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Private investors

Glossary of terms

From A to Z, understand investment jargon with our glossary of terms

‘Absolute return strategy’

Rather than simply aiming to outperform a benchmark index, an absolute return investment strategy will aim to deliver positive returns whatever the market conditions.

‘Accumulation date’

The date when income from investments in a fund is reinvested back into the fund, therefore increasing the value of the accumulation units or shares.

‘Accumulation units or shares’

Funds may issue two types of units or shares to investors in a fund. Accumulation units or shares are those where the income to the fund is not distributed to investors but is automatically retained and reinvested. This results in the fund increasing the value of each accumulation unit or share, but leaving the number of units/shares held unchanged. Conversely, distribution units/shares (sometimes called 'income' units/shares) are those where income will be paid to investors on set dates relating to the financial year of the fund.

‘Active management’

Active management is a style of investment management where the fund manager aims to achieve superior returns than the benchmark and sector, by actively selecting the stocks he or she believes will be winners from the relevant benchmark. See also 'passive management'.

‘Administrator’

Artemis uses a third party administrator to carry out a number of fund administration functions, such as dealing and client registration.

‘Alpha’

Alpha is a measure of investment performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's 'alpha'. Simply stated, alpha is generally considered to represent the value that a fund manager adds to or subtracts from a fund's return. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. 'Positive alpha' therefore indicates that the manager has added valued in relation to risk taken relative to the market.

‘Alternative Investment Market (AIM)’

The Alternative Investment Market is a separate market within the London Stock Exchange set up for the purpose of trading shares in small, young and growing companies. Investors have the benefit of being able to trade in these companies on a market regulated by the Exchange. The companies have the benefit of access to investment capital without the cost and regulatory burden of a full listing on the main market. The nature of these companies means that their share prices are likely to be more volatile.

‘Annual management charge’

This is the fee paid to a fund manager for managing a fund. The fee is calculated daily, based on the value of the fund’s net assets and is reflected in the daily value of the fund’s assets. Different charges are applied for ‘class R’ and ‘class I’ units/shares in Artemis funds. Also see ‘class R / class I’.

‘Annual report and accounts’

Every fund manager is required by the Financial Conduct Authority (FCA) to prepare a report together with financial accounts for each investment fund on a yearly and half-yearly basis, which are then made available to investors.

‘Annualised return’

An annualised rate of return shows the average rate of return over a number of years on a per-year basis. For example if a fund has produced a return of 75% over five years, this means that, on average, the fund would have produced an annualised return of 11.8% each year.

‘Asset allocation’

The asset allocation of a fund describes the allocation of the portfolio's assets according to geographical region, sector or type of security.

‘Asset class’

Asset class refers to the type of asset in which a fund invests - for example, shares, bonds, cash, property, currencies, commodities - where a market exists for the purpose of trading these assets amongst investors.

‘Assets’

The underlying investments of a fund, which may comprise, for example, shares, bonds, cash, currencies, commodities, etc, depending on the type of portfolio in which a fund typically invests. For example, an 'equity fund' will invest in shares; a 'bond fund' will invest in bonds; a 'multi asset' fund will invest in a number of different asset types.

‘Attribution analysis’

Attribution analysis is a performance-evaluation tool used to analyse the abilities of fund and portfolio managers. It uncovers the impact of a manager's investment decisions with regard to overall investment policy, asset allocation, security selection and activity. Fund and portfolio management cost money, and so attribution analysis helps determine whether that money is being well spent.

‘Authorisation’

Any firm wishing to conduct investment business in the UK requires to be authorised under the provisions of the Financial Services and Markets Act 2000. This authorisation is granted by the Financial Conduct Authority, being one of the regulatory bodies for the financial services industry.

‘Authorised fund’

An authorised fund (formally, a collective investment scheme) is one that has been authorised by the Financial Conduct Authority (FCA) for marketing to the public in the UK.


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