Glossary

Henderson Diversified Income | Investment Trusts |
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Balanced Fund
An actively managed fund investing in all available asset classes in order to create a 'balanced' portfolio of assets. This type of reduced risk fund aims to benefit from the good performance of some assets when others are not performing well.
Basis Points ('bps')
One basis point is 1/100th of 1.00%, or 0.01%. 100 bps= 1%.
Benchmark
A measure against which the performance of an investment trust is compared or against which performance objective are set. For example, a UK invested investment trust might have the FTSE All-Share as a benchmark and a stated objective to outperform the index over a certain period.
Bid price
The price at which you deal when you sell shares.
Bid/Offer spread
The dealing spread ('spread' or 'bid-offer' spread) is the difference between the price at which you can buy (offer) and the price at which you can sell (bid).
Book Close
This allows the registrars to look at the list of investors whose names appear on the register, and at books close date those investors will receive the benefit from the company. (Sometimes referred to as a Record Date)
Borrowing Powers (also see Gearing)
The total amount that a company and its subsidiaries may borrow at any one time.
Bottom-up investment
This approach is primarily driven by the manager's view at an individual company level. The manager will be aware of the macro dynamics, but will choose stocks for his portfolio based on his knowledge of the company, its business, management, competition and a whole host of other characteristics that the manager believes will enable this company to perform. As an example, this manager may well buy a bank share if he understands it's dynamics and will not look to form a macro view on the banking sector.
Blue chip
Large well-established companies considered to be stable investments. In the UK, such companies are usually listed on the FTSE 100 index.
Bonds
Also known as fixed interest securities, a bond is a certificate issued by a company or government that promises to repay borrowed money at a fixed rate of interest and for a fixed period of time. Not to be confused with investment bonds issued for individual investors, usually by insurance companies.
Breakeven rate
The difference between the yield on a conventional bond and an inflation-linked bond, which provides an indication of investors' inflation expectations.
Break-up Basis
The most conservative formula for calculating Net Asset Value (NAV), by deducting prior charges at their redemption value. In effect, the break-up value of the trust is the amount that would be received if all its assets were disposed of.
Buy-back
An increasingly popular way for investment trusts to return cash to their shareholders is through offering to buy back a proportion of shares currently held. Trusts need to seek the permission of shareholders to do this and will typically put a motion to their AGMs allowing them to buy back a proportion of their total shares (up to 15%). This process is also used to reduce the discount to NAV, by reducing the number of shares in issue.