Here you’ll find definitions of terms used on the AIC site. Enter the term you want to search for in the box, or click on the letter it begins with.

5 A B C D E F G H I J L M N O P R S T U V W Y Z

C (‘Conversion’) shares help an investment company grow in a way that protects the interests of existing ordinary shareholders.

When an investment company wants to grow, it may issue C shares. These shares and the proceeds are held in a separate pool and invested in a portfolio of assets.

After a certain period, or when the pool of new money is fully invested, the two portfolios are merged and the C shares are exchanged for ordinary shares.

The advantage of C shares is that existing ordinary shareholders:

  • don’t have to take up the C share offer if they don’t want to
  • don’t have their returns affected while they wait for the proceeds of the C share to be invested
  • don’t bear any of the issue costs

A measure of performance which looks only at the increase and decrease in the value of the investment over time. It doesn’t take into account any income dividends you may have received, however it does include capital dividends within the calculation.

See share price capital return performance and NAV capital return performance.

The different types and amounts of shares an investment company has. This is particularly important when considering split capital investment companies.

Learn more about split capital investment companies

A closed-ended investment company has a fixed number of shares in issue at any one time. These are traded backwards and forwards on the stock market, which has no impact on the underlying portfolio.

As well as allowing managers to take a longer-term view, this enables investment companies to invest in specialist illiquid asset classes such as private equity, venture capital and property.

See also open-ended fund

An investment vehicle where a group of investors pool their money and invest in a portfolio of assets to spread risk.

Investing in a collective investment fund can offer:

  • economies of scale
    All the investors pool their money and share the costs of running the fund.
  • a way to spread your risk
    As you’re not dependent on the success of just one or two investments.
  • a professional manager’s expertise
    The fund will employ a professional fund manager to deliver returns and to manage risk.

Read more about risk and reward

Shares or securities which can be converted into ordinary shares at some time in the future.

If you buy shares when you’re entitled to the most recently declared dividend, this is known as the shares being ‘cum dividend’.

See ex-dividend