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Glossary of terms

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


Gearing is the measure of a company's level of long-term debt (or borrowing) compared to its equity capital, often expressed as a percentage. It is a measure of a company’s financial leverage and indicates the extent to which its operations are funded by lenders versus shareholders. The appropriate level of gearing for a company depends on its sector, as well as the degree of leverage employed by its peers.


Gilt edged securities ('gilts') are bonds issued by the UK government. They have the same properties as other bonds, in that they pay a set rate of interest at regular intervals for a set period of time and will be bought back at their issue price on a set date. Some gilts are 'perpetual', having no set end date.

'Government bond'

A government bond is a bond issued by government to support national spending. It is generally considered to have a low risk of default (though this can vary depending on the risks associated with the particular country, such as its political situation, inflation and interest rates). and therefore pay a lower yield. See also 'investment grade bond' and 'high-yield bond'.

'Gross exposure'

Gross exposure is the total of the 'long' and 'short' positions held by a fund. For example, a fund manager who has a 90% long exposure and 50% short exposure would have a gross exposure of 140%. Also see ‘long position or exposure’ and ‘short position or exposure’.

'Gross redemption yield'

The gross redemption yield is the total return for a share or a bond including the expected income and the capital return. It may also include capital growth over its life.

'Gross return'

The gross return is the rate of return on an investment before the deduction of any fees, commissions and expenses. It is quoted over a specific period of time, such as a month, quarter, year or longer. The 'net return' (NR) is the rate of return after fees and costs are paid and is the return that an investor will receive on their investment.

'Growth At a Reasonable Price (GARP)'

GARP investors are growth investors who do not believe in paying an excessive price for growth, so will look for companies where potential growth may not yet be factored into the price of their shares.

'Growth fund'

A growth fund is a fund whose main objective is to increase the value of its investments over time (capital appreciation). Conversely, an income fund's main aim is to provide income to investors in the form of dividend or interest payments.

'Growth philosophy'

Growth investors aim to invest in companies where they believe the earnings per share growth will be in excess of what the market expects.

'Growth stock'

A growth stock refers to a company that is expected to produce increasing profits and exceed the average returns of the relevant stockmarket over time.