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Private investors

Glossary of terms

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

‘Hedge fund’

A hedge fund is an aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark). Investing in hedge funds is only suitable for sophisticated experienced investors. Also see ‘absolute return strategy’.

‘High yield bond’

A high yield bond is a bond which has a lower credit rating than 'investment grade' bonds. They have a higher risk of default and therefore pay a higher yield. Also see 'investment grade bond' and 'credit rating'.

‘Historic pricing’

Historic pricing is where managers will buy and sell shares on the basis of prices calculated at the last valuation point - investors therefore know the price they will receive when they deal. It is the opposite of forward pricing (also see 'forward pricing').

‘Historic yield’

Historic yield is the calculation of the income return on an investment relative to its price. It is the amount of income paid by an investment, which is divided by the current price of that investment and expressed as a percentage of that price. Some funds offer the choice of withdrawing this amount (a distribution yield). The calculation of yields enables comparisons to be made of the level of income provided by different investments such as shares, bonds, cash or property, or between funds at any one point in time.


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