St James International

Glossary

A
Accumulation Units	These units reinvest the income a Unit Trust earns, instead of paying it out to investors as an income. Policyholders get the benefit through the increased value of the fund.
Actuary	A professional person qualified to make calculations and valuations in respect of pension funds, insurance funds or other forms of investment. Actuaries apply mathematical, statistical, economic and financial analysis to a wide range of practical business problems with particular emphasis on longer-term financial assessment of risk or uncertain financial outcomes.
Allocation Rate	The percentage rate that a customer's money is invested in the policy.
Annual Management Charge (AMC)	A charge made each year by managers of Unit Trusts or Investment Trusts to cover the expenses associated with running the fund. Although it is expressed in annual percentage figures it could be taken from the fund monthly or daily.
Annuity	An arrangement under which periodic payments are made to a person in return for the investment of a lump sum, usually for the purpose of providing retirement income.
Annuity Rate	The percentage rate used to calculate the amount of income payable, following investment of a lump sum in an Annuity.
Assets	Items that are owned by a company, fund or individual such as property and investments etc. Money in a bank or building society account is known as liquid assets.
B
Balanced Fund	An investment portfolio which spreads its holdings over a range of asset classes which typically include shares, fixed interest, property and cash.
Bear Market	A market in which prices decline sharply against a background of widespread pessimism.
Bid Offer Spread	A form of charging whereby the price that units are bought and sold at are different. The price of units which a customer can buy is higher than the price at which they can sell the same units. The spread is the percentage by which the buying (offer) price is higher than the selling (bid) price.
Bond	A debt security issued by such entities as corporation, governments or their agencies. A bond holder is a creditor of the issuer and not a shareholder. Not to be confused with an Investment Bond.
Broker	An agent who handles investors’ orders to buy and sell securities, commodities, insurance policies or other property. For this service, a commission is charged which, depending upon the broker and the amount of the transaction, may or may not be negotiated.
Bull Market	An increasing market (As opposed to Bear Market).
Buying(Offer) Price	The price at which you can buy Shares or units in a Unit Trust or life policy.
C
Capital Gains	The difference between an asset's purchase price and selling price. (The difference is called a "capital gain" only if it's a positive amount.)
Capital Protected	Referring to a type of investment portfolio which is managed in such a way as to reduce or eliminate the risk of capital losses, usually through the use of quantitative techniques.
Cash	Generally, coin and note currency of a country in circulation and deposited in cheque accounts and other deposits that are available on short notice. One of the asset classes invested in as part of a typical balanced investment portfolio.
Cash-in Value	The amount you might get if you cash in an investment.
Closed funds	Funds which are no longer accepting new premiums, but where the fund is still invested and managed in the usual manner.
Contract Note	A legally binding confirmation of each portfolio transaction showing the: - date of each transaction. - security description. - amount bought or sold. A contract note is sent to you after each transaction.
Contribution	An amount of money placed into a fund. In relation to pension funds, contributions may be made by either employers or employees or both. Payments into Skandia pensions and other plans are also referred to as contributions.
Currency	A country’s unit of exchange that has a value in terms of purchasing goods and services within the country.
D
Deposit Account	A savings account from a bank or building society that pays interest on the amount of money held in it.
Direct Debit	An electronic way of making a payment directly from an individual’s to a company’s bank account.
Dividend	An amount of money or stock that a corporation pays to its shareholders.
E
Emerging Markets	Financial markets in countries with developing economies, where industrialisation has commenced and the economy has linkages with the global economy. The financial markets in these countries are immature compared to those of the world’s major financial centres, but are becoming increasingly sophisticated and integrated into the international markets. These markets provide potentially high returns but are subject to high risk and volatility.
Equities	Another name for Shares held in a company.
Equity	The value of an asset (e.g. a property) less any money owing on it (e.g. loans/mortgages).
Ethical Investment	An investment approach which takes into account considerations other than solely the financial return potential of particular investments. An ethical portfolio might, for example, avoid investing in alcohol or tobacco.
Exchange Rate	The price of the currency in terms of another currency.
Executor(s)	Individual(s) or Company(s)who are appointed in a will to deal with the wishes of the deceased, in administering their estate.
F
Fixed Interest	Referring to income which remains constant and does not fluctuate, such as income derived from bonds, annuities etc. Any debt security which has a fixed flow of income is known as a fixed interest security.
FTSE 100 Index	An index of the Share prices of the 100 largest companies (by market capitalisation) in the UK.
FTSE All-Share Index	An index of the Share prices of over 800 leading companies and Investment Trusts on the London Stock Exchange.
Fund Manager	The professional company responsible for the day to day running of a fund.
Fund Value	The monetary value of a fund, calculated by adding up the value of its underlying assets. The price of units in a Unit Trust, for instance, is worked out from the value of all its holdings divided by the number of units issued.
G
Gearing	A measure of indebtedness, i.e. the extent of borrowing as against the equity held by a person or company in an asset. The ability to increase exposure by investing in futures contracts without making the underlying cash available. See also Leverage.
Gross Domestic Product (GDP)	A measurement of the aggregate goods produced and services provided within an economy over a year and excluding income earned outside the country. Considered one of the main yardsticks of the health and vitality of an economy. See also Gross National Product.
Gross National Product	An economic statistic which includes GDP plus any income earned by residents from their overseas investments, minus income earned within the domestic economy by overseas residents. See also Gross Domestic Product.
Group of Seven (G7)	The seven major capitalist powers: Canada, France, Germany, Italy, Japan, UK and US.
H
Hedge Fund	A type of investment portfolio under which the fund manager is authorised to utilise a number of higher risk investment techniques, including using derivatives, short selling and borrowing funds to generate a higher return.
I
Independent Financial Adviser(IFA)	Individuals who give advice about all aspects of finance. IFAs can advise and sell products for a range of insurance companies and investment companies. Generally, the companies pay them commission when they sell a product although they may assign part of that commission to their client. There are also IFAs who do not take commission but charge a fee to their clients instead.
Income Tax	Tax paid by individuals on income received over a certain threshold. The amount paid will depend on the amount earned and unearned during a tax year period.
Index Linked	A way of managing a fund. An index-linked fund simply follows as closely as possible the movement within a chosen market. It does not aim to outperform the market like active management does.
Inflation	An increase in the level of prices of goods and services in the economy. It is typically measured by examining a basket of goods and services.
Initial Charge	A charge made by an investment provider when you first take out an investment. This is to cover the cost of setting up the investment.
Interest Rate	The amount of money a customer can earn on an investment. It is usually expressed as a percentage of the total sum invested.
International Monetary Fund (IMF)	An international organisation founded in 1947 to promote maintenance of equilibrium in the balance of payments among the various nations of the world. The functions of the IMF include the levying of quotas on member nations to create a pool of funds available to be loaned to nations facing balance of payments problems.
Investment Bond	Name given to a single premium life insurance policy.
Investment Company	This is a company whose main business consists of specific activities relating to investments. Examples of Investment Companies include stockbrokers and investment fund managers.
Investment Manager	An organisation or individual that specialises in the investment of a portfolio of securities on behalf of individuals and/or organisations subject to the guidelines and directions of the investor. Investment managers offer both pooled investment products and segregated portfolios to a range of clients including pension funds, institutions and private investors.
Investment Trust	A company that invests in shares of other companies. When investing in an Investment Trust customers actually own shares in the Investment Trust rather than owning the shares it invests in. Investment Trusts are closed ended investment vehicles.
Investor	A person whose principal purpose is to invest money prudently and productively over the longer term with the investment objectives being achievement of a reasonable return and capital appreciation to preserve purchasing power. The opposite of a Speculator, who will sacrifice safety of principal for the possibility of larger gains.
J
Jurisdiction	The country where your investment is held. For example, we use the Isle of Man as the jurisdiction for some of our products because of its low taxes and stability.
K
Key Person Insurance	A life assurance policy to cover the death of a business’s key employee. It pays out a lump sum that is designed to cover the costs of finding and training a replacement as well as covering any loss of profitability.
L
Level Term Assurance	A simple form of life assurance that pays out a lump sum if the policy holder dies within a specified time period
Life Assurance	An insurance policy which pays out on the death or survival of the Life Assured, for a certain period.
Liquidity	The ability of an investment to be easily converted into cash with little or no loss of capital and with minimum delay. An example of a highly liquid asset is a short term bank bill, while property is a relatively illiquid investment. For many securities, the degree of liquidity depends on the depth of the secondary market for that security. Also refers to the maintenance of cash and reserves by a financial institution to fund withdrawals by depositors, unit holders or clients.
Long Term	In our view a period of five or more years. We specialise in products and investment strategies taking a long-term view.
M
Managed Fund	Managed funds are generally made up of a spread of other specialist funds so spreading the risk.
Money Market	The market for trade in short-term securities such as Bills of Exchange, Promissory Notes and Government and Semi-Government bonds. Participants in the money market include banks and other financial institutions, life offices, stockbrokers, pension funds and Government authorities. See also Capital Markets.
Mutual Fund	An American term for certain forms of collective investments. Mutual funds are similar to unit trusts in that individual investors are entitled to an interest in a portfolio of securities, but different in the sense that they are offered through a corporate legal structure rather than through a trust arrangement.
N
NASDAQ	The first electronic stock market. It provides brokers and dealers with instant up-to-date price quotations for many New York Stock Exchange listed securities and companies like Microsoft and Intel.
O
Offshore	Basically, anywhere out of the country not within the authority of the Inland Revenue.
P
Paid-up Benefits	A preserved benefit which is secured for an individual member of a pension scheme or the policyholder of a life assurance policy where premiums have ceased to be payable in respect of that member.
Pension	A regular income paid to a person after they have retired. Also used to describe a plan or scheme that is set up to provide a pension or other retirement benefits.
Pension Fund	General term used to describe the investment fund built up in a pension plan and used at retirement to purchase an Annuity to provide a continuing income.
Pension Transfers	Refers to the current value of a pension plan that can be transferred from one approved scheme to another approved scheme. The value is transferred direct from one employer or pension provider to another.
Personal Pension Plan	An arrangement, often in the form of a policy from a life insurance company, under which individuals can make contributions without the need for employer contribution.
Portfolio	The collection of investment holdings of a particular investor usually with reference to its composition – i.e. the mix of different classes of securities, such as bonds, property, shares and cash, or if in a single asset class, the mix of different sectors and stocks.
Pound Cost Averaging	The term used to describe the effect of paying a fixed regular amount into a unitised investment fund where the value of units fluctuates. The amount will purchase more units when prices are low and vice versa. Over the longer-term, the average cost per unit is likely to be lower than the average unit price over the period.
Premium	The amount of money an individual pays into a saving or investment product, as either a lump sum or a regular payment.
Premium Frequency	How often the premium is paid, e.g. monthly or annually.
Q
R
Rally	A brisk rise following a decline in the general price level of the market or an individual share.
Real Estate	Property in land, building or housing, as distinct from personal property (e.g. cars); also known as physical property to distinguish itself from Property Trusts.
Retail Price Index (known as RPI)	A monthly indication of the average price changes to a particular ‘basket’ of consumer goods, and used as a general indicator of price inflation.
Retirement Date	This is the date that you choose to retire at.
Return	The amount of money in income and capital growth received annually from an investment, usually expressed as a percentage.
Risk	In its simplest sense, risk is the variability of returns. Investments with greater inherent risk must provide higher expected yields if investors are to be attracted to them. Risk can take any forms, but a major one is valuation risk – paying too much for an asset.
Risk Management	The monitoring and controlling of various risk factors in an investment portfolio with the aim of minimising volatility of investment returns.
Risk Profile	Risk profiles can be low, medium or high. A careful assessment of your individual financial status and needs is required before any of these models are applied to your portfolio. Portfolios can be managed for pure capital growth or a balance between growth or income.
Roll-over Relief	A tax concession, which allows investors and businesses to defer the payment of Capital Gains Tax. For example, if proceeds from the sale of a fixed asset are reinvested, Capital Gains Taxis not payable until the new asset is sold.
S
Securities	A term used to describe stocks and shares.
Selling (Bid) Price	The price at which you can sell Shares or units in a Unit Trust or units in a life policy.
Share Certificate	A piece of paper representing legal evidence of ownership of a stipulated number of shares in a company. Also known as Scrip.
Share Holder	The owner of one or more issued shares of a company who is normally entitled to: a proportionate share of the issuing company’s undivided assets; dividends when declared by the directors; and the right of proportionate voting power.
Share Option	An offer by a company, usually to its employees and directors, to buy its Shares at a given price, before a specified date. A number of approved share option schemes offer tax-free capital growth.
Share Price Index	An index measuring movements in the price of shares, but not of their dividends (as opposed to an Accumulation Index, which measures movements in both price and dividend income).
Shares	Sold by a company to raise money. Shares give the owners an interest in the company and a right to share in the profits
Short Term	A period of up to five years.
Single Premium	A one off payment into an insurance policy or pension.
Spread	In relation to share, bond and currency markets, the difference between the bid price and the ask (offering) price, incorporating both an estimate of demand and potential profit for the seller; In relation to unit trusts, the difference between the allocation of redemption price of units, as a result of transaction costs incurred in buying and selling the underlying securities which make up the value of the trust. In relation to option markets, the holding of a long position and an offsetting short position, usually in contracts with the same underlying security or asset.
Stock Market	A place where Shares or other securities are bought and sold e.g. the London Stock Exchange.
Stockbrokers	Agents who buy and sell stocks and shares for customers.
Stocks and Shares	A stock generally refers to fixed interest securities, usually issued in denominations of £100.Share is sold by a company to raise money. Shares give the owners an interest in the company and a right to a share in the profits.
Sum Assured	The guaranteed amount paid on death or maturity under a life assurance policy.
Surrender Value	The amount of money that will be paid to a policy holder if they discontinue a policy before it matures. The benefits the customer usually receives are reduced because of the effects of the charges.
Switching	Transferring sums of money from one unitised fund to another. This is usually done on a bid-to-bid basis to avoid ‘new money ‘ charges when buying units at the offer price.
Switching Facility	The ability to transfer units between two funds or components of a unit trust or life policy.
T
Tax Avoidance	A legal planned strategy to pay the least amount of tax as possible. We exist to help you to do this. Not to be confused with Tax Evasion, which is the illegal practice of intentionally evading taxes. Common and therefore easily traceable tactics include underreporting income or hiding assets for the tax authorities. We are experts in exploiting clever lawful tax avoidance strategies and can help you avoid any accidental or unintentional tax evasion and the unwelcome consequences and severe financial and criminal penalties.
Term Assurance	A simple life assurance policy that pays out on death of the customer during the time period specified by the policy.
Testate	A person who dies having made a will is described as ‘Testate’
Tied Agent	A sales person who sells the policies of only one insurance company. Some sales people are tied to several companies –this is known as a multi-tie.
Top Slicing	A method of calculating Income Tax liability on a chargeable gain from certain packaged products.
Total Return	The aggregate increase or decrease in the value of a portfolio resulting from the net appreciation (or depreciation) of the principal of the fund, plus or minus the net income (or loss) experienced by that fund during the period.
Tracker Funds	Aim to mirror or 'track' the performance of any of a number of worldwide stock market indices, such as the FTSE 100 Index-see passive management.
Trend	A persistent and pervasive direction, upwards or downwards, of commodities, prices, earnings, etc. over a period of time.
U
UK Resident (for tax purposes)	If you are physically present in the UK for six months in a tax year then you will be resident in the UK and taxable on your income and capital gains. If you are in the UK for less than six months you may still be taxable. If you are abroad only temporarily, or if you spend an average of three months a year in the UK for four years, you will be treated as ordinarily resident and therefore taxable. If you regard the UK as your home you will be classed as UK domiciled. You can be a resident abroad but, if you consider the UK to be 'home' you will still be domiciled in the UK. If you die, all of your assets anywhere in the world will be chargeable to Inheritance Tax (IHT). If you are not domiciled in the UK, only your UK assets will be chargeable to IHT.
Under Funded	Generally refers to the valuation of a Final Salary Occupational Pension Fund where the actuary perceives that there are insufficient funds to support liabilities within the investment review period.
Underlying Inflation	A calculated measure that takes the headline inflation rate and excludes certain volatile items or series that are affected by factors other than general economic conditions (e.g. government taxes, or the effect of weather on fruit and vegetable prices). The resulting rate is based on only those items directly related to the economy.
Underwriting	There are two definitions: 1. Financial organisation, usually an investment bank, taking up Shares from an Initial Public Offering (IPO), not purchased by the public, for commission. 2. Review and analysis of relevant factors affecting an insurance proposal by an Underwriter.
Unit Linked	Where the value of the saver's fund is linked to the value of the units of the Trust or Life Company Fund it is invested in.
Unit Trust	A fund made up of a group of individual securities specifically linked to either a geographical area or business sector. The price of the fund is the value of all the securities added together divided by the number of units issued. The fund is open and has an unlimited number of unit holders.
Units	When investing in a unit-linked contract, the individual's contribution is used to buy units of equal value. These units will fall or rise in line with the underlying investments.
V
Valuation	The value or worth of a portfolio of investments or life/pension policies recorded on a statement. Not necessarily the amount available if cashed-in.
W
Waiver of Premium	An optional feature on some life policies where the insurance company will pay the premiums if the policyholder becomes ill.
Whole Life Policy	Life assurance that a customer pays throughout the whole of their life and that pays out whenever they die.
X
Y
Yield	A measure of the income received from an investment compared to the price paid for the investment. Normally expressed as a percentage.
Z