Glossary

Term Definition
Asset Anything having commercial or exchange value that is owned by a business, institution or individual.
Asset class Category of assets, such as cash, company shares, fixed income securities and their sub-categories, as well as tangible assets such as real estate.
Bonds A loan in the form of a security, usually issued by a government or company, which normally pays a fixed rate of interest over a given time period, at the end of which the initial amount borrowed is repaid.
Bottom-up strategy/selection Selecting stocks based on the attractiveness of a company.
Diversification/diversify The practice of investing in a variety of assets. This is a risk management technique where, in a well-diversified portfolio, any loss from an individual holding should be offset by gains in other holdings, thereby lessening the impact on the overall portfolio.
Index-linked bonds Fixed income securities where both the value of the loan and the interest payments are adjusted in line with inflation over the life of the securitiy.  Also referred to as inflation-linked bonds.
Inflation The rate of increase in the cost of living. Inflation is usually quoted as an annual percentage, comparing the average price this month with the same month a year earlier.
OEICs/Open-Ended Investment Company A type of managed fund, whose value is directly linked to the value of the fund's underlying investments.