Glossary of terms

Sector is the term given to a group of companies engaged in a similar type of industry/business or a group of funds investing in similar stocks. Also see 'IA sector'. Further information can be found on the Investment Association's website www.theinvestmentassociation.org under the section 'Fund sectors'.

The proportions of a fund, relative to its total net assets, held in industry sectors. For example, a fund with 15% of its net assets invested in companies in the technology sector will have a 15% weighting to the technology sector.

Investment securities are financial assets such as equities (shares) or fixed income (bond) instruments that are purchased with the intention of holding them for investment. They are tradable in that they can be bought and sold on investment markets.

SEDOL stands for Stock Exchange Daily Official List, a list of codes used in the UK and Ireland to uniquely identify each security, including unit trusts, OEICs, investment trusts and other types of funds. The codes are assigned by the London Stock Exchange, on request by the security issuer. SEDOLs serve as the national securities identifying number for all securities issued in the United Kingdom and are therefore part of the security's 'ISIN' as well. The SEDOL Masterfile (SMF) provides reference data on millions of global multi-asset securities, each uniquely identified at the market level using a universal SEDOL code.

In investment terms, a share refers to an equal portion representing part-ownership of a company or fund. In relation to a fund, investors purchase shares which represent their interest in the underlying assets of the fund. The changing price of the shares reflects the rise and fall in value of the underlying assets of the fund.

Share buybacks, also known as share repurchases, refer to the reacquisition by a company of its own shares. Instead of paying dividends, it is an alternative way for a company to return money to shareholders. In most countries, a company is able to repurchase its shares by paying cash to existing shareholders in exchange for a reduction in the number of shares outstanding.

Share class is a designation applied to a share in a fund. Different share classes within the same fund will confer different rights on their owners. Also see 'class R / class I'.

A share price is the price of a particular company's shares at a particular time.

In investment funds terms, a share in an OEIC fund represents a proportion of the property of the fund. A share can be either an 'accumulation' share, where income is not distributed to investors but instead retained within a fund (so increasing the value of each share but leaving the number of shares held unchanged) or a 'distribution share', where income will be paid to investors on set dates relating to the financial year of the OEIC fund.

Shares in issue refers to the number of shares of a company or OEIC fund that have been allotted to shareholders.

A short position is when an investor borrows a share or other financial instrument (for a fee) and then sells it. The investor does this in the expectation that the price will fall and the share or position can be bought back at a lower price later, thus making a profit. The investor then returns the borrowed shares. Conversely, a 'long position' is the purchase of a similar asset in the belief that its price will rise, with the aim of making a gain from the increase.

SICAV is short for Société d'investissement à Capital Variable and is a form of investment fund structure offered in Europe, regulated under European law. Similar to open-ended mutual funds, SICAVs do not have a fixed number of shares traded in the public market.

Market capitalisation (sometimes referred to as 'market cap') is the total value of a company, calculated by multiplying the number of shares in issue by the current price of the shares. Companies are often referred to as being 'mega-cap', 'large-cap', 'mid-cap' and 'small-cap', reflecting their relative total value – mega-cap and large-cap being the largest companies and small-cap being the smallest (though it's important to remember that small-cap can still mean companies with values in the hundreds of millions or even low billions). Different markets attach different values when seeking to define the differences between these categorisations.

In investment terms, a spread is used to describe the difference between the buying and selling price of an investment (the bid-offer spread). This can vary depending on the demand for the investment and the volumes in which it is normally traded. Dual-priced unit trust funds have a set spread between the buying and selling prices. This no longer applies to Artemis funds as they operate a 'single-priced' model where units/shares are sold and bought at the 'mid price' so there is no bid/offer spread involved.

Some funds are riskier than others (ie- have a greater or lesser chance of losing value). The Synthetic Risk and Reward Indicator (SRRI) is a risk rating indicator intended for investors and potential investors. It displays the historic volatility of a fund’s performance and categorises it accordingly. The SRRI's range of values is from 1 (lower risk) to 7 (higher risk). All collective investment schemes (funds such as OEICs and unit trusts) are required to calculate and disclose the SRRI for the scheme. It is important to understand that the risk rating of a fund is not static as it will be calculated on an ongoing basis using the most recent data about a fund.

Stamp duty is a tax of (currently) 0.5% levied on purchases of shares listed on the London Stock Exchange. With effect from 28 April 2014, stamp duty is no longer chargeable on purchases of AIM and ISDX-listed securities.

SDRT was a tax that was previously chargeable on the value of surrenders and issues of fund units and shares. Although the UK government abolished this tax with effect from 30 March 2014, there are some instances in which SDRT continues to be levied. If an investor redeems fund units ‘in specie’ and receives a non-pro rata share of the fund’s underlying assets, SDRT will arise to the extent that those underlying assets include chargeable securities. SDRT might also continue to arise on sales of units or shares by one investor to another, where the holding remains registered in the same name.

Standard & Poor's is an American financial services company that publishes financial research and analysis on stocks, bonds and funds.

A stock is a type of security that signifies proportionate ownership of a company. Ownership of a stock entitles the owner (the 'stockholder') to that proportion of the company's assets and earnings. Stocks are also known as shares or equities. Stocks are bought and sold primarily on stock exchanges (also known as stock markets), though private sales can take place as well. Most private investors will buy and sell stocks via stock brokers, many of them online.

Stock selection is the process by which a fund manager selects stocks (shares) for inclusion in a fund's portfolio

Stock transfer is the process of transferring the beneficial ownership of shares/units from one party to another.

A subscription share issued by a company carries the right to be exchanged for ordinary shares at a pre-determined price within a specified period. Holders may have the right to a dividend before the shares are exchanged. Also see 'ordinary share'.

Sustainability is the term used to encompass meeting the needs of the present without compromising the ability of future generations to meet their needs. The concept of sustainability is composed of three pillars: economic, environmental and social. Sustainability encourages businesses to take account of environmental, social and human considerations over the longer term, rather than focusing solely on short-term objectives such as immediate profit. (Also see 'Environmental, social and governance (ESG)').

Switching is the process of moving an investment from one fund to another within the same provider's range of products.