GLOSSARY

We try to make our marketing materials clear, but some financial jargon is inevitable. This glossary explains some of the most common financial terms. Words in italics within the definitions indicate they are explained elsewhere in the glossary.

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z


A

Absolute return

The total return of a portfolio, as opposed to its relative return against a benchmark. It is measured as a gain or loss, and stated as a percentage of a portfolio's total value.

Active investing

An investment approach where a fund manager actively takes decisions about which and what proportion of investments to hold, often with a goal of outperforming a specific index. It relies on a fund manager’s investment skill. The opposite of passive investing.

Active share

This measures how much a portfolio's holdings differ from its benchmark holdings. For example, a portfolio with an active share of 60% indicates that 60% of its holdings differ from its benchmark, while the remaining 40% mirror the benchmark.

Alpha

Alpha is the difference between a portfolio's return and its benchmark’s return after adjusting for the level of risk taken. A positive alpha suggests that a portfolio has delivered a superior return given the risk taken.

Alternative investment

An investment that is not included among the traditional asset classes of equities, bonds or cash. Alternative investments include property, hedge funds, commodities, private equity and infrastructure.

Asset allocation

The allocation of a portfolio according to an asset class, sector, geographical region, or type of security.

Asset-backed securities (ABS)

A financial security which is ‘backed’ with assets such as loans, credit card debts or leases. They give investors the opportunity to invest in a wide variety of income-generating assets.


B

Balance sheet

A financial statement that summarises a company's assets, liabilities and shareholders' equity at a particular point in time. Each segment gives investors an idea as to what the company owns and owes, as well as the amount invested by shareholders. It is called a balance sheet because of the accounting equation: assets = liabilities + shareholders’ equity.

Bear market

A financial market in which the prices of securities are falling. A generally accepted definition is a fall of 20% or more in an index over at least a two-month period. The opposite of a bull market.

Benchmark

A standard against which a portfolio's performance can be measured. For example, the performance of a UK equity fund may be benchmarked against a market index such as the FTSE 100, which represents the 100 largest companies listed on the London Stock Exchange. A benchmark is often called an index.

Beta

This measures a portfolio’s (or security’s) relationship with the overall market or any chosen benchmark. The benchmark always has a beta of 1. A portfolio with a beta of 1 means that if the market rises 10%, so should the portfolio. A portfolio with a beta of more than 1 will be expected to move more than the market, but in the same direction. A beta of 0 means the portfolio’s returns are not linked at all to the market returns. A negative beta means the investment should move in the opposite direction to the market.

Bond

A debt security issued by a company or a government, used as a way of raising money. The investor buying the bond is effectively lending money to the issuer of the bond. Bonds offer a return to investors in the form of fixed periodic payments, and the eventual return at maturity of the original money invested – the par value. Because of their fixed periodic interest payments, they are also often called fixed income instruments.

Bond proxy

An equity perceived to pay safe and predictable income with low volatility – characteristics that are more commonly associated with bonds. They are typically drawn from the utility, consumer staple and pharmaceutical sectors. They might be added to a portfolio to imitate bonds, hence their name.

Bottom-up

Bottom-up fund managers build portfolios by focusing on the analysis of individual securities, in order to identify the best opportunities in their industry or country/region.

They may also consider economic and asset allocation issues, known as top-down factors, but these are not of primary importance.

Bull market

A financial market in which the prices of securities are rising, especially over a long time. The opposite of a bear market.

Buy and hold

An investment strategy where a long-term view is taken, regardless of short-term fluctuations in the market.


C

Capital

When referring to a portfolio, the capital reflects the net asset value of a fund. More broadly, it can be used to refer to the financial value of an amount invested in a company or an investment portfolio.

Commercial property

Any property used for commercial purposes. Commercial property has three main sectors: retail, office and industrial. It excludes residential property.

Commodity

A physical good such as oil, gold or wheat. The sale and purchase of commodities in financial markets is usually carried out through futures contracts.

Consumer price index (CPI)

A measure that examines the price change of a basket of goods and services over time. It is used to estimate inflation. Headline CPI or headline inflation is a calculation of total inflation in an economy, which includes items such as food and energy, whose prices tend to be more prone to change (volatile). Core CPI or core inflation is a measure of long-run inflation and excludes volatile items such as food and energy.

Contract for difference (CFD)

A form of derivative between two parties. Profit and loss depends on the changing price of an underlying security, with the difference paid in cash. It provides exposure to all the benefits and risks of owning a security, but with neither party needing to actually own it.

Contrarian

An investment style that goes against market consensus or a conventional approach. Contrarian investors believe that crowd behaviour can lead to mispricing opportunities in financial markets.

Corporate bond

A bond issued by a company.

Correlation

How far the price movements of two variables (eg, equity or fund returns) match each other in their direction. If variables have a correlation of +1, then they move in the same direction. If they have a correlation of -1, they move in opposite directions. A figure near zero suggests a weak or non-existent relationship between the two variables.

Coupon

A regular interest payment that is paid on a bond. It is described as a percentage of the face value of an investment. For example, if a bond has a face value of £100 and a 5% annual coupon, the bond will pay £5 a year in interest.

Credit default swap (CDS)

A form of derivative between two parties, designed to transfer the credit risk of a bond. The buyer of the swap makes regular payments to the seller. In return, the seller agrees to pay off the underlying debt if there is a default on the bond. A CDS is considered insurance against non-payment and is also a tradable security. This allows a fund manager to take positions on a particular issuer or index, without owning the underlying security or securities.

Credit market

A marketplace for investment in corporate bonds and associated derivatives.

Credit rating

A score assigned to a borrower, based on their creditworthiness. It may apply to a government or company, or to one of their individual debts or financial obligations. An entity issuing investment-grade bonds would typically have a higher credit rating than one issuing high-yield bonds. The rating is usually given by credit rating agencies, such as Standard & Poor’s or Fitch, which use standardised scores such as ‘AAA’ (a high credit rating) or ‘B-’ (a low credit rating). Moody's, another well known credit rating agency, uses a slightly different format with Aaa (a high credit rating) and B3 (a low credit rating).

Credit risk

The risk that a borrower will default on its contractual obligations to investors, by failing to make the required debt payments.

Credit spread

The difference in the yield of corporate bonds over equivalent government bonds.

Currency hedge

A transaction that aims to protect the value of a position from unwanted moves in foreign exchange rates. This is done by using derivatives.

Cyclical stocks

Companies that sell discretionary consumer items, such as cars, or industries highly sensitive to changes in the economy, such as miners. The prices of equities and bonds issued by cyclical companies tend to be strongly affected by ups and downs in the overall economy, when compared to non-cyclical companies.


D

Default

The failure of a debtor (such as a bond issuer) to pay interest or to return an original amount loaned when due.

Deflation

A decrease in the price of goods and services across the economy, usually indicating that the economy is weakening. The opposite of inflation.

Deleveraging

A company reducing its borrowing/debt as a proportion of its balance sheet. Within an investment fund, it refers to the fund reducing its level of leverage.

Derivative

A financial instrument for which the price is derived from one or more underlying assets, such as shares, bonds, commodities or currencies. It is a contract between two parties. It does not imply any ownership of the underlying asset(s). Instead, it allows investors to take advantage of price movements in the asset(s). The main types of derivatives are futures and options.

Direct property

Within property investing, this refers to investments in physical property assets (ie. buildings), as opposed to listed property shares. Also referred to as ‘bricks and mortar property’.

Discount

When the market price of a security is thought to be less than its underlying value, it is said to be ‘trading at a discount’. Within investment trusts, this is the amount by which the price per share of an investment trust is lower than the value of its underlying net asset value. The opposite of trading at a premium.

Distribution yield

The income received on an investment relative to its price, expressed as a percentage. It enables comparisons of the level of income provided by different investments such as equities, bonds, cash or property, or between funds at a point in time.

Diversification

A way of spreading risk by mixing different types of assets/asset classes in a portfolio. It is based on the assumption that the prices of the different assets will behave differently in a given scenario. Assets with low correlation should provide the most diversification.

Dividend

A payment made by a company to its shareholders. The amount is variable, and is paid as a portion of the company’s profits.

Dividend cover

The ratio of a company’s income to its dividend payment. The measure helps indicate how sustainable a company’s dividend is.

Dividend payout ratio

The percentage of earnings distributed to shareholders in the form of dividends in a year.

Down-market capture ratio

This measures how well a portfolio performs in relation to an index when the index falls. A portfolio with a down-market capture ratio of 90 indicates that in periods when the benchmark was down -10%, the portfolio was down -9% (so it outperformed the benchmark by 1%).

Downside risk

An estimation of how much a security or portfolio may lose if the market moves against it.

Drawdown

The difference between the highest and lowest price of a portfolio or security during a specific period.

Duration

How far a fixed income security or portfolio is sensitive to a change in interest rates, measured in terms of the weighted average of all the security/portfolio’s remaining cash flows (both coupons and principal). It is expressed as a number of years. The larger the figure, the more sensitive it is to a movement in interest rates. ‘Going short duration’ refers to reducing the average duration of a portfolio. Alternatively, ‘going long duration’ refers to extending a portfolio’s average duration.


E

Earnings per share (EPS)

The portion of a company’s profit attributable to each share in the company. It is one of the most popular ways for investors to assess a company’s profitability.

Economic cycle

This reflects the fluctuation of the economy between expansion (growth) and contraction (recession). It is influenced by many factors including household, government and business spending, trade, technology and central bank policy.

Efficient portfolio management

The idea of investing in a range of assets likely to deliver the best risk-adjusted returns and operate efficiently, ie, to reduce its risk or minimise its costs.

Equity

A security representing ownership, typically listed on a stock exchange. ‘Equities’ as an asset class means investments in shares, as opposed to, for instance, bonds. To have ‘equity’ in a company means to hold shares in that company and therefore have part ownership.

Excess return

The difference between a security or portfolio’s return and the relevant benchmark’s return. Also often called ‘relative return’.

Exchange traded fund (ETF)

A security that tracks an index (such as an index of equities, bonds or commodities). ETFs trade like an equity on a stock exchange and experience price changes as the underlying assets move up and down in price. ETFs typically have higher daily liquidity and lower fees than actively managed funds.

Exposure

This refers to the part of a portfolio that is subject to the price movements of a specific security, sector, market or economic variable.

It is typically expressed as a percentage of the total portfolio, eg, the portfolio has 10% exposure to the mining sector.


F

Fiscal policy

Government policy relating to setting tax rates and spending levels. It is separate from monetary policy, which is typically set by a central bank. Fiscal austerity refers to raising taxes and/or cutting spending in an attempt to reduce government debt. Fiscal expansion (or ‘stimulus’) refers to an increase in government spending and/or a reduction in taxes.

Fixed income

See bond.

Free cash flow (FCF)

Cash that a company generates after allowing for day-to-day running expenses and capital expenditure. It can then use the cash to make purchases, pay dividends or reduce debt.

Fundamental analysis

The analysis of information that contributes to the valuation of a security, such as a company’s earnings or the evaluation of its management team, as well as wider economic factors. This contrasts with technical analysis, which is centred on idiosyncrasies within financial markets, such as detecting seasonal patterns.

Future

A contract between two parties to buy or sell a tradable asset, such as shares, bonds, commodities or currencies, at a specified future date at a price agreed today. A future is a form of derivative.


G

Gearing

A measure of a company’s leverage that shows how far its operations are funded by lenders versus shareholders. It is a measure of the debt level of a company. Within investment trusts it refers to how much money the trust borrows for investment purposes.

Gross domestic product (GDP)

The value of all finished goods and services produced by a country, within a specific time period (usually quarterly or annually). It is usually expressed as a percentage comparison to a previous time period, and is a broad measure of a country’s overall economic activity.

Growth investing

Growth investors search for companies they believe have strong growth potential. Their earnings are expected to grow at an above-average rate compared to the rest of the market, and therefore there is an expectation that their share prices will increase in value. See also value investing.


H

Hedge

Consists of taking an offsetting position in a related security, allowing risk to be managed. These positions are used to limit or offset the probability of overall loss in a portfolio. Various techniques may be used, including derivatives.

High-yield bond

A bond that has a lower credit rating than an investment-grade bond. Sometimes known as a sub-investment grade bond. These bonds carry a higher risk of the issuer defaulting on their payments, so they are typically issued with a higher coupon to compensate for the additional risk.


I

Illiquid assets

Securities that cannot be easily bought or sold in the market. For example, shares with a high market capitalisation are typically liquid as there are often a large number of willing buyers and sellers in the market.

Index

A statistical measure of the change in a securities market. For example, in the US the S&P 500 Index indicates the performance of the largest 500 US companies’ shares, and is a common benchmark for equity funds investing in the region. Each index has its own calculation method, usually expressed as a change from a base value.

Inflation

The rate at which the prices of goods and services are rising in an economy. The CPI and RPI are two common measures. The opposite of deflation.

Inflation-linked bonds

Bonds where the coupon and principal payments are adjusted in line with the rate of inflation. For example, Treasury inflation protected securities (TIPS), issued by the US government. Inflation-linked bonds are also known as index-linked bonds, or ‘linkers’.

Information ratio

A ratio measuring a portfolio’s returns above that of a benchmark, relative to the level of risk taken. The ratio attempts to identify the consistency of a fund manager’s returns. It is calculated by dividing a portfolio’s excess return by the tracking error.

Infrastructure investment

Investment into the physical assets of a nation or company, such as roads, bridges, water, sewerage and telecommunications. It tends to involve investors committing large amounts of money for long periods of time, but being rewarded with long-term and fairly predictable cash flows.

Investment-grade bond

A bond typically issued by governments or companies perceived to have a relatively low risk of defaulting on their payments. The higher quality of these bonds is reflected in their higher credit ratings when compared with bonds thought to have a higher risk of default, such as high-yield bonds.

Investment trust

A publicly quoted company that invests its shareholders’ money in the shares of other companies. It has a fixed number of shares.


J

No glossary definitions are available for J.


K

No glossary definitions are available for K.


L

Leverage

The use of borrowing to increase exposure to an asset/market. This can be done by borrowing cash and using it to buy an asset, or by using financial instruments such as derivatives to simulate the effect of borrowing for further investment in assets.

LIBOR

London interbank offered rate. A widely-used benchmark rate that banks use to charge each other for short-term loans. It serves as a reference for short-term interest rates more widely.

Liquid assets

Securities that can be easily bought or sold in the market.

Liquidity

The ability to buy or sell a particular security or asset in the market. Assets that can be easily traded in the market (without causing a major price move) are referred to as ‘liquid’.

Listed property

In property investing, this refers to companies (including REITs) listed on a stock exchange, which derive most of their revenue from owning, managing or developing property.

Long-only

A portfolio that only invests in long positions.

Long position

A security that is bought in the expectation that it will rise in value.

Long/short

A portfolio that can invest in both long and short positions. The intention is to profit from price gains in long positions, and price declines in short positions. This type of investment strategy has the potential to generate returns regardless of moves in the wider market, although returns are not guaranteed.


M

Market capitalisation

The total market value of a company’s issued shares. It is calculated by multiplying the number of shares in issue by the current price of the shares. The figure is used to determine a company’s size, and is often abbreviated to ‘market cap’.

Money market instrument

A short-term and highly liquid fixed income instrument.

Monetary policy

The policies of a central bank, aimed at influencing the level of inflation and growth in an economy. It includes controlling interest rates and the supply of money. Monetary stimulus refers to a central bank increasing the supply of money and lowering borrowing costs. Monetary tightening refers to central bank activity aimed at curbing inflation and slowing down growth in the economy by raising interest rates and reducing the supply of money. See also fiscal policy.

Mortgage-backed security (MBS)

A security which is secured (or ‘backed’) by a collection of mortgages. Investors received periodic payments derived from the underlying mortgages, similar to coupons. Similar to an asset-backed security.


N

Net and gross exposure

The amount of a portfolio's exposure to the market. Net exposure is calculated by subtracting the amount of the portfolio with short market exposure from the amount of the portfolio that is long. For example, if a portfolio is 100% long and 20% short, its net exposure is 80%. Gross exposure is calculated by combining the absolute value of both long and short positions. For example, if a portfolio is 100% long and 20% short, its gross exposure is 120%.

Net asset value (NAV)

The total value of a fund's assets less its liabilities.

Nominal value

A value which has not been adjusted for inflation. Within fixed income investing it refers to a bond’s par value rather than its current (‘market’) value.

Non-cyclical

Companies/industries that produce essential goods or services, such as utilities or food. The prices of equities and bonds issued by non-cyclical companies tend not to be strongly affected by ups and down in the overall economy, when compared to cyclical companies.


O

OEIC

Open-ended investment company. This is a common structure for UK-domiciled funds. Most are UCITS-compliant.

Option

A contract in which two parties agree to give one of them the right to buy or the right to sell a specific asset, such as shares, bonds or currencies, within a stated time period at a price that is fixed when the option is bought. An option is a form of derivative.

Outperform

To deliver a return greater than that of a portfolio’s assigned benchmark. Also often called excess return.

Over the counter (OTC)

Securities that are not traded on a formal centralised exchange, eg. the London Stock Exchange. Instead, they are traded via a network of dealers. Most bonds and derivatives are traded OTC.

Overweight

To hold a higher weighting of an individual security, asset class, sector, or geographical region than a portfolio’s benchmark.


P

PAIF

Property authorised investment fund. A fund designed to allow eligible investors to receive income from property investments tax efficiently.

Par value

Bonds are usually redeemed at par value when they mature. For example, if they are issued at £100, they should pay back £100 par when redeemed at maturity. Also commonly called ‘maturity value’.

Passive

An investment approach that tracks an index. It is called passive because it simply seeks to replicate the index. Many exchange traded funds are passive funds. The opposite of active investing.

Performance fee

An incentive fee paid to an asset management company if a portfolio outperforms a stated benchmark. Usually it is expressed as a percentage of the excess return above the benchmark.

Portfolio

A grouping of financial assets such as equities, bonds and cash. Also often called a ‘fund’.

Position

An investment in a single financial instrument or group of financial instruments, such as a share(s) or bond(s). For example, a portfolio can have a position in a technology company, or through several different shares take a position in the technology sector.

Premium

When the market price of a security is thought to be more than its underlying value, it is said to be ‘trading at a premium’. Within investment trusts, this is the amount by which the price per share of an investment trust is higher than the value of its underlying net asset value. The opposite of discount.

Price to earnings (P/E) ratio

A popular ratio used to value a company’s shares. It is calculated by dividing the current share price by its earnings per share. In general, a high P/E ratio indicates that investors expect strong earnings growth in the future, although a (temporary) collapse in earnings can also lead to a high P/E ratio.

Principal

Within fixed income investing, this refers to the original amount loaned to the issuer of a bond. The principal must be returned to the lender at maturity. It is separate from the coupon, which is the regular interest payment.

Private equity

Investment into a company that is not listed on a stock exchange. Like infrastructure investing, it tends to involve investors committing large amounts of money for long periods of time.

Property asset management

In property investing, this refers to the ongoing management of properties. It may include renegotiating existing leases with tenants (to deliver longer or more favourable terms) or doing refurbishments.

Protectionism

The practice of restraining trade between countries, usually with the intent of protecting local businesses and jobs from foreign competition. Measures taken typically include quotas (limits on the volume or value of goods and services imported) or tariffs (tax or duty imposed on imported goods and services, which typically renders them more expensive to domestic consumers).


Q

Quantitative easing

A measure whereby a central bank creates large sums of money to purchase government bonds or other securities, in order to stimulate the economy.


R

R2

A statistical measure of an asset’s price movements that can be explained by another asset’s price movements. For example, it measures the percentage of a portfolio’s movements that can be attributed to changes in its benchmark.

Rates markets

A marketplace for investment in government bonds and associated derivatives.

Real estate investment trust (REITs)

An investment vehicle that invests in real estate, through direct ownership of property assets, property shares or mortgages. As they are listed on a stock exchange, REITs are usually highly liquid and trade like a normal share.

Reflation

Government policies intended to stimulate an economy and promote inflation.

Retail price index (RPI)

A measure that examines the price change of a basket of goods and services over time. It is used to estimate inflation. It differs from the CPI measure of inflation mainly in its calculation method and the inclusion of mortgage interest payments.

Return on equity (ROE)

The amount of income a company generates for shareholders as a percentage of the company’s equity that is owned by shareholders. It is a measure of a company’s profitability as it shows how much profit a company generates relative to the money shareholders have invested.

Reshoring

The transferring of business operations that were moved overseas back to the home country.

Risk-adjusted return

Expressing an investment’s return through how much risk is involved in producing that return. Typical risk measures include alpha, beta, volatility, Sharpe ratio and R2.

Risk-free rate

The rate of return of an investment with, theoretically, zero risk. Typically defined as the yield on a three-month US Treasury bill (a short-term money market instrument).

Risk premium

The additional return over cash that an investor expects as compensation from holding an asset that is not risk free. The riskier an asset is deemed to be, the higher its risk premium.

RPI-linked leases

In property investing, this refers to rental increases based on the Retail Price Index (RPI) measure of inflation.


S

Secular stagnation

A prolonged period of low or no economic growth within an economy.

Secured loan

A loan which is secured by collateral, to reduce the risk for the lender. A mortgage is an example of a secured loan.

Security

A share, bond, or any other financial instrument.

Share buybacks

The repurchase of shares by a company, thereby reducing the number of shares outstanding. This gives existing shareholders a larger percentage ownership of the company. It typically signals the company's optimism about the future and a possible undervaluation of the company’s equity.

Shares

See equity. Also commonly called ‘stocks’.

Sharpe ratio

This measures a portfolio’s risk-adjusted performance by quantifying its excess return (as measured by returns above the risk-free rate) per unit of realised risk. A high Sharpe ratio indicates a better risk-adjusted return. The ratio is designed to measure how far a portfolio’s return can be attributed to fund manager skill as opposed to excessive risk taking.

Short position

Fund managers use this technique to borrow then sell what they believe are overvalued assets, with the intention of buying them back for less when the price falls. The position profits if the security falls in value. Within UCITS funds, derivatives – such as CFDs – can be used to simulate a short position.

SICAV

Société d'investissement à capital variable. This is a common structure for European-domiciled funds. Most are UCITS-compliant.

Sustainable and responsible investment (SRI)

An investment considered to improve the environment and the life of a community. A common strategy would be to avoid investing in companies that are involved in tobacco, firearms and oil, while actively seeking out companies engaged with environmental or social sustainability.

Sortino ratio

A ratio used to evaluate a portfolio’s return for a given level of ‘bad’ (downside) risk. It is a modification of the Sharpe ratio, quantifying only the downside risk, as measured by returns below the risk-free rate. A high Sortino ratio indicates the return is high compared to the downside risk taken.

Stagflation

A contraction of the words 'stagnant' and 'inflation'. A condition of slow economic growth, where high inflation and unemployment coincides with low or negative economic growth.


T

Technical analysis

The analysis of esoteric factors such as market liquidity and investor behaviour, and how they influence security prices. This contrasts with fundamental analysis, which looks at factors such as corporate health and the quality of management teams.

Top-down

A top-down fund manager builds a portfolio based mainly on the economic environment and asset allocation decisions. This contrasts with an approach based on individual security-specific criteria, known as bottom-up.

Tracking error

This measures how far a portfolio's actual performance differs from its benchmark index. The lower the number, the more closely it resembles the index.


U

UCITS scheme

The European Union (EU) has issued directives that allow carefully regulated funds to operate freely throughout the EU. A fund operating in line with the directives is known as an Undertaking for Collective Investment in Transferable Securities (UCITS) scheme. The regulations aim to give investors a high level of protection.

Underweight

To hold a lower weighting of an individual security, asset class, sector, or geographical region than a portfolio’s benchmark.

Up-market capture ratio

This measures how well a portfolio performs in relation to an index when the index rises. A portfolio with an up-market ratio of 110 indicates that if the benchmark returned 10%, the manager typically returned 11% (and so outperformed the benchmark by 1%).


V

Valuation metrics

Metrics used to gauge a company’s performance, financial health and expectations for future earnings eg, price to earnings (P/E) ratio and return on equity (ROE).

Value investing

Value investors search for companies that they believe are undervalued by the market, and therefore expect their share price to increase. One of the favoured techniques is to buy companies with low price to earnings (P/E) ratios. See also growth investing.

Value trap

An equity that appears to be cheap due to an attractive valuation metric (such as a low P/E ratio) may attract investors who are looking for a bargain. However, this may turn out to be a ‘trap’ if the share price does not improve or falls, which may happen if the company or its sector is in trouble, or if there is strong competition, lack of earnings growth or ineffective management.

Volatility

The rate and extent at which the price of a portfolio, security or index, moves up and down. If the price swings up and down with large movements, it has high volatility. If the price moves more slowly and to a lesser extent, it has lower volatility. It is used as a measure of the riskiness of an investment.


W

Weighted average lease length

In property investing, this describes the average time of the expiry of leases across the portfolio, weighted by rental income.


X

No glossary definitions are available for X.


Y

Yield

The level of income on a security, typically expressed as a percentage rate. For equities a common measure is the dividend yield, which divides recent dividend payments for each share by the share price. For a bond, this is calculated as the coupon payment divided by the current bond price.

Yield curve

A graph that plots the yields of similar quality bonds against their maturities. In a normal/upward sloping yield curve, longer maturity bond yields are higher than short-term bond yields. A yield curve can signal market expectations about a country’s economic direction.


Z

No glossary definitions are available for Z.


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