A fee sometimes paid on top of a management fee if an investment company outperforms its benchmark or meets other conditions.
A collection of different investments selected by fund managers to deliver returns to investors and to spread risk.
Most investment companies have a portfolio of tens, or even hundreds, of different investments in order to spread risk. This is called diversification and is one of the key benefits of investing in a collective investment fund like an investment company.
Portfolio yield is only a measure of how much income the portfolio is expected to produce. It doesn’t take into account any expenses, interest and tax that might be incurred. Though a higher portfolio yield might indicate that the company will pay a higher level of dividends, you shouldn’t assume that this will be case. The actual income received might also differ from the expected income.
See also dividend yield.
Buying shares on a regular basis to smooth out the ups and downs in the share price.
Pound-cost averaging can be a useful technique if you’re worried the stock market might fall in the near future. You invest over time instead of all in one go, so you end up buying more shares when the price is low and fewer when the price is high. Over time, this can help to smooth out some of the ups and downs in the share price.
An amount which must be paid by the company before the shares you hold can receive certain payments they are due. Prior charges may include borrowings or shares which are higher in the order of priority.
Investing in shares of private companies, as opposed to companies whose shares are traded on stock markets.
A professional investor is defined in the AIFM Directive as “an investor which is considered to be a professional client or may, on request, be treated as a professional client on request within the meaning of Annex II of” the MiFID Directive.
The definition of a professional investor is relevant for the rules on marketing.
This is defined in the AIFM Directive as a credit institution, a regulated investment firm or an other entity subject to prudential regulation and ongoing supervision, offering services to professional investors primarily to finance or execute transactions in financial instruments as counterparty and which may also provide other services such as clearing and settlement of trades, custodial services, securities lending, customised technology and operational support facilities.