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glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

a

active fund

A fund that actively seeks out stocks that will outperform the market average.

AER

(Annual Equivalent Rate) The rate equivalent to having your interest paid and compounded over a whole year.

APR

(Annual Percentage Rate) The standard way of describing the cost of loans, overdrafts and credit cards as required by the Consumer Credit Act 1974. It includes any charges as well as interest.

area

The place that the fund will be investing in – North America, Asia Pacific, Europe etc.

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b

base rate (Bank of England)

The Bank of England sets an interest rate for money loaned to the money markets. That’s the base rate. The banks then set the interest rates on their accounts according to the base rate. If they lend you money they charge a little more than base rate, if they are paying you interest they give you a little less than base rate. That’s how they make money, it’s kind of like a mark up.

bear

An investor who believes that a share, or stock market, will lose value. The opposite of a bear is a bull.

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c

capital growth

Basically it’s the amount your initial pot of cash has grown. For example: if you put £1000 into a fund and it goes up to £1100, you capital growth is £100 or 10%. That means your now investing £1100 in the fund which will reap even more reward.

cash ISA

An ISA (Individual Savings Account) that allows cash deposits. Cash ISAs are available via smile.

CBFA

Stands for: Co-operative Bank Financial Advisors Ltd. Financial advisors offering free, independent, expert advice on three key areas of business and personal finance:

  • Investments
  • Pensions
  • Protection through life assurance and keyman.
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d

 

 

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e

EAR

(Equivalent Annual Rate) The equivalent to paying and compounding debit interest over a whole year. Or put another way, the amount you’re charged every year if you borrow money.

EIRIS

The Ethical Investment Research Service – a research organisation that looks into how ethical a company’s activities are.

equities

Another name for shares in a listed company.

ethical investment

Ethical investments seek to invest in companies, which make a positive contribution to the world and seek to avoid companies, which harm the world, its people or its wildlife.

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f

Fidelity Investments

Fidelity is an investment management company. Founded in Boston, USA in 1946, it is now one of the largest and most successful investment management organisations in the world. Its funds' supermarket was one of the first to launch in the UK in June 2000 and is the biggest in the USA.

fixed interest securities

A stock which pays investors a fixed rate of interest. The actual return to investors will depend upon the price paid for the stock.

Financial Conduct Authority (FCA)

An independent, non-governmental body, responsible for regulating deposit taking, insurance and investment business.

fund

Funds are a way of investing in the stock market without actually buying and owning individual shares yourself. They also allow access to lots of other types of investments, such as bonds and gilts, if that sort of thing turns you on. When you invest in a fund your money goes in a large pot that is invested and managed on your behalf, by a professional Fund Manager. It's their job to make sure that the value of the fund, and therefore your investment within it grows. But remember, they don't always produce the goods.

Fund Manager

A fund manager is a professional investor who uses his/her judgment to invest other people's money with the aim of increasing its value as fast as possible.

funds network

Fidelity's online service, which allows investors to tailor their own portfolio, choosing from over 560 funds with 37 leading fund managers.

fund provider

The company, or group, that manages an investment fund.

fund size

The total value of the assets under management in a fund. (Note: for our fact sheets, this information is collected one month in arrears).

funds supermarket

A collection of funds from a variety of different providers, available in one place to buy at a discount.

FTSE

Stands for Financial Times Stock Exchange. The FTSE UK indices are the benchmark for measuring how companies are performing in the market. The FTSE 100 Index was created in 1984 with a base of 1,000 to contain the 100 largest UK companies by market capitalisation. It is owned by the London Stock Exchange and the Financial Times.

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g

geographical sector

This identifies funds by region, for instance a country or a continent.

gilts

The name given to bonds which are issued by the UK government. They are IOUs which offer the purchaser a fixed rate of interest for a fixed period of time. At the end of the agreed period, the original loan is repaid. Many gilts are not held until maturity and a secondary market has developed in which these IOUs are bought and sold.

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h

     

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i

income

Some shares are called income shares which means you get paid all the income or dividends generated by the fund rather than have that income reinvested.

Independent Financial Advisor (IFA)

An individual or a firm that is licensed by the financial watchdog, the Financial Conduct Authority, to carry out the business of advising on and selling financial products. Independent financial advisers are not commited to sell any single firm's products and are obliged to give "best advice" when recommending products to clients.

index tracker funds

Commonly shortened to simply tracker funds, these are investments whose returns mimic that of a nominated index, like the FTSE All-Share. They do this by maintaining the same proportion, or weighting, of shares as is present in the real index. Or by buying derivatives that mimic the chosen index. The funds are generally cheaper than managed funds, which rely on human judgement to guide investment decisions.

initial charge

The fee payable to the fund company when you make your first investment. It’s usually a small percentage of the original invested sum. It’s worth knowing some funds do not have an initial charge.

investment trust (company)

A public limited company quoted on the stock exchange. Its main business is to invest in the shares of other companies. The share price is affected by the value of the underlying investments; it is also subject to market forces and will fluctuate depending on demand from investors.

ISA

An Individual Savings Account.

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j

jaws

JAWS (Job Access With Speech) is a Windows based software that uses a voice synthesizer and a computer's sound card to read out the content of your computer screen to your speakers, it can also output to refreshable Braille displays.

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k

Killer interest rates on all smile accounts

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l

       

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m

maxi ISA

A maxi ISA (Individual Savings Account) is an ISA that can consist of 2 parts: cash and stocks and shares. Maxi ISAs are no longer available and have been replaced by Stocks and Shares ISAs, which are available via smile invest.

mini ISA

A mini ISA (Individual Savings Account) is an ISA that allows cash deposits. Mini ISAs are no longer available and have been replaced by Cash ISAs, which are available via smile.

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n

   

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o

OEIC (Open Ended Investment Company)

As with unit trusts and investment trusts, investors' money is pooled to buy a range of investments such as equities, bonds and cash, spreading overall exposure to risk. As the name implies, the funds are 'open-ended' - there is no limit to the size of the fund and new money can always be added to it.

Unlike unit trusts and investment trusts, which have two prices - a buy and a sell price - OEIC’s have a single ('mid') price.

offer price

The price at which units or shares are sold to the public.

offshore funds

A fund operated outside the jurisdiction of the UK tax authorities. They usually pay dividends gross, their charges vary considerably and the quality of the fund managers is not uniform. Although offshore fund returns accumulate free of tax, these become liable to UK tax when cashed in by investors resident in the UK.

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p

passive fund

Unlike an active fund, passive funds do not seek to out perform the stock market average; instead they seek to match it. Sounds odd, but it actually makes a lot of sense. Because it’s easier to do, the fund managers have far lower expenses and consequently the charges to investors are lower. Active funds have a loftier ambition - they aim to outperform the market average by seeking out stocks that will provide superior total return. Their fund managers have access to extensive research and analysis to help them make the right choices, and one of the consequences of this effort is that the management charges passed on to investors in the fund tend to be higher.

There are two sides to the coin. Advocates of passive funds point to the fact that many actively managed funds fail to match the index, let alone beat it. Advocates of active funds argue that the more investors there are investing in passive funds, the more opportunity there is for active investors to be selective and invest in outperforming shares. You decide.

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q

Because we're an Internet bank we don't have any Q's!

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r

     

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s

sector

Unit trusts are classified in various sectors to enable fair comparisons between the performance of an individual trust and its direct competitors. The criteria range from requiring a particular geographic spread to insisting on a yield either higher or lower than the stock market as a whole. Shares are also classified by sector so that the performance of companies in the same type of business can be compared.

share

A share is literally part ownership (or share) in a company. When you buy a share you are giving the company money in return for a stake in their business and in return you receive a proportion of its profits, paid as dividends.

spread

The difference between the bid and offer prices of units of a fund.

SRI

Socially Responsible Investment (SRI), a new slant on ethical investments. It deals with investing in a way, which seeks to actively influence a companies social impact.

stock

A security that pays a fixed rate of interest, usually for a specified period. UK government stocks are known as gilts, while corporate stocks are called loan stock. Private investors usually pay no Capital Gains Tax on fixed-interest stock issued in the UK by public companies, local authorities, utilities and the Treasury.

stocks and shares ISA

An ISA (Individual Savings Account) that allows deposits in stocks and shares. Stocks and Shares ISAs are available via smile invest.

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t

tariff

This is where you can see details of the charges for services on your account.

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u

unit trusts

These are a fund you invest in, there are three types: Income Funds, Growth Funds and Specialist Funds. Each has a specific investment objective. Unit trusts work by pooling investors’ money, then using this pool to buy a portfolio of cash, bonds or shares. The spread of investments reduces exposure to risk. As the name suggests, a unit trust is divided into units and the value of each unit represents a precise proportion of the fund's total value. A unit trust is 'open-ended', which means there is no limit to the size of the fund and new money can always be added to it (unlike an investment trust, which is 'closed').

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v

 

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w

working day

A working day is any day except weekends and Bank Holidays in England and Wales.

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x

X for Xcellent customer service, Xtremely efficient and Xcited to have you as a customer.

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y

Y don't you apply for a smile account today?

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z

zzzzzzz - tired with your existing bank? Get a new smile account today

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The Co-operative Bank p.l.c. is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (No.121885). The Co-operative Bank, Platform, smile and Britannia are trading names of The Co-operative Bank p.l.c., P.O. Box 101, 1 Balloon Street, Manchester M60 4EP. Registered in England and Wales No.990937. Credit facilities are provided by The Co-operative Bank p.l.c. and are subject to status and our lending policy. The Bank reserves the right to decline any application for an account or credit facility. The Co-operative Bank p.l.c. subscribes to the Standards of Lending Practice which are monitored by the Lending Standards Board.