Closed-ended investment companies – or 'investment trusts'
Are listed on the stock market like companies. Investors' money is pooled together from the sale of a fixed number of shares issued by the trust when it launches. An investment trust is a company that is set up to buy and sell shares in other companies and is run by a Board of Directors.
Diversification
This is a technique used to help reduce risk by investing in a variety of assets that, in normal circumstances, do not move up and down in tandem.
Equities
Another name for shares in a company.
Fixed Income
Simply refers to any type of investment that generates a fixed regular return, such as bonds and gilts.
Gearing
A way of borrowing money to make additional investments on top of shareholders' funds. When the market is rising, the performance in a geared investment is enhanced but in a falling market, will magnify the losses.
Long Term
Premier defines this as a period of, typically, over 7 years.
Medium Term
Premier defines this as a period of, typically, between 3 and 7 years.
Open Ended Investment Company (OEIC)
A type of open ended investment fund similar to a unit trust whereby investors pool their money together to invest in a range of different assets such as bonds, equities, property, cash etc. The price of shares in an OEIC directly reflects the value of these underlying assets. Each OEIC will have an investment objective, stated in a prospectus document, which could be to produce long term growth or generate a regular income.
Short Term
Premier defines this as a period of, typically, between 3 and 7 years.
Structured Products
This type of product is generally designed to combine the potential upside of market performance whilst providing some protection against falls in the market. Structured products are typically linked to the performance of one or more underlying instruments or assets such as market prices, indices, securities, commodities and other financial instruments. The portfolio manager uses structured products to help keep a portfolio's volatility levels relatively low and provide an appropriate risk/reward balance.
Volatility
The frequency and severity with which the price of an investment goes up and down.
Zero Dividend Preference Shares
Often called 'zeros', these are simply shares that do not receive any income but instead pay out a return at the end of the investment's fixed life. As 'preference' shares, they rank ahead of ordinary shares.