Investment terms

A return provided by a share or portfolio which is not measured relative to another share or benchmark index.

A method of depreciation used for accounting or income tax purposes which allows greater deductions in the earlier years of the life of an asset.

Investors who purchase shares in companies and continuously monitor the performance of the companies in order to provide returns, as opposed to passive investors who buy shares based on index weighting.

A measure of the percentage difference between the portfolio holdings and index constituents. A higher percentage reflects a higher divergence from the index.

Regulations that encourage market competition by limiting the market power of any particular firm. 

Companies certified by the non-profit B Lab which meet rigorous standards of social and environmental performance, accountability and transparency. B Lab is a non-profit organisation headquartered in Wayne, Pennsylvania, which created, and awards, the B Corporation certification. 

A market where prices of assets are falling.

The value of an asset according to its stated value on the balance sheet of a company.

Debt investment in which an investor loans money to an entity (typically corporate or government) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of activities and projects. 

The poorest group in a society.

Analysis of a company focused principally on its management, franchise and financials, rather than the broader industry in which it operates, or macroeconomic factors, such as economic growth.

Conditions in an asset market where valuations are extended to excessive levels.

A form of project deliver method. Usually for large-scale infrastructure projects, where a company receives a concession from the public sector to finance, design, construct, own and operate a facility stated in the concession contract.

A market where price of assets are rising.

Controlling the level of flows in terms of assets under management of a fund management company.

The part of the balance of payments which records all transactions made between entities in one country with entities in the rest of the world. These transactions consist of imports and exports of goods, services, capital, and transfer payments such as foreign aid and remittances. 

Expenditure applied by a company to acquire, upgrade, and maintain physical assets such as property, buildings, industrial plant, technology or equipment.

A measure of the rate of growth of a company’s cash flow.

Intensive change caused by complex economic and political factors, such as population change, environmental problems etc.

An economic system aimed at eliminating waste and the continual use of resources.

CleanTech companies seek to increase performance, productivity and efficiency by minimising negative effects on the environment. 

A statistic that measures the compound annual return of metrics over a set period of time, assuming gains are reinvested (i.e. compounding effect).

A territorial area over which a company has been granted regulatory approval to provide a given service, generally for a limited period of time.

Fixed exchange rate mechanism, with the domestic currency usually fixed at a specific rate to the US dollar.

Sensitive to movements of the economy (expansion and contraction).

A payment by a company to its shareholders.

A tradable security whose value is derived from the actual or expected price of an underlying asset.

A valuation method used to estimate the attractiveness of an investment opportunity. 

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

A measure of a company’s operating performance without having to factor in financing decisions, accounting decisions or tax environments. Amortisation, like depreciation, is the practice of reducing the value of an asset to reflect its falling value over time, but is usually applied to non-tangible assets like brands.

This refers to a set of criteria by which a company is judged by investors. Environmental criteria consider how it performs on environmental issues. Social criteria consider how it manages relationships with employees, suppliers, customers and the communities in which it operates. Governance deals with a company’s management, executive pay, audits, internal controls and shareholder rights.

The portion of a company’s profit allocated to each outstanding share of common stock.

ESG criteria are a set of standards for a company’s operations. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.

A type of investment fund that is traded on a stock exchange and tracks an index. 

Making companies pay for externalities (costs such as pollution which are not a usual cost of business).  

A tech company which designs microchips but contracts out their production, rather than owning its own factory. 

Financial technology (Fintech) is used to describe new technology that seeks to improve and automate the delivery and use of financial services.

Debt denominated in a foreign currency, usually US dollars.

A company not owned by a family group with a broad range of shareholders.

The monetary value of all the finished goods and services produced within a country’s borders in a specific time period. 

The amount of GDP (gross domestic product) relative to a country’s population.

Refers to the ratio of a company's debt-to-equity (D/E). Gearing shows the extent to which a firm's operations are funded by lenders versus shareholders.

A medicine that contains the same active substance as an originally marketed brand medicine which is produced by a manufacturer other than the company that developed the original brand.

The financial crisis of 2007–2008, also known as the GFC, the Great Recession or simply the 2008 financial crisis. It is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

A share in a company which can outvote all other shares in certain specified circumstances, and is often held by a government organisation. 

Conveying a false impression, or providing misleading information, about how a company's products or processes are environmentally sound.

Companies expected to grow earnings strongly in the future.

When the income of a company is denominated in a currency which is regarded as lower risk, such as US dollars or euros.

Conditions which slow company growth.

Creations of the mind, such as inventions, literary and artistic works and designs, as well as symbols, names and images used in commerce.

The interconnection via the internet of computing devices embedded in everyday objects, enabling them to send and receive data.

The process of offering shares of a private corporation to the public in a new stock issuance.

An increase in a company’s amount of debt.

The ongoing acceptance of a company or industry’s business practices and operating procedures by its employees, stakeholders and general public.

Debt denominated in a country’s domestic currency.

The value of a company traded on the stock market. 

An economic theory concerned with currency and unemployment.

International ratings agencies which measure risks associated with countries and companies.

A company’s total cash minus total liabilities when discussing financial statements.

A measure of debt held by a company.

Non-governmental organisation.

An international organisation that works to build better policies to improve people’s lives. 

When a market is shared between a few firms which are able to maintain higher prices as a result.

A scandal in the US which involved the sale of prescription opioid painkillers amid a nationwide overdose crisis.

A position larger than the benchmark index weighting in a stock.

The Paris Agreement sets out a global framework to avoid dangerous climate change by limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C. It also aims to strengthen countries’ ability to deal with the impacts of climate change and support them in their efforts. The Paris Agreement is the first-ever universal, legally-binding global climate change agreement, adopted at the Paris Climate Conference (COP21) in December 2015.

An investment strategy that follows the weighting of companies in a benchmark index, as opposed to an active one.

Having different points of view or multiple political parties.

Measurements based on ‘real’ assets of a company, such as plant and machinery or property, rather than human capital (workforce) or intangible assets, like brands or trademarks.

The ratio of a company’s market value to its book value where the book value is the company’s assets expressed on the balance sheet. A lower ratio could mean that the company is undervalued.

The ratio of a company’s share price to its earnings per share.

A valuation metric that indicates a company’s ability to generate cash revenues (which can be used to repay debt, pay dividends or re-invest). Price/FCF is calculated by dividing the share price of the company by its free cash flow per share. 

A United Nations-supported international network of investors working together to implement its six aspirational principles. Its goal is to understand the implications of sustainability for investors and support signatories to facilitate incorporating these issues into their investment decision-making and ownership practices.

When a trading desk at a large financial institution (brokerage firm or investment bank) uses the organisation's own capital and balance sheet to conduct financial transactions. 

Amounts put aside by a bank to cover bad debts.

Refers to a ballot cast by a single person or firm on behalf of a company’s shareholder who may not be able to attend a shareholder meeting.

An unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.

 Is a technique that uses mathematical and statistical modeling, measurement, and research to understand behaviour.

An investment fund where the managers run computer-based models to determine whether to buy/sell stocks.

Stands for research and development.

Making products appear more aligned and targeted to the colourful icons of the United Nations Sustainable Development Goals.

A deal or arrangement made between two parties who are joined by a pre-existing business relationship or common interest, and may create a conflict of interest. 

A natural resource or source of energy that is not depleted by use, such as water, wind or solar power.

An attempt to boost profits by manipulating political or regulatory connections.

A large quantity of currency maintained by a central bank or major financial institution to prepare for investments, transactions and international debt obligations, or to influence a domestic exchange rate.

Propositions put before the directors or members of a company to vote on. 

A measure of the profitability of a company relative to the amount of capital invested by shareholders and other debtholders.

A measure of the net income of a company as a percentage of shareholders equity. Used to analyse the ability to generate profit and efficiency of company management.

An invitation to existing shareholders of a company to purchase additional new shares in the company at a discounted price.

The risk-free rate of return refers to the theoretical rate of return of an investment with zero risk. In practice, the risk-free rate of return does not truly exist, as every investment carries at least a small amount of risk.

Named after American cartoonist Rube Goldberg, is a chain reaction-type machine or contraption, intentionally designed to perform a simple task in an indirect and overly complicated way.

A sale of new or closely held shares of a company that has already made an initial public offering (IPO).

A cross-boundary investment channel that connects the Shanghai Stock Exchange and the Hong Kong Stock Exchange.

A credit classification referring to lending of higher risk.

Economic and social development without using up the world’s natural resources. It aims for high human development with a sustainable environmental footprint.

A collection of 17 global goals designed to be a ‘blueprint to achieve a better and more sustainable future for all.’ The SDGs were set in 2015 by the UN and intended to be achieved by 2030.

Taking account of environmental, social and governance (ESG) considerations when making investment decisions. 

Investing which takes account of sustainable development issues, such as environmental issues and corporate governance concerns. 

A process which identifies a company’s strengths, weaknesses, opportunities and threats.

Assets which have a physical form, like property, computer equipment or factories, as opposed to intangible assets, like brands and trademarks.

Conditions favourable to a company’s growth.

An investment philosophy focused on trends in the economy as a whole rather than a company level (bottom-up).

Amount by which the return of a stock differs from the index.

The fee charged by a brokerage company when buying or selling shares in a company. 

Refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control.

A position less than the benchmark index weighting in a stock.

Solar power generation at a large scale.

Companies which may not grow earnings, but whose share price does not reflect the value of its assets.

A business structure in which an investor has a controlling interest despite not having a majority of voting rights.

A financial derivative which moves in price more than the underlying security.