Glossary

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

An investment company whose assets are managed by its own team of managers or by the directors of the company, rather than by external fund managers.

A part of the share capital of a company.

Describes an investment company buying its own shares and reducing the number of shares in existence.

Share buy-backs can be used to return money to shareholders, but are also often used to tackle the company’s discount. Discounts may reflect an imbalance between the demand for shares and the number of shares in existence. The hope is that, by reducing the number of shares in existence, the buy-back will help to prevent the discount widening or even reduce it.

The price of a share as determined by the stock market.

A measure showing how the share price has performed over a period of time in capital terms alone, without reflecting any income dividends paid to shareholders. However it does include capital dividends within the calculation.

The AIC shows share price capital return as a percentage change from the start of the period. Using the share price, rather than NAV, shows performance which is affected by movements in discounts and premiums.

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

A measure showing how the share price has performed over a period of time, taking into account both capital returns and dividends paid to shareholders.

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

Share price total return shows performance which is 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 share price, share price capital return performance, NAV price total return performance and total return performance.

Another name for net asset value.

A dividend paid in addition to normal regular dividends in circumstances which are unlikely to be repeated in the near future.

The Specialist Fund Segment (SFS) is a peer group segment of the Main Market designed to appeal to alternative funds and their sophisticated investors. The rules governing corporate governance and transparency standards reflect this by replicating EU Directive minimum standards, which also qualifies the market for most investment mandates. The SFS is designed to accept more sophisticated fund vehicles, governance models and security types that are likely to be characteristic of the funds involved.

A tax you pay on the purchase of some investment company shares, but not on the sale.

If you buy shares in an investment company which is based in the UK, you’ll normally have to pay 0.5% stamp duty on the value of the shares. If you buy shares in an investment company which is based outside the UK, you won’t normally have to pay any stamp duty. You don’t have to pay stamp duty on the sale of your shares.

A type of share that investors can convert into new ordinary shares in the company at some time in the future at a fixed price.

Subscription shares have similar characteristics to warrants, including a limited life, but can be held more freely in an ISA. They don’t have the same rights as ordinary shares (e.g. they may not be entitled to any dividends before they are converted into the ordinary shares).

They are also much higher risk than ordinary shares, as you may not want to convert them into new ordinary shares if you can buy these on the stock market more cheaply. Subscription shares can therefore expire worthless and you could lose all the money you paid for them.