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.
A measure of how an investment trust's portfolio has performed, taking into account how the NAV per share has changed as well as any dividends that have been paid.
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 is a measure of underlying performance which isn't affected by movements in discounts or premiums. It is used to assess how a fund manager or strategy has performed over a period of time. However, it is not a measure of the return a shareholder would have received. That is called the share price total return.
A very common measure of the underlying value of a share in an investment trust.
In basic terms, the net asset value (NAV) is the value of the investment trust's assets, less any liabilities it has, such as gearing. 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.
A measure of the size of an investment trust. The total value of all assets held, less any liabilities (such as gearing).
A measure of how much cash an investment trust holds, after offsetting gearing. It is expressed as a percentage of net assets.
When an investment trust with cash balances also has gearing in place, any cash is first offset against the trust's gearing to give a lower gearing figure. So, if an investment trust has 10% gearing, and 5% in cash, we would say the investment trust is 5% geared with 0% net cash.
We will only show a net cash figure if the investment trust has more cash than gearing. For example, if an investment trust has 5% gearing and 10% cash, then its net cash would be 5% and its gearing would be shown as 0%.
A company that holds investment trust shares on your behalf.
You can buy and hold shares in an investment trust in your own name, but it's much more common to hold shares through 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.
If you hold shares through an investment platform, then the shares will be held for you by a nominee set up by the platform.
Using a nominee can be cost-effective and convenient, and very few private investors nowadays buy shares without using one. The only problem is that you may miss out on some of your shareholder rights, like voting and attending the annual general meeting (AGM). The AIC offers information about how to vote your shares and attend AGMs if you hold shares through a nominee.
An investment company based outside the UK. The majority of non-UK investment companies listed on the London Stock Exchange are based in Guernsey or Jersey.
Non-UK investment companies are very similar to UK investment trusts, offering access to a diversified portfolio of investments with the benefits of a London Stock Exchange listing. The main difference for an investor is that you don't pay stamp duty when you buy the shares of non-UK investment companies.
Strictly speaking, non-UK investment companies are not "investment trusts". However, the term "investment trust" is commonly used to refer to both UK investment trusts and non-UK investment companies, and we adopt this convention on this website except where it's important to make the distinction.
