The Investment Terms provide plain English definitions of common investment and finance terms used on this web site.
To find a word in the Investment Terms, click on the corresponding section of the alphabet below.
If you are unsure of the meaning of a word and can't find it in the Investment Terms, please Contact Us.
A
An investment management style focused on attaining returns above an established benchmark through asset allocation and stock selection.
A description of a market in which the volume of securities trading is well above normal.
When the level of investment in a particular asset (or class of assets) exceeds the benchmark level of investment for that asset (or class of assets).
An investment product purchased with a superannuation lump sum to provide an annual income stream. The investor selects a level of income they will receive each year based on a range calculated from the account balance and a set of age based factors.
A regular income stream generated by a lump sum investment.
The formal process through which an investment portfolio selects which different asset classes (shares, bonds, property, cash and overseas investments) to invest in and how much to invest in each class. Also known as investment mix.
A loosely defined category of financial assets (e.g. fixed income, cash, equities etc.).
The Standard & Poor Australian Stock Exchange 200 Index is a capitalisation (or -total market value) -weighted list of the top 200 stocks on the Australian Stock Exchange ranked by market size.
An Australian credit rating agency, based in Melbourne and owned by Standard & Poors.
B
An investment portfolio that distributes its investments over a range of asset classes (generally including shares, fixed interest, cash and equities).
An individual who believes the market will decline.
A market which experiences sharp declines as a result of widespread pessimism.
An index or other measurement tool used by fund managers to assess the risk/performance of a particular investment portfolio.
A security issued by corporations and governments in exchange for loans from investors. The bond issuer is, essentially, borrowing from investors (which constitute creditors, not shareholders), and pays interest throughout the life of the bond.
A bottom-up manager concentrates on identifying individual assets or stocks which they believe represents a good investment rather than the relative performance of the asset class as a whole.
An individual that acts as an investor’s agent for the sale and purchase of securities (such as shares).
The fee charged by a broker or financial adviser for performing a transaction. Also referred to as commission.
An individual that believes the market will rise.
The difference between the entry and exit (that is, purchase and sale) cost of an investment in a managed fund.
C
The difference between the sale price of a capital asset and its cost (or purchase price).
A tax payable on the gain (or profit) made on an investment upon its sale.
The increase in value of an investment over time (excluding any income derived from that investment e.g. dividends).
An asset class that covers coin and note currency and money market securities.
A conservatively managed investment trust that holds cash securities and provides the potential for a higher return than standard bank savings accounts.
The fee charged by a broker or financial adviser for performing a transaction. Also referred to as brokerage.
A tradeable item that can generally be further processed and sold; includes industrial (metals), agricultural (wool, wheat, sugar, etc) and bulk (coal, iron ore) goods.
A superannuation fund that complies with the requirements of the Superannuation Industry Supervision legislation, thereby making it eligible for concessional tax treatment.
Interest calculated on both the principal sum invested and any interest previously accumulated.
An index measuring the price, from time to time, of a basket of goods and services bought by ordinary Australian households, used for the purpose of comparing the relative cost of living.
A tax levied on certain contributions to superannuation funds.
D
An annuity that begins payment at a fixed, future date.
The generic term applied to certain financial instruments, such as futures and options, whose value derives from other commodities, indices or share prices.
Payments by managed investments representing the recipient’s portion of any net income and realised capital gains earned by the investment over the financial year.
A process by which investment funds are spread among different classes of securities and geographic regions in an effort to balance and manage risk. Put simply, it is the implementation of the old adage: Don’t put all your eggs in one basket.
A payment made to company shareholders representing their portion of after-tax profits.
A share price index measuring the market prices of 30 representative industrial companies on the New York Stock Exchange. The United States equivalent of the Australian Leaders Index.
A measure of the sensitivity of fixed interest investments to changes in interest rates that takes into account both redemption date of the investment, the dates on which interest payments are made and the amount of interest payable.
E
Payments from superannuation funds and some payments received on termination of employment are ETPs. If taken in cash, ETPs may receive concessional tax treatment, depending on the components of the payment and the age of the recipient. ETPs can be rolled over to a superannuation vehicle, which will defer the payment of any tax, other than tax on unfunded benefits.
The fee payable when investing with a managed fund (normally calculated as a percentage of the amount invested and generally payable for both initial and subsequent investments).
(a) Another term for a share in a company; (b) The difference between the value of an asset and the debt secured against it.
The fee payable when withdrawing some or all of an investment in a managed fund.
Units are redeemed at the Exit Price, which includes an allowance for Transaction Costs where applicable. The price for a particular day is effective for any valid redemption request received at BlackRock up to 2pm Melbourne time.
Another name given to shares. Shareholders are the owners of a company who can vote on important matters such as the appointment of directors. They also participate in the increased value of the company, and therefore its shares, if the company is successful.
F
A calculation in which the price for a transaction is derived using the underlying value of an asset as at the end of the day on which it is calculated.
A professional organization representing the financial planning industry within Australia.
A calculation in which the price for a transaction is derived using the underlying value of an asset as at the end of the day on which it is calculated. Prior to 21 June 1999, we used "historical pricing". This means that the price for a particular day reflected the asset values as at the end of the previous day - i.e. they were a day behind the market. Under forward pricing, the price for a transaction reflects the asset values as at the end of that day. This means that the price at which you enter or exit the fund will not be known until the next business day. The prices quoted on this site are the prices effective for transactions received on the "Price Date" as shown on the Prices Page.
Dividends issued with imputation tax credits reflecting the amount of tax already paid on profits by the company issuing the dividends.
The degree (expressed as a percentage) to which a dividend is “franked”.
Financial Times Stock Exchange Index, comprising the 100 largest public companies listed on the London Stock Exchange.
Units are issued at the Full Entry Price for investments of less than $2 million, for direct investments and when the adviser indicates that the full entry fee is to be applied. This price includes Dealing Costs, Financial Institutions Duty (at 0.06%) and the maximum Entry Fee for the particular fund. The price for a particular day is effective for any valid applications received at BlackRock up to 5pm Melbourne time. From 21 June 1999 all funds are "forward priced". Applications can only proceed on the form attached to a current disclosure document, which is available on request from any BlackRock Office.
A pool of funds provided by investors which is used to make investments according to a particular investment objective.
A managed fund which invests in other managed funds. This is an investment vehicle that enables individual investors to invest money into one or more underlying investments operated by professional managers.