A description of financial terms found on our website.

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A - E



ABS (Asset-Backed Security)

A financial security collateralized by a pool of assets such as loans, leases, credit card debt, etc.



Typically refers to the excess return of a strategy relative to returns available in the broader market.





Baby boomers

Generation born between 1946-1964.


Balanced (convertible bond)

A convertible that trades at a price where it is neither a pure equity substitute nor trading on its bond floor but is balanced between the two.


Bottom-up analysis

An approach focusing on the analysis of the individual stocks. In bottom-up investing, therefore, the investor focuses his or her attention on a specific company rather than on the industry in which that company operates, or on the economy as a whole.



A market when security prices are generally rising (bull) or falling (bear).


Buy and maintain

An investment strategy that typically focuses on low turnover or holding investments for a longer period of time, and a diversified approach to risk.





Cap (capitalisation)

Total equity market value of company (number of outstanding shares multiplied by price per share).


Capital efficiency

A company’s level of profit generated over capital employed.


Capital structure

Proportion of net debt to equity.


Cash equivalent per share 

Sum of highly-liquid investments which can be easily converted into cash (for example treasury bills), divided by the number of shares


Climate-aligned bonds (non-labelled)

Non ring-fenced debt funding dedicated to climate-friendly sectors, requiring deeper impact verification expertise.


Consumer discretionary

Goods and services that are considered non-essential by consumers, but desirable if their available income is sufficient to purchase them.


Consumer staples

Goods and services most people need to live regardless of the state of the economy.



A statistic that measures the degree to which two securities move in relation to each other.


Credit rating

An independent assessment of a borrower’s ability to repay its debts i.e. default risk. Standard & Poor’s, Fitch and Moody’s are the three most prominent credit rating agencies.




Debt recourse

Rights to demand payment from the general or specific assets of the debtor.


Debt to equity

A company’s total debt divided by shareholders’ equity


Delta (convertible bond)

A measure of the sensitivity of the convertible bond price to share price movements.



If the price of one asset class typically moves in the reverse direction to another, this can help mitigate risk on a portfolio. For example, if bond prices rise when equity prices fall, including bonds in a portfolio of equities can help to reduce the volatility in the value (i.e., risk) of that portfolio.



A measure of historical risk that refers to the proportional decline of an instrument from its highest point to its lowest point during a specific period.  Drawdowns are typically expressed as a percentage of movement between the peak valuation of the instrument (eg its highest point) and the trough valuation (eg its lowest point).






Emerging markets

An emerging market economy is one in which the country is becoming a developed nation and is determined through many socio-economic factors.



Environmental, Social and Governance factors in corporate behaviour that may offer investors potential long-term performance advantages.


Excess economic returns

Companies making profits that comfortably exceed their cost of capital.



Exposure refers to the possible risk to an investment at a given point. In fixed income, bonds have exposure to interest rate risk, duration and credit.



F - J



Fallen angels

Debt issuers that have been downgraded to below investment grade credit ratings.


FRN (Floating Rate Notes)

A debt instrument with a variable interest rate.


Fundamental analysis

Financial analysis about a company such as assessing its sales, profitability and ability to service debt.


FX arbitrage

A strategy acting on opportunities presented by pricing inefficiencies in the short window they exist. 



The key information about a company that determines if it is considered a worthwhile investment.  Fundamentals represent the basic qualities and reported information needed to analyse the strength of the business.




GDP (Gross Domestic Product)

The monetary value of all the finished goods and services produced within a country’s borders in a specific time period. A PPP-based GDP measure involves converting individual countries’ GDP using the Purchasing Power Parity approach as an exchange rate. PPP is the exchange rate that allows an identical basket of goods in one country to be bought in a second country.

Green bonds (labelled)

Ring-fenced debt funding for projects with clear positive climate impact. External validation on the use of proceeds.




Hedge Funds

A portfolio that employs numerous different strategies to earn active return, or alpha, for their investors. 


High conviction approach

Seeking a more concentrated portfolio of investments that a manager has high confidence will do well in the future.


High yield

A high yield bond has a rating that is below investment grade, and generally pays a greater return to the investor to reflect the higher risk of the borrower defaulting.  The rating is generally below BBB for Standard & Poor's, or below Baa for Moody's.





Idiosyncratic risk

A risk that is specific to a particular asset rather than to the portfolio as a whole.


Impact verification

An objective assessment to qualify a project’s green, social or sustainability impact with measurement of those results.


Investment grade

A bond with a credit rating of at least BBB- (Fitch), Baa3 (Moody’s) or BBB- (S&P).



K - O




A benchmark rate that represents the interest rate at which banks offer to lend funds to one another in the international interbank market for short-term loans. 


Liquidity buffer

An amount of cash or similarly liquid assets that can be easily accessed.


Liquid securities

Securities (e.g., bonds, equities) that are easy to buy (or sell) in the relevant investment market without the purchase (or sale) significantly impacting the price of the security.


Long/Short equity

An investing strategy that takes long positions in stocks that are expected to appreciate and short positions in stocks that are expected to decline.



Market neutral

A type of investment strategy undertaken by the investment manager that seeks to profit from both increasing and decreasing prices in one or more markets, while attempting to completely avoid some specific form of market risk.



Stocks valued by the markets at below (or above) what a manager deems to be the fair value of a company, based on its financial data and prospects.



Describes an investment that invests across a range of asset classes (for example, equities, bonds, commodities).




Option (convertibles)

A convertible bond has the option to be converted into shares of the company at a ratio determined at issue.


Organic revenue growth

An increase in a company’s revenue base that is not achieved through mergers and acquisitions.



P - T



PPP (Purchasing Power Parity)

Purchasing power parity is an economic theory that compares different countries’ currencies through a “basket of goods” approach. According to this concept, two currencies are in equilibrium or at par when a basket of goods (taking into account the exchange rate) is priced the same in both countries.



Risk-based investment approach (or risk allocation) 

This means that instead of designing the Sub-Fund around a chosen split of capital (e.g., 60% of the fund’s capital to be invested in equities; 40% in bonds) the chosen split relates to how the portfolio’s overall risk is allocated rather than its capital. For example, if the manager targets 60% of portfolio risk in equities, at times when equity markets become highly volatile, the manager will need to reduce the amount of capital invested in equities so that he/she keeps the level of risk in equities at 60%. 



A risk-return profile looks at the potential risks of a strategy relative to the returns that an investor might expect.  Weighing the risks and returns helps an investor make choices that are aligned with the overall profile of their portfolio.





Short side

This profits if a security's price declines. In other words, the trader sells to open the position and expects to buy it back later at a lower price and will keep the difference as a gain.



A condition that changes how an industry or market operates, regardless of cyclical or short-term economic trends.




Transition rate

Likelihood that a given rating will change over a given period.



The frequency of trading involved in a strategy.  A low turnover strategy would refer to reduced incidence of trade, while a high turnover strategy would refer to an approach that trades more frequently.




U - Z



Valuation shock

A sudden change in the price of a bond, sometimes due to a downgrade in an issuer's credit rating.



The annualised standard deviation of returns reflecting dispersion of a share price. The assumption for future share price volatility is an input for convertible valuation.





The anticipated percentage return on a bond if held to its maturity date.