like VAT and Council Tax) and RPIJ (which is RPI calculated on a geometric rather than an arithmetic basis).
RRP is an abbreviation for 1) recommended retail price and 2) Reverse Repurchase Facility (sometimes reverse repo facility) This is a mechanism whereby a central bank sells a security to another institution (usually a bank) and agrees to buy it back at a fixed price at a fixed point in the future. A fuller explanation, as it applies in the US, is provided here.
Rule 9 is the part of the Takeover Code that defines when a person or a company is required to make a mandatory offer for a company.
The rule is quite complex – you can read it in full here – but basically it is designed to force anyone who buys shares so that they end up owning 30% or more of a company to make an offer for that company. There are ways around it – shareholders can agree a waiver, for example.
The run rate in business is the metric to forecast a company’s future financial performance based on the current financial performance. It is a standard metric to judge any business’s future growth and profitability, irrespective of size and nature.
SaaS is an acronym for software as a service
Synthetic Aperture Radar, or SAR, is a remote sensing technique using the motion of a radar instrument to create high-resolution images of Earth’s surface.
Read more about SAR here.
SAREB is an acronym in Spanish for Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria. It is a holding bank (a bit like NAMA in Ireland), established in 2012 in Spain that holds property and other assets transferred to it by four nationalised banks to get the bad assets off their balance sheets. The four banks are BFA-Bankia, Catalunya Banc, NGC Banco-Banco Gallego and Banco de Valencia. It is supposed to sell off these assets over a 15 year period.
You can read more about it here
scleroderma is a condition that results in hard, thickened areas of skin and sometimes problems with internal organs and blood vessels. See more here
Scope 1 emissions are greenhouse gas emissions that you create directly – like those created when you drive a petrol or diesel powered vehicle.
Scope 2 emissions are indirect emissions – those that are created by your suppliers of electricity (and other things such as steam, heat, and cooling).
Scope 3 emissions are also indirect emissions, but these are the ones associated with all the goods and services that you consume, or – for a business – those that are associated with its value chain.
In an investment context, secondary can refer to trade in bonds or shares that have already been issued as opposed to primary
Securitised debt is a form of structured finance. A portfolio of debt which is packaged together and then sold off in tranches.
The highest ranking tranche (the one that gets repaid first) may be rated as AAA or equivalent; that is to say, in the opinion of a rating agency, the chances of losing money on the AAA portion are the same as the chances of losing money lent to any other AAA rated borrower, like a well-financed government.
Below the AAA tranche, which is usually by far the largest, are a series of lower ranking tranches and the lowest is often called the equity tranche because it is as risky as holding highly geared equity.
The interest rate paid on the AAA tranche should be consistent with the interest rate paid on any other AAA rated security and this and the interest payable on other higher ranking tranches should be well below the interest being paid by the borrowers. This means the interest rates on the lower rated tranches can be a lot higher (but, to large extent, this just compensates them for the extra risk involved in holding the lower rated tranches since they bear the first losses in the portfolio if a borrower or borrowers cannot repay their loans.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Self managed describes an investment company that makes its own investment decisions rather than sub-contracting that job to an investment manager
Series A is the stage in a company’s life where stock is first sold to outside investors. Subsequent equity funding rounds are called Series B, C, D etc., and usually come at higher prices – though not always, sometimes there will be a “down round”.
SFDR is an acronym for Sustainable Finance Disclosure Regulation. This is an EU regulation aimed at making it easier for investors to distinguish between funds’ ESG characteristics. Funds mindful of ESG issues are likely to adopt one of three different product categories:
Funds that integrate ESG risk considerations into their investment decision-making processes, or explain why sustainability risk is not relevant to theior chosen strategy, but would not qualify as Article 8 or Article 9 strategies.
Funds that promote social and/or environmental characteristics, and may invest in sustainable investments, but do not have sustainable investing as a core objective.
Funds that have a sustainable investment objective.
EU taxonomy specifies an additional set of disclosure requirements which establish whether an economic activity is environmentally sustainable. It identifies six objectives:
You can read more about the EU Taxonomy here
A share buyback is when a company repurchases its own shares from the stock market, reducing the number of outstanding shares and often increasing the value of remaining shares.
All the different types of shares issued by the company
Where shareholders use their rights to influence company behaviour, often by proposing resolutions or seeking board changes.
The investors in the equity of a company.
Shareholders funds are the assets that belong to the shareholders – equivalent to equity
The individual units a shareholder owns in a company.
All the shares of a company that could be traded on a stock exchange.
An economist called Robert Shiller wanted to come up with a way of comparing valuations based on price/earnings ratios but without the distorting effect of the economic cycle on what the earnings were.
He devised a metric – the cyclically-adjusted price to earnings ratio (CAPE). This averages 10-years of earnings (adjusting for the effects of inflation) to come up with an “earnings” number. That should, in theory, strip out the effect of the cycle.
To go “Short” in the context of an investment refers to a negative holding of something (selling something you do not own). It is the opposite of long investing.
“Net short” is where an investor has more short positions than long positions in a given asset, industry or market in his / her portfolio.
EXAMPLE: When investment manager A does not own a stock and wants to short sell it, he / she must first borrow it from investment managers that do. The lending manager B will charge a margin for this. The reason that the manager A must borrow stock is that when it is sold on the main market, stock must be delivered before the cash is paid.
When, as manager A expects, the share price falls, they can be brought back at a far cheaper price than the sell and returned to lending manager B. The gain from the short is difference between the money that manager A got from the sale of the borrowed stock and the cost to buy back at a lower price and the margin charged by manager B.
However, if the stock price rises, the cost of buying it back is greater. Therefore, the loss is the price to money that manager A got from the sale of the borrowed stock, minus the cost to buy back at a higher price and the margin charged by manager B.
Stock lending is a good way for investment managers to derive other earning streams from a portfolio. They are also a risk, as the need may arise for manager B to sell it from their portfolio when it is still with manager A. Therefore, the agreement to lend may include a covenant to return the stock on demand. This passes the risk to borrowing manager A .
Amounts that are owed that have to be paid within one year
Sicav is an acronym for Société d’investissement à capital variable. It is a type of open-ended fund, found typically in continental Europe.
SIPP is an abbreviation of self invested personal pension. Using a SIPP, you get to choose which investments your pension is invested in rather than an investment manager. You still get tax relief on contributions (depending on your personal circumstances) and there is no UK capital gains tax or UK income tax to pay.
SJIA is an acronym for systemic juvenile idiopathic arthritis – you can read more about it here
Sjogren’s syndrome is a condition that causes dryness in areas such as the eyes, mouth and skin – you can read more about it here
SMA is an acronym for spinal muscular atrophy. SMA is a genetic condition that weakens muscles and this may affect movement.
SME stands for small and medium enterprises and is an acronym used to describe smaller companies.
SOCIMI is an acronym for Sociedades Anónimas Cotizadas de Inversión Inmobiliaria which in English means Listed Real Estate Investment Companies. They are the Spanish equivalent of REITs.
SOEC is an acronym for solide oxide electrolyser cell, used to electrolyse water to produce hydrogen and oxygen. These operate at high temperatures.
SONIA is the abbreviation for the Bank Of England’s Sterling Overnight Index Average and was first introduced in March 1997. SONIA is a widely used interest rate benchmark and the reference rate for sterling Overnight Indexed Swaps (OIS). The Bank of England became its administrator in April 2016, and introduced a series of reforms of the benchmark in April 2018. Data for the previous London business day is published by authorised distributors at 9am.
For more information, please click here
According to the Bank of England, the definition of SONIA has two elements:
(i) Statement of underlying interest
(ii) Statement of methodology
Eligible transactions are:
The statement of the underlying interest is intended to be an enduring statement of the economic concept that SONIA seeks to measure. The statement of the methodology describes how the specified underlying interest is currently to be measured.
SORP is the acronym for Statement of Recommended Practice and refers to Financial Statements of Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Trust Companies.
SORP recommends that 75% of management fees and finance costs can come from capital and 25% to revenue. This can reflect the balance of the capital and revenue elements of total return experienced historically over the longer term.
Total return is not affected whichever route is followed, though relative rates of taxation of income and capital gains may be a consideration for boards for investors.
SPAC is an acronym for special purpose acquisition company. These are listed companies with no business of their own but often with substantial cash resources, that are established to take over another business. They can be used as a way of listing an unquoted company.
A special dividend is a dividend declared by a company that is a one-off – rather than declaring a larger than average dividend, a company will declare a special dividend alongside their regular dividend to emphasis to shareholders that this is unlikely to be repeated
Investment companies with more than one type of share capital also called a split capital investment trust.
Each type of share capital will have a different share. For example, all the dividends of an investment trust may be paid by the Income shares.
Systems designed to protect against the malicious impersonation of a trusted source.
The spot price is the current price in a market for a given asset (for example a security, commodity, or a currency) at which it can be bought or sold at for immediate delivery. This is in contrast to a future price, at which an asset can be bought or sold at, for delivery in the future.
The bid / offer spread is the gap between the highest bid price and the lowest offer price
The word “spread” is also often used in fixed income. For example, a credit spread is the difference in yield between two bonds of similar maturity but different credit quality.
An abbreviation for Special purpose vehicle
A significant risk transfer, or SRT, is a financial transaction where a significant majority of economic risk attached to a pool of assets, liabilities, or financial exposure is transferred from one party to another.
For example, a bank can reduce the amount of risk that its loan book is exposed to by using derivatives to transfer that risk to other investors.
SSAS is an acronym of Small Self Administered Scheme, a defined contribution pension scheme established for an individual company
An economic cycle where growth is slowing despite rising inflation
Stamp duty is a UK tax paid on share (stamp duty reserve tax) and property (stamp duty land tax) transactions.
Stamp duty reserve tax is charged as 0.5% on purchases of shares in the secondary market (not on primary deals). It is no longer payable when dealing in shares traded on AIM.
https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro
Volatility is measured in a number of ways but the most common measurement is standard deviation. This is worked out using a formula: the square root of the average difference from the average value. A big standard deviation means lots of volatility and vice versa.
In steam-methane reforming, methane reacts with steam under 3–25 bar pressure (1 bar = 14.5 psi) in the presence of a catalyst to produce hydrogen, carbon monoxide, and a relatively small amount of carbon dioxide. Steam reforming is endothermic—that is, heat must be supplied to the process for the reaction to proceed.
A statistical measure of the range of potential outcomes for an investment based on its historical volatility.
Stock has two meanings – as a term for shares or, in accountant speak, the products that a company has made that are finished and available for sale. In the US the term for these products is Inventory.
Stock selection is the art of choosing which companies will end up in your portfolio where the choice is based on their individual merits rather than because they fit any particular asset allocation.
STP is an abbreviation of Sustainability and transformation partnerships. The NHS and local councils have formed partnerships in 44 areas covering all of England, to improve health and care. Each area has developed proposals built around the needs of the whole population in the area, not just those of individual organisations. You can access a webpage about these here
Stratigraphy is a field with geology which looks at rock layers (strata) and their layering (the stratification). Stratigraphy is predominantly in the study of sedimentary and layered volcanic rocks. Stratigraphy is also used to refer to the chronological sequence of such bedded rocks.
The terms ‘Strike’ and ‘Dip’ are used with geology and mining to define a plane for rock slope analysis. In simple terms, strike means across the slope whereas dip means down the slope.
In more technical terms, strike is the direction of the line that is formed by the intersection of the plane of the rock bed with a horizontal surface. Dip is the direction in which the steepest angle is formed between the plane of the rock bed and the horizontal surface.
The price at which an option, warrant or subscription share gives the right to buy an ordinary share also known as the exercise price
see securitised debt
An instrument that gives the holder a right but not the obligation to buy ordinary shares at a pre-determined price (the strike price or exercise price) on a given date or within a range of dates. It is like a warrant but eligible for inclusion in an ISA
A compound of sulphur and some other element
High temperature-resistance alloys, usually with a nickel or cobalt base, used in turbine engines in the aerospace and marine industries.
Surrender premium is the term given to the payment that a tenant makes to a landlord when then tenant wants to get out of its lease contract early.
A swap in financial terms has the same meaning as in normal English – i.e. exchanging one thing for another. Usually it means exchanging the liabilities/returns of one asset for another. For example, a currency swap might involve swapping the interest and currency risk on a sterling deposit for an equivalent deposit in US dollars. Or it might just involve swapping the interest payments.
SWOT is an acronym for strengths, opportunities, threats and weaknesses. It is a way of analysing the prospects for a business or venture
SX-EW stands for solvent extraction-electrowinning, which is a metallurgical technique, predominantly used to process copper ores, in which metal is dissolved from the ore by organic solvents and recovered from solution by electrolysis to produce cathodes.
Systematic Macro funds use quantitative (number based) models to try to predict changes in the prices of assets. The system generates the investment ideas. These models are trying to take advantage of market inefficiencies that arise because we humans don’t always invest rationally. Some of these strategies will be trend following. For example, investing on the lines that if the value of one currency has fallen relative to the value of another for three straight days, it is likely to do so for a fourth.
Systematic risk is the risk inherent in an investment because of external factors. Example might be the country where the investment is located in or the industry sector it operates in.
Systemic lupus erythematosus, often abbreviated to SLE, SLE is an autoimmune condition, which means it is caused by problems with the immune system. The immune system in people with SLE starts to attack and inflame healthy cells, tissue and organs. You can read more about it here.
Systemic risk is the risk that an event triggers a catastrophic collapse of an entire financial system because of the interdependency of various players within it.
(not to be confused with systematic risk)
T-cells are a form of white blood cells (specifically lymphocytes) that have an important role in the body’s immune system. The ‘T’ is a reference to thymocyte – these mature in the thymus which is part of the lymphatic system.
Tail Hedging Funds are designed to benefit when extreme events occur. So-called Black Swan events (named after Australia’s Black Swans, an animal so alien to European minds that its existence couldn’t be foretold) could impact the value of all assets (when assets fall or rise in tandem they are said to be positively correlated). Tail Hedging Funds are supposed to protect against that risk. They do things like buying very out of the money derivatives (derivatives that won’t have any real value unless the value of the underlying changes significantly).
Tail risk refers to an outside chance that an investment will experience a sudden fall from its average value (technically it could also apply to a sudden increase in value, but that isn’t how this tends to be used). Strictly, the phrase is referring to a move which is at least three standard deviations away from the average price.
Tailings are the waste product from a mine processing plant after the mineral-bearing ore has been extracted and concentrated.
These are positive events or circumstances that can assist a company or industry in growing and becoming more profitable
When you hear the phrase ‘tanking’ or ‘in the tank’, this typically means that a stock has encountered a poor quarterly performance, leading to a price decline shortly after. If someone says their assets are ‘tanking’, it means they aren’t doing great right now.
tardive dyskinesia is a form of dyskinesia that occurs in patients that have had long-term treated with antipsychotic drugs. ‘tardive’ means late onset.
Tax inversion deals involve a company that is domiciled for tax purposes in one country allowing itself to be take over by a smaller company in a different, less punitive tax regime, shifting its domicile and cutting its future tax bill
TCFD is an acronym for the Taskforce on Climate-related Financial Disclosures.
The Financial Stability Board established the TCFD to develop recommendations for more effective climate-related disclosures that could promote more informed investment, credit, and insurance underwriting decisions and, in turn, enable stakeholders to understand better the concentrations of carbon-related assets in the financial sector and the financial system’s exposures to climate-related risks.
The Financial Stability Board believes that better information will allow companies to incorporate climate-related risks and opportunities into their risk management and strategic planning processes. As this occurs, companies’ and investors’ understanding of the financial implications associated with climate change will grow, empowering the markets to channel investment to sustainable and resilient solutions, opportunities, and business models.
That does rather beg the question – who or what is the Financial Stability Board? The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system.
The FSB was established in April 2009 as the successor to the Financial Stability Forum (FSF). At the Pittsburgh Summit, the Heads of State and Government of the G20 endorsed the FSB’s original Charter of 25 September 2009 which set out the FSB’s objectives and mandate, and organisational structure. The FSB has assumed a key role in promoting the reform of international financial regulation and supervision.
At the Cannes Summit in November 2011, the G20 called for a strengthening of the FSB’s capacity resources and governance through establishment of the FSB on an enduring organisational basis. On 28 January 2013, the FSB established itself as a not-for-profit association under Swiss law with its seat in Basel, Switzerland.
The FSB’s predecessor institution the FSF was founded in 1999 by the G7 Finance Ministers and Central Bank Governors following recommendations by Hans Tietmeyer, President of the Deutsche Bundesbank.
more information on the TCFD is available here
Technical advisors are people who provide specialized knowledge and guidance in their fields of expertise.
Sometimes an investor or a company looking to buy back its own shares wants to buy a larger block of shares in one go than the market can normally accommodate. A tender offer involves setting a fixed price at which you are prepared to acquire up to a fixed number of shares. Shareholders are given some time to decide whether to accept the tender offer or not.
If more shares are tendered to the offer by shareholders than the buyer has agreed to purchase, selling shareholders may be scaled back. In these cases the tender offer is said to be oversubscribed.
Tenor has two main uses within finance. It is most commonly used to describe the amount of time left until the repayment of a loan or until a financial contract expires. It is similar to ‘maturity’ but tenor is traditionally used for non-standardised contracts, for example foreign exchange and interest rate swaps, whilst maturity is more commonly used for bonds, both corporate or government.
Tenor can also refer to the coupon or payment frequency on a swap.
The Association of Investment Companies (AIC) is the United Kingdom trade association for the closed-ended investment company industry.
To visit the AIC’s website, please click here http://www.theaic.co.uk/
The therm is a unit of heat energy. It is equal to 100,000 British thermal units and is approximately the amount of energy released by burning 100 cubic feet (often referred to as 1 CCF) of natural gas. The therm is 1.055 × 108 joules. Historically, the therm was the statutory unit of gas supplied in the UK.
TLAC or T-LAC – TLAC is an abbreviation for total loss absorbing capacity used by the Financial Stability Board (FSB). It can also be referred to as T-LAC. It describes the debt or capital available to absorb losses in (mostly) banks.
TLAC is closely related to (but different from) the term Minimum Requirement for Own Funds and Eligible Liabilities (MREL) used in the European Bank Recovery and Resolution Directive.
TONAR is an acronym for the Tokyo Overnight Average Rate – the Japanese equivalent of SONIA
Topped-up net initial yield is the current annualised rent, net of costs, topped up for contracted uplifts (including the expiration of lease incentives such as rent-free periods), expressed as a percentage of capital value.
TSX is an abbreviation for Toronto Stock Exchange, which is the major mining stock market in Canada.
Total cash costs are defined as on-site mining costs (see definition) plus on-site G&A, royalties/production taxes, permitting/community costs related to current operations, inventory write-down less by-product credits. It is expressed as US$ per ounce of gold sold.
Subscribe for free equity research on investment trusts, funds and listed companies.
The total return is the return generated by the move in the share price or net asset value including dividends or income.
When dividends are not included in the performance calculation, it is known as Capital Return
Tracking error is a measure of how closely a portfolio follows an index – it is worked out by using the standard deviation of the portfolio’s returns relative to the benchmark. They are used as a measure of active risk. A high tracking error suggests the portfolio is more volatile than the index and a low tracking error suggests the portfolio is less volatile.
Index tracking or passive funds, which are designed to track an index should have low tracking errors. A sign that an active fund manager is not being active enough is a low tracking error, although it may also be a measure of his/her skill.
From the French for slice – a selection from a larger pool of assets.
To clarify, a pool of assets may be divided up into a number of tranches and dealt with separately. Payments or investments may be made in a number of tranches, etc.
Transformer models or Transformers (launched by Google in 2017) are a type of neural network primarily used for natural language processing tasks.
The model can weigh the importance of different parts of the input (by applying a set of mathematical techniques called self-attention) and allows for massive parallel processing.
Unlike other models, transformers can handle longer documents and maintain longer conversations without context being lost. Most importantly, performance does not plateau as model complexity becomes exponentially larger. This is a significant improvement over earlier models that had a tendency to unlearn when trained to undertake new tasks.
Treasury bills or Treasuries are short-term debt issued by the US government (repayable within one year). Instead of paying interest they are issued at a discount to their face value so that the appreciation in value provides the investor with their return.
Treasury bonds are US government debt that is issued with a maturity of 20 years or more (typically 20 year bonds and 30-year bonds). They pay interest every six months at a fixed annual rate. At maturity, investors are repaid a fixed amount.
Treasury notes represent debt issued by the US government that has a maturity less than a Treasury bond but longer than a Treasury bill – in other words more than one year but less than 20 years. Like Treasury bonds, Treasury notes pay a fixed annual interest payment (coupon) in six-monthly instalments and repay a fixed amount at maturity.
Shares bought back by a company and held on its balance sheet rather than being cancelled. Treasury shares are not included in calculations of net asset value and market capitalisation.
TRIAD – The Triad charging system is a charging mechanism adopted by National Grid in the early 1990’s to 1) recoup the Network Transmission costs and 2) manage demand. TRIADS are how energy storage can help businesses with charge avoidance. Energy storage is becoming a key part of energy storage.
As one of the major challenges to the National Grid is dealing with peaks in demand for electricity, which occurs during the winter months, it is this moment of peak demand that is used to determine how much large companies (those on half hourly metering) should pay for the transmission element of their energy bill. Although half hourly metering was originally introduced for large industrial and commercial users of electricity such as steelworks, cement factories and railways, nowadays all users with more than 100kW demand are on half hourly metering.
The Triad period itself are the three half-hours of highest demand on the UK electricity transmission system between November and February each year with the proviso that they are at least 10 days apart (this is to avoid all three potentially falling on the same day if, for example, the temperature is particularly low). National Grid does not forecast the Triads and they are not known in advance. Instead they use data after the event to work out the three Triad periods. The benefit of this is that customers wanting to reduce their costs try and limit peaks throughout the entire Winter period, which therefore flattens out demand. The ‘smoothing’ effect of the Triad system on electricity demand helps to keep the network running more efficiently, reduces the need for new generators and helps to maintain the safety margin between supply and demand.
Triple net, in the context of a lease in the property sector, refers to a tenant’s lease where the tenant is responsible for taxes, insurance and maintenance.
Pure tungsten (sometimes known as wolfram) is a shiny white metal and, in combination with small amounts of carbon and oxygen, is extremely hard and brittle.
Tungsten is the heaviest engineering material (with a density of 19.25 g/cm3) and has the highest melting point of all metals, at 3,410 degrees centigrade. It has excellent high temperature strength and is very corrosion resistant, characteristics which make it an ideal material for use in cutting tools when combined chemically with carbon in a matrix with other metals (commonly cobalt) as a cemented carbide.
Sixty per cent of tungsten production worldwide goes into the manufacture of cemented carbides for use in wear-resistant parts and cutting tools in the mining, oil and gas and manufacturing industries.
Tungsten occurs in the natural state only in the form of chemical compounds with other elements, the two most important commercially being wolframite and scheelite.
TVPI is an acronym for Total Value to Paid In capital. It represents the ratio of the current value of remaining investments within a fund, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund to date.
UC is an acronym for ulcerative colitis – a condition associated with inflammation and ulceration of the inner lining of the rectum and colon – you can read more about it here
UCITS is an abbreviation for Undertakings for Collective Investment in Transferable Securities – these are open-ended funds set up subject to EU legislation. The legislation was designed to allow these funds to be marketed across the EU and to allow fund managers to operate in other EU countries.
UN Sustainable Development Goals : SDG are a collection of 17 global goals set by the United Nations General Assembly. The SDGs cover social and economic development issues including poverty, hunger, health, education, global warming, gender equality, water, sanitation, energy, urbanisation, environment and social justice.
They are:
Goal 1: No Poverty
Goal 2: Zero Hunger
Goal 3: Good Health and Well-Being for People
Goal 4: Quality Education
Goal 5: Gender Equality
Goal 6: Clean Water and Sanitation
Goal 7: Affordable and Clean Energy
Goal 8: Decent Work and Economic Growth
Goal 9: Industry, Innovation, and Infrastructure
Goal 10: Reducing Inequalities
Goal 11: Sustainable Cities and Communities
Goal 12: Responsible Consumption and Production
Goal 13: Climate Action
Goal 14: Life Below Water
Goal 15: Life on Land
Goal 16: Peace, Justice and Strong Institutions
Goal 17: Partnerships for the Goals
The UN General Assembly adopted the 2030 Development Agenda, entitled “Transforming our world: the 2030 Agenda for Sustainable Development” on 25 September 2015.
Goal 17 encompasses the promotion of international cooperation and the use of public-private partnerships.
The 17 goals incorporate 169 specific targets. This has been criticised in some quarters as over-complex.
SDG driven investment is expected to help push the agenda forward. For example, many large institutional investors have been seeking to promote the SDG goals through engagement with the companies in which they invest. Hence the growth of SRI (socially responsible investing) and ESG (environmental, social and governance) metrics when assessing potential investments.
Under rented is a term used in the property market to describe when the passing rent is less than the estimated rental value
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
The estimated worth of the company based on its long-term fundamentals, rather than short-term market sentiment.
underperform or outperform – relative terms regarding performance, usually compared to an index, benchmark or peer group. See also comparitor and reference benchmark
A fund underperforms its benchmark index or outperforms it.
see also beta
underweight – when a portfolio holds more of an asset than in the index
Underweight is used as a relative term, generally to something neutral, generally an index and often refers to a benchmark.
The opposite is overweight
See also neutral weight
Stock A is 10% of an index. A portfolio holds 8% of Stock A. The portfolio is underweight Stock A by 2%
Germany is 10% of the European Index. Investment manager is concerned about Germany. Portfolio holds 8% and is 2% underweight
If stock A’s share price rises, the portfolio performs badly relative to the index because it holds 2% less than the index
If German markets fall, the portfolio performs well relative to the index because it holds 2% less than the index
A unit trust is a form of collective investment governed by a trust deed. They are open-ended funds.
TIPS is an acronym for Treasury Inflation Protected Securities – the US equivalent of the UK’s index-linked gilts.
The principal value and interest payments of these securities are adjusted to reflect changes in the US consumer price index.
uveitis – an inflammation of the uvea – the middle layer of the eye
Vacancy rate is the estimated rental value of vacant space divided by estimated rental value of the whole portfolio, excluding developments
A valuation is the estimation of the worth of a company or an asset.
Value investing – investing in companies where their shares are on cheaper valuations than the market values them at. Investor can make money when the markets “appreciates” the actual value of an undervalued company and the share price rises to the NAV or a premium.
Value stocks can have higher dividend yields than growth stocks.
The investor must decide that the value company is of a higher quality than other investors believe. There needs to be a catalyst for that opinion to change. The eventual re-rating is what allows the value to make money, as the share price rises accordingly
A value stock is a company whose shares tends to trade at a lower price relative to its fundamentals, such as dividends, earnings and sales.
See also Growth investing
Value investing
An investment which appears attractively priced but can often be misleading due to structural issues or other causes
VaR or Value at Risk is a measure of market risk, most often used in the hedge fund world. It tries to put a value on potential losses within a portfolio based on a “normal” level of market movements, say those that will occur 95% of the time, though the definition of normal can change according to who is calculating the VAR – 99% is also often used. Since you are looking at the probability of something happening, it’s also important to think about the time period – so you might have more confidence that something is unlikely to happen tomorrow than saying something might happen at some point over the next year.
The VaR can be calculated based on historical market movements on an investment, on a delta normal basis (which uses the standard deviation of returns) or using a Monte Carlo simulation (plugging many possible outcomes into a model).
The VaR idea is essentially a backward looking measure. It is also trying to estimate what is happening 95% or 99% of the time which is great until you hit the other 5%/1% – it has been described as “an airbag that works all the time, except when you have a car accident.”
An abbreviation for venture capital trust
A fissure, fault or crack in a rock filled by minerals that have travelled upwards from some deep source.
Venture capital is used to fund new companies or new ideas and is designed to help a company develop a product or a service. Good examples would be funding for a biotech company developing a new drug or for a software company. The failure rate for venture capital projects can be quite high but the rewards can be high too
A quoted closed-end fund set up specifically to provide private equity capital to small companies. Investors in venture capital trusts can typically get tax relief for investing in these funds, the dividends are not subject to income tax and any capital gain is exempt from capital gains tax. The rules on how large these tax reliefs are tend to change from year to year – it is advisable to check before investing. www.bvca.co.uk
vitiligo is a condition that affects skin pigmentation, you can read more here
The void rate is the percentage of a property or portfolio that is vacant or unoccupied. High void rates could indicate poor demand or letting performance but could also reflect the completion of a new development or the loss of a big tenant. A low void rate could point to strong rental demand for the property or across the portfolio as well as a strong asset management team.
Volatility in the investment world is a descriptive term for how far the value of something moves up and down over a period of time.
Volatility Arbitrage funds try to make money by exploiting changes in the volatility (how far the value of something moves up and down over a period of time) of an asset. One way of doing this is to construct a delta neutral portfolio by selling / buying an underlying security and buying / selling an option on that security. The portfolio won’t change in value when the price of the underlying security changes (this is the delta neutral bit) but it will change in value if the option price changes in response to a change in the volatility of the price of the underlying security.
WALE is an abbreviation of Weighted Average Lease Expiry. It is used by property companies as an indicator of the average remaining life of the leases within their portfolios, taking into account the size. This can be the size of either expected income or space. Therefore large tenants can shift the balance of things, especially if they have a longer lease lengths. Most listed companies use WALE in reference to space/rentable area, however this is certainly not always the case, as we see clients reporting WALE in reference to income.
A similar term is WAULT, Weighted Average Unexpired Lease Term in portfolios. More can be learnt here.
Subscribe for free equity research, news and unique data on Investment Trusts, REITS, Active ETFs, LTAFs and property companies.
Warehousing – This is a catch-all name for a specific financing activity. Warehousing is where an asset manager takes a number of different assets, usually loans, and gathers them together before either packaging them up up into a vehicle such as a CLO or CDO and passing them on or creating a portfolio from them.
An instrument that gives the holder a right but not the obligation to buy ordinary shares at a pre-determined price (the strike price or exercise price) on a given date or within a range of dates.
This should not be confused with an Option, which applies to any security and not specifically to equities
A waterfall arrangement or waterfall payment scheme describes the order in which creditors get paid. Two common uses of the term are within the debt and private equity sectors.
In a debt context, it is commonly used to describe the seniority of debt liabilities. In the first instance, money flows to repay the most senior debt up to a predefined limit. Any left over is then paid against the next most senior debt, up to a predefined limit, and so on down the chain. This occurs until all the money has been used.
A waterfall arrangement might be put in place when a borrower runs into trouble. For example, the lender might impose an arrangement whereby all of the borrower’s income may be used to pay interest and maybe a portion of the principal up to a limit and only the income left over is available to the borrower.
The term is also used by private equity investors to specify when the general partner gets paid and how much it earns. For example, LP investors might be entitled to receive a return of the amount that they invested plus a preferred return before the GP can earn any carry.
With any waterfall arrangement, as the money flows down the waterfall, more and more of it is diverted.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
WAULT is an abbreviation of weighted average unexpired lease term. It is used by property companies as an indicator of the average remaining life of the leases within their portfolios.
There are two commonly used forms: WAULT to expiry and WAULT to break.
Both are calculated by adding up all the contracted rental income on the portfolio between now and the time the leases expire, or the time until the leases have their first break, and dividing it by the contracted annual rent. The result is usually expressed as a number of years.
Simplistically, a low WAULT might be good news in an environment where rents are rising fast and the property is in a strong negotiating position. A higher WAULT is good news in weak property markets where rents are falling and/or tenants are looking to move.
We have also seen a similar term used – WALE or weighted average lease expiry – where the calculation can also be the weighted by the amount of space rented or the amount of rent due.
Subscribe for free equity research, news and unique data on Investment Trusts, REITS, Active ETFs and property companies.
The weighted average cost of capital, or WACC, is the average rate that a company is expected to pay to all its security holders to finance its assets.
Wet AMD – the ‘AMD’ in ‘Wet AMD’ stands for age-related macular degeneration. The macula is the central part of the retina in the eye. Wet AMD occurs when blood vessels grow into the macula. Dry AMD relatyes to a slow deterioration of the cells in the macula.
More information is available here
WGBI stands for the World Government Bond Index, compiled by Citigroup.
Citigroup Index LLC designed, calculated and publish the indices, which may be licensed for use as underlying indices for OTC or exchange-traded structured products, including ETFs, swaps, warrants and certificates.
The WGBI measures the performance of fixed-rate, local currency, investment grade sovereign (i.e. government) bonds. The WGBI is a widely used benchmark that currently comprises sovereign debt from over 20 countries, denominated in a variety of currencies, and has more than 25 years of history available. The WGBI provides a broad benchmark for the global sovereign fixed income market. Sub-indices are available in any combination of currency, maturity, or rating.
One sub-index is the EGBI – the EMU Global Bond Index consists of EMU-participating countries that meet the WGBI criteria for market inclusion: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Netherlands, and Spain.
The WGBI includes the EMU countries plus the US, Japan, UK, Australia, Canada, Denmark, Malaysia, Mexico, Norway, Poland, Singapore, South Africa, Sweden, and Switzerland
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
The term ‘whale’ is a nickname given to investors who have the potential to manipulate the market. A whale can be an individual or company with enough money or power to influence the price of a stock. These individuals usually make huge investments, with their actions causing a huge ‘splash’.
Bringing the company’s life to an end by distributing all the net assets to those entitled to receive it. Also known as Liquidation.
A winze is an internal shaft that is sunk downwards, connecting two levels in an underground mine.
See Tungsten
(Fe,Mn)WO4: Iron manganese tungstate mineral commonly found in veins associated with granitic intrusions
Working Capital is a term used to describe the assets (including cash) available to a company to fund its short-term funding requirements. An accountant would define it as current assets minus current liabilities.
As well as cash, it includes stock (inventory) and products that they have started to make but aren’t yet available for sale (work in progress), amounts owed to the company payable in less than a year and amounts the company is due to pay within a year.
A wrapper is a term for a financial product – like an ISA
Wrappers may contain many types of investment, such as Investment Trusts and open-ended investment company (OEIC) funds.
Wrapper is also the generic name for financial products such as Personal or Self Invested Personal Pensions.
X-linked myotubular myopathy (XLMTM) is a rare genetic neuromuscular disorder that is characterized by muscle weakness that is most typically severe but can range from mild to profound. Common symptoms include mild to profound muscle weakness, diminished muscle tone (hypotonia or “floppiness”), feeding difficulties, and potentially severe breathing complications (respiratory distress).
read more about it here
xd stands for ex-dividend
The XD date is the day when a share price is marked as ex-dividend. The day before the XD date the holder of the shares is entitled to receive the dividend. If you buy the shares on the XD date, you are not entitled to receive the dividend and, if it does get paid to you by mistake, you have to give it back. Fortunately this does not happen much as companies pay dividends to whoever is on the register on the record date
The year end is the last day of a company’s financial year
For shares, yield is the relationship between the dividend and the share price or asset value, calculated by dividing the dividend by the share price or asset value and expressed as a percentage. Unless specified, “yield” probably refers to the yield on the share price.
Managers may also talk about portfolio yield – the yield on their portfolio before expenses
The yield curve plots the interest rates of bonds, that have equal credit quality, at a set point in time, against differing maturity dates. This curve is used to predict changes in economic output and growth.
There are three main types of yield curve: normal, inverted and flat (or humped).
A normal curve is one in which longer maturity bonds have a higher yield compared with shorter-term bonds due to the risks associated with time. It is upward sloping.
An inverted curve is one in which the shorter-term yields are higher than the longer-term yields. This is downward sloping and can be a sign of upcoming recession.
A flat yield curve (sometimes referred to as a humped curve) is where the shorter and longer-term yields are very close. This is often seen during transitions between normal and inverted curves and so may also be considered to be a sign of moving between certain phases of the economic cycle.
Yield to worst describes the worst possible annual return an investor might get on a bond assuming it is held as long as possible and it does not default. Normally that would be the definition of yield to maturity but some bonds come with the potential to be called (repaid early) at the option of the borrower. Yield to worst might assume that the borrower calls the bonds at the earliest opportunity though in many circumstances the yield to worst and yield to maturity will be the same.
Yield to worst (may be abbreviated to YTW) – is the lowest possible yield that can be earned on a bond that might be repaid early
Yieldcos are companies that own tangible assets producing predictable cash flows – such as pipelines, toll roads, and renewable generation assets – that pass on the bulk of their income to investors as dividends
Z score is an indicator of how far away a number is away from the mean (average) of a group of numbers. It is calculated as (the difference between the number and the mean of the group of numbers) divided by (the standard deviation of the group of numbers)
ZDP is an abbreviation for zero dividend preference share
The ZDP cover ratio / Zero Dividend Preference share cover ratio is an indicator of the likelihood of a split capital company being able to repay its zero dividend preference shares (ZDPs) when they fall due. The method of calculation varies from firm to firm but, for the purposes of producing our monthly sheet on zeros we have adopted the following method.
1) take the gross assets of the company (based on the latest available net asset value including accrued income) and adding back bank debt
2) deduct bank debt (unless it specifically ranks below the zeros – but this is unlikely)
3) deduct the final capital entitlement of any prior ranking zero dividend preference share issues
4) divide the resultant number by the final capital entitlement of the ZDP issue for which you want to calculate the ZDP cover ratio
Some other measures of ZDP cover try to adjust the calculation for management fees, interest on debt and estimated wind up costs. We think this gives a spurious accuracy (since it is hard to forecast some of these expenses) to what is really only just a rough guide to whether the zero will easily be repaid out of available assets when it falls due.
Click here to subscribe for free equity research on investment trusts, funds and listed companies.
Zero discount mechanism / Zero discount policy are terms used to describe a situation where an investment company commits (sometimes only in normal market conditions) to maintaining its discount close to zero by issuing shares to meet demand or buying back shares to absorb excess supply. They blur the boundary between a closed-ended fund (like an investment company) and an open-ended fund (like an OEIC or a unit trust). If they are to work efficiently, the manager must be able to raise and deploy cash in the portfolio without affecting the performance of the fund. this means they are best suited to funds that hold relatively liquid investments.
Zero dividend preference shares (ZDP) are Shares that will be redeemed at a fixed price at some defined point in the future (provided that sufficient assets are available). Their entitlement to the assets of the company rises in a straight line between their entitlement on issue and their redemption value. They are not entitled to receive dividends. They will usually get paid out before the ordinary shares on a winding up.
Here are our monthly valuation sheets for ZDP and subscription shares – click here
