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A measure showing how the Net Asset Value (NAV) per share has performed over a period of time just in relation to the capital, without reflecting the value of dividends paid to shareholders.

The AIC shows NAV capital return as a percentage change from the start of the period. Using NAV, as opposed to share price, shows performance that isn’t affected by movements in discounts and premiums.

See net asset value, NAV total return performance and share price total return performance.

A measure showing how the net asset value (NAV) per share has performed over a period of time, taking into account both capital returns and dividends paid to shareholders.

The AIC shows NAV total return as a percentage change from the start of the period. It assumes that dividends paid to shareholders are reinvested at NAV at the time the shares are quoted ex-dividend.

NAV total return shows performance which isn’t affected by movements in discounts and premiums. It also takes into account the fact that different investment companies pay out different levels of dividends.

See net asset value, NAV capital return performance, share price total return performance and total return performance.

A very common measure of the underlying value of a share in an investment company.

In basic terms, the net asset value (NAV) is the value of the investment company’s assets, less any liabilities it has. The NAV per share is the NAV divided by the number of shares in issue. This will very often be different to the share price. The difference is known as the discount or premium.

Learn more about discounts and premiums

A measure of the size of an investment company. The total value of all assets held, less liabilities and prior charges, including income for the current year.

A way of expressing how much an investment company is exposed to cash after offsetting cash balances first against its gearing.  It is expressed as a percentage of shareholders’ funds.

Investment companies may not always be fully invested in the markets they specialise in.  They may hold cash, or cash equivalents, which have a very small chance of losing money.  The more cash they hold, the less risky the investment company is.  However, if markets rise, holding cash may also reduce the returns the company makes.

Sometimes investment companies hold cash as a means to reduce gearing.  Holding cash can be a cheaper way of reducing gearing than, say, repaying a bank loan, which might incur penalties for early repayment.  It can also be easier to increase gearing later if the markets look favourable, as the company can invest the cash and does not need to take out new gearing facilities.

When an investment company with cash balances also has gearing in place, any cash is first offset against the company’s gearing to give a lower gearing figure.  So, if an investment company has 10% gearing, and 5% in cash, we would show this company as being 5% geared.   On the other hand, if the company’s cash balances rose to 15%, then we would show gearing as 0%, and net cash as 5%

See also gearing.

A company that holds investment company shares on your behalf.

You can buy and hold shares in an investment company in your own name, and receive a share certificate, or they can be held for you by a nominee. This means the nominee is the legal owner of the shares, but you still get the benefit of any increase in the share price, dividends etc.

Using a nominee can cut down on paperwork and costs associated with buying shares. The majority of wrapper schemes, ISAs and online share dealing accounts work in this way and can be very cost-effective.

However, you may lose some of the advantages of holding shares in your own name, such as being sent the annual report and accounts directly or being able to vote at the Annual General Meeting.

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