Funds Glossary

Funds Market Glossary

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Accumulation Units	-	Units in a unit trust which do not pay income to the investor but which instead redistribute dividend income from the underlying investments back into the capital value of the units.
Actively Managed Funds	-	Funds where the Manager uses his professional judgement to decide which funds to buy and sell, whilst seeking to out-perform the relevant benchmark.
Annual Management Charge	-	A charge levied by the Fund Manager to cover the cost of investment management and administration, usually for unit trusts and OEICs (Open Ended Investment Companies)

Collective Investment	-	Units in a unit trust which do not pay income to the investor but which instead redistribute dividend income from the underlying investments back into the capital value of the units.
Continuing Commission	-	When a broker invests in a fund for you, they may receive remuneration from the Fund Manager based on your initial investment. They may also also receive further remuneration each year thereafter for as long as you continue to hold the fund investment with them. This remuneration payment is known as continuing commission. It may also be referred to as trail commission. The continuing commission will usually be a percentage of the Annual Management Charge applied by the fund manager to the fund in question.

Distributions	-	Income generated by a unit trust or OEIC (Open Ended Investment Company), which can be either paid out to the investor or reinvested within the fund. Frequency of distribution may vary from fund to fund.
Dual Pricing	-	Two prices quoted by a unit trust manager - the lower at which investors can sell and the higher price at which they can buy.

Equity Fund	-	A fund investing primarily in equities.
Ex-distribution	-	The period, which can be no more than two months, immediately before the distribution of income from a fund (excludes cash funds). If you buy a fund during this period, you are not entitled to the next income payment. However, if you sell during this period then you remain entitled to the next income distribution.
Exit Charge	-	Some Fund Managers levy charges on certain funds, should you decide to sell your investment within a specified period eg five years. This type of charge, which is becoming increasingly rare, may replace - or be in addition to - an initial charge.

Financial Express Crowns	-	These quantitative performance measures, are based on pure data and mathematics, and measure the extent and consistency of a fund's out-performance relative to its sector. S&P first calculates the fund and sector index performance over each of the preceding 36 months. By dividing each monthly fund performance by its sector index performance a relative monthly return is reached for each of these months. The higher the average of these 36 months relative returns, the better the fund has done relative to its peers; the more volatile the relative monthly returns are, the less consistent the fund performance is relative to its peers.
Financial Express Ratings	-	Fund management ratings, which are based on both quantitative performance based reviewing and screening and the more qualitative aspect of the fund which looking at the fund manager's track record, his qualifications, the management team etc.
Fund Manager	-	Individual or company that invests money on behalf of clients.
Fund Objective	-	A fund manager's stated goal for your investment.
Funds	-	A generic term used to describe pooled money of individual investors that has been committed to a stock or bond market under the management of an investment professional. They offer the advantage of spreading risk as they invest in a large number of securities at any one time, eg unit trusts and OEICs (Open Ended Investment Companies)
Forward Pricing	-	The pricing of a unit trust after the sale and purchase orders of the day have been received and the funds have been revalued.

Growth and Income Fund

A fund that seeks earnings growth as well as income. These funds invest mainly in the ordinary shares of companies with history of capital gains but that also have a record of consistent dividend payments.

Income Units	-	Units in a unit trust which entitle the investor to regular payments of income.
Index Funds	-	Funds which seek to mirror the returns of a market index (eg FTSE 100 Index), by investing directly in the securities, which make up that index.
Investment Fund	-	A fund of funds, owned by one of more investors, that is managed as one entity by one or more managers. The legal structure of the fund can take many forms and can include unit trusts, investment trusts and OEICs (Open Ended Investment Companies).

Money Market Fund

A highly liquid mutual fund that invests in short-term securities and seeks to maintain a stable net asset value of £1 per share.

No-load fund

An open-ended investment that imposes no front end charge on investors.

OEIC

Open Ended Investment Company. A collective investment fund similar to a unit trust. The major differences are that OEICs quote a single price rather than a bid and offer price and they are governed by company law rather than trust law. Most new funds launched today are established under the OEIC structure and it is widely predicted that, over time, most unit trusts will convert to OEICs.

Quartile Ranking

Categorise funds within a sector into four equal bands based on their performance over a specified period. Top first quartile contains the top 25% of funds, through to the bottom or 4th quartile which contains the bottom 25% of funds.

Reinvestment unit trusts

These are a sub section of income unit trusts whereby the dividend is utilised by the Fund Managers who purchase additional units, this payment carries an associated tax credit.

Sector	-	investment funds are grouped into a variety of sectors reflecting their investment strategy and objectives. eg Global Growth, UK Equity Income and Specialist. Dividing funds into sectors makes it easier to make comparisons between similar funds.
Sector Average	-	Shows the average of all funds within the same sector.
Sector Ranking	-	Shows the position of a fund relative to equivalent funds in the same sector.

Tracker Funds	-	Unit trusts which track the performance of a specific share index. Usually they invest in companies in the same proportion that they make up the index.
Trial Commission	-	When a broker invests in a fund for you, they may receive remuneration from the Fund Manager based on your initial investment. They may also also receive further remuneration each year thereafter for as long as you continue to hold the fund investment with them. This remuneration payment is known as trail commission. It may also be referred to as continuing commission. The trail commission will usually be a percentage of the Annual Management Charge applied by the fund manager to the fund in question.

Unit Trusts

Open ended investment funds where your money is invested with thousands of others so that you can invest in a greater variety of stock. Each investor owns a unit (or a number of them) the value of which is dependent on the value of the assets owned by the trust.

Valuation Point

The time at which the Fund Manager calculates the price of units (unit trusts)/shares (OEICs)