Glossary

Term Definition
Asset Anything having commercial or exchange value that is owned by a business, institution or individual.
Asset classes Category of assets, such as cash, company shares, fixed income securities and their sub-categories, as well as tangible assets such as real estate.
Asset allocation Apportioning a portfolio's assets according to risk tolerance and investment goals.
Bond 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.
Capital Refers to the financial assets, or resources, that a company has to fund its business operations.
Capital growth Occurs when the current value of an investment is greater than the initial amount invested.
Credit The borrowing capacity of an individual, company or government. More narrowly, the term is often used as a synonym for fixed income securities issued by companies.
Derivatives Financial instruments whose value, and price, are dependent on one or more underlying assets. Derivatives can be used to gain exposure to, or to help protect against, expected changes in the value of the underlying investments. Derivatives may be traded on a regulated exchange or traded over the counter.
Diversification/Diversified 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.
Episode A phase during which investors allow their emotions to affect their decision making, which can cause financial markets to move irrationally.
Equities Shares of ownership in a company.
Risk The chance that an investment's return will be different to what is expected. Risk includes the possibility of losing some or all of the original investment.
Total return The term for the gain or loss derived from an investment over a particular period. Total return includes income (in the form of interest or dividend payments) and capital gains.
Yield (income) Refers to the income received from an investment and is usually expressed annually as a percentage based on the investment's cost, its current market value or face value.