General

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

A
Absolute return	Absolute return refers to investment performance regardless of market performance. Absolute return strategies aim to produce returns independent of traditional performance benchmarks such as the FTSE 100.
Accrual Rate	The rate at which pension benefits are built up as pensionable service in a defined benefit scheme e.g. 1/60th of earnings for each year in scheme until retirement.
Accrued Benefits	The benefits for service up to a given point in time, whether vested rights or not. They may be calculated in relation to current earnings or projected earnings.
Accrued Rights	The benefits to which a member is entitled, as of right, under an occupational pension scheme. These include accrued benefits. Depending on the context, accrued rights for an active member can be based on benefits as if the member had left service or could include a right to have benefits linked to future salary changes.
Accrued Rights Premium (ARP)	A state scheme premium which could have been paid for members below state pensionable age when a scheme which was contracted out by reference to the provision of a GMP ceased to be contracted out before 6 April 1997. In return the member was reinstated in SERPS for the period covered by the ARP.
Accumulated Contributions	The total of contributions paid by a member of a pension scheme during a given period, enhanced where appropriated by interest. In a defined contribution scheme the term may also include the employer’s contributions.
Active Investment Management	A style of investment management which is designed to achieve, over a period of time, out-performance of a benchmark by being selective in the individual investments.
Active management	A style of investment management where the manager aims to provide returns higher than a given benchmark through stock selection, asset allocation and market timing. The opposite of passive management.
Active Member	A member of an occupational pension scheme who is at present accruing benefits under the scheme in respect of current service.
Active Risk	A statistical way of measuring the extent to which an investment portfolio is likely, over any period, to out-perform or under-perform the benchmark against which it is measured.
Actuarial Liability	The value placed on the liability of a pension fund for outgoings due after the date to which the calculations relate.
Actuarial Report	A report on an actuarial valuation, or actuarial advice on the financial effects of changes in an occupational pension scheme.
Actuarial Statement	The statement signed by the scheme actuary to a defined benefit scheme that is required by the Disclosure Regulations to be included in the annual report of the scheme. It must state the amounts necessary to be paid into the scheme in order to protect the security of prospective rights. The statement must also state the actuarial method and assumptions adopted.
Actuarial Surplus	The excess of the actuarial value of assets over the actuarial liability on the basis of the funding method and actuarial assumptions used.
Actuarial Valuation	Commonly refers to an investigation by an actuary into the ability of a defined benefit scheme to meet its liabilities. This is usually to assess the funding level and a recommended contribution rate based on comparing the actuarial value of assets and the actuarial liability.
Actuarial Value of Assets	The value, following actuarial practice, placed upon the assets for the purpose of an actuarial valuation. It could be an assessed value, the market value or some other value.
Actuary	An adviser on financial questions involving probabilities relating to mortality and other contingencies.
AIMR/GIPS	The Association of Investment Management Research (AIMR) sponsored and funded the Global Investment Performance Standards (GIPS) Committee to develop and publish one global standard by which firms calculate and present performance to clients and prospective clients. In 1999, AIMR formally endorsed the GIPS as the worldwide standard to calculate and present performance.
Alpha	Alpha represents the excess return of a fund over its benchmark.
Annualised return	The value that an investment has achieved over a 12 month period based upon interest, dividends and unrealised appreciation.
Annuity	A series of payments, which may be subject to increases, made at stated intervals until a particular event occurs. This event is most commonly the end of a specified period or the death of the person receiving the annuity.
Arbitrage	If a price differential exists between two markets for the same, or similar instruments, an immediate profit can be taken. This is known as arbitrage.
Asset Allocation	The apportionment of a fund's assets between different types of investments (e.g. cash, equities and fixed income). The strategy should reflect the fund's objectives and will be altered over time according to the micro and macroeconomic outlook.
Asset and Liability Modelling	A technique used to test the effect of different economic scenarios on the assets and liabilities of an occupational pension scheme, the inter relationship between them, the funding ratio and contribution rates.
Asset backed securities	A security where the promised interest and principal payments are backed by cash flows from an asset or portfolio of assets that generate the cash flows.
Attribution analysis	Performance attribution is the process of determining the sources of active returns. The return is split into its constituent parts, e.g. how much value has been added through asset allocation and stock selection. Performance attribution can be extended to capture a range of decisions a manager can make, such as country, currency and duration (for fixed income).

B
Balanced management	A fund which invests in a variety of asset classes in order to diversify and reduce risk. The manager will usually base his asset allocation on the average weightings of his peer group.
Basic Pension	The flat rate (not earnings related) state pension paid to all who have met the minimum NI contributions requirements. The amount paid is increased if the recipient is married and a spouse or widow/er may claim on the record of his/her spouse.
Basis point	One hundredth of 1%, i.e.1 basis point (bp) = 0.01%.
Bear	An investor who thinks the market will fall. A bear market is one where prices are falling over a continued period of time. Contrasts with a bull market.
Beauty contest	The process by which external managers are selected by the board of trustees. Competing managers will be asked to present to the board, demonstrating track record and the ability to sustain this. They will also be expected to show strategy, style, process and philosophy.
Benchmark	A yardstick by which we can measure the performance of a fund. This may be an index, a competitor or a peer group median.
Beneficiary	A person entitled to benefit under a pension scheme or who will become entitled on the happening of a specified event.
Best execution	The duty of a broker to provide the best price when buying or selling shares to their customer. Also applies to fund managers trading on behalf of their clients.
Beta	The measure of a fund's or stock's risk in relation to the market or to an alternative benchmark. A beta of 1.5 means that the stock is expected to move 1.5 times as much as the market. If the market returns 10% then we expect, on average, that the stock will return 15%.
Big Bang	The change which took place on 27 October 1987, whereby the London Stock Exchange moved from a single to dual capacity system. Under a single capacity system, clients dealt with a broker whose job it was to get the best price from a market maker. Under the dual system, the client may go direct to a market maker and all members of the Stock Exchange can act as broker or market maker.
Blue chip	Often used to refer to shares in a well established, large and highly regarded company. Originates from the highest value chip in poker.
Bond	Securities that pay interest, often at a fixed rate. They are a form of borrowing and are issued either by corporates or governments.
Bonus issue	A company may issue shares free of charge to existing shareholders on a pro rata basis. This is a way of returning value to shareholders.
Bottom up	A term used to describe a style of investment which concentrates on stock selection rather than asset allocation or sector selection. Both asset and sector allocation thus become a by product of the stocks chosen.
Bull	The opposite to bear. A bull refers to an investor who believes the market will rise and is therefore bullish. A bull market is one where prices continue to rise.
C
Capital Gains Tax (CGT)	A tax on the net appreciation of an asset, charged on inflation adjusted returns above an annual threshold. Pension funds and charities are both exempt from CGT.
CAPS	Combined Actuarial Performance Services (provided by Russell/Mellon CAPS). One of the largest performance measurement and benchmarking services. Often used by trustees of pension funds to measure performance.
Career Average Scheme	A scheme where the benefit for each year of membership is related to the pensionable earnings for that year.
Certificates of Deposit	Short or medium term, interest bearing debt, usually issued by highly rated banks. Although, like other debt instruments, they do carry a coupon, this is only paid on maturity. Such certificates have a maturity of up to five years, more normally one year or less. The certificate may also be traded, enabling the deposit holder to realise the deposit through sales proceeds. They are low risk, low return and are also known as time deposits, because the account holder has agreed to tie up the money for a specified amount of time.
Chartism	The study of historical data in an attempt to predict future trends and price movements. This is also known as technical analysis.
Chinese walls	Arrangements made within financial companies to ensure conflicts of interest do not occur, e.g. between investment banking and research departments.
Churning	An exceptionally high turnover of stocks within a portfolio caused by excessive dealing.
Closed Scheme	A pension scheme which, does not admit new members.
Commercial paper	Commercial paper is a promissory note issued at a discount to the face value with maturities normally up to 12 months. It is issued by companies whose name is strong enough for them to issue discount securities without the need for a bank guarantee.
Common Investment Fund (CIF)	An arrangement whereby assets of two or more occupational pension schemes, operated by a single employer or a group of associated employers, are added together for investment.
Continuous Service	Treatment by an occupational pension scheme approved under Chapter 1 of the pensionable service of a member as continuous with a previous period of pensionable service within the same scheme or another scheme.
Contribution Holiday	A period during which ordinary annual contributions and or member’s normal contributions are temporarily suspended, normally when the fund is in surplus.
Convertible	A security which is convertible into another type of security, at a predetermined price (or ratio) and time. Conversion is usually the decision of the holder.
Core portfolio	The bulk of a fund's assets, usually managed in a relatively conservative manner (often passively) in order to provide stable returns. The remainder of the portfolio can then be held in satellite funds, which may be managed more aggressively or through specialist managers.
Corporate bond	A fixed income stock issued by a company, also known as credit. These stocks are given quality ratings by agencies such as Moody's and Standard & Poor’s, with a AAA rating being the highest quality and thus the least chance of default.
Corporate governance	Issues relating to the way a company governs itself, ensuring it gives maximum importance to shareholder interests. Issues such as pay levels of executives are often voted upon and there has been much debate recently surrounding how institutional investors (such as fund managers) should use their votes to influence a company in a positive fashion.
Coupon	The regular interest payment on a fixed income security. These are often paid semi annually, as with UK gilts.
Credit derivatives	An OTC arrangement designed to transfer credit risk from one party to another. Credit exposure is synthetically created or eliminated, allowing institutions to manage their risk more effectively. The most common form of trade is the credit default swap which is a form of insurance against exposure to a credit event.
Crest	An electronic system of holding and transferring shares without the need for paper certificates and transfer forms.
Cyclical stocks	Shares in companies which tend to fare well during a particular phase in the economic cycle (and may consequently do badly at other stages).
D
Defensive stocks	Shares in companies which are well positioned to withstand recession and usually have strong cash flow and resonable dividends e.g. utilities
Deferred Member	A member entitled to preserved benefits.
Defined Benefit Scheme	A Scheme where the scheme rules define the benefits independently of the contributions payable, and benefits are not directly related to the investments of the scheme. The scheme may be funded or unfounded.
Deflation	A fall in the level of total spending and economic activity leading to reduced output, employment, investment and trade and, eventually, prices.
Derivative	Contracts which derive their value from other assets, e.g. futures and options. No physical asset is held; a future is simply a contract to buy or sell an underlying asset at a specified price and point in the future.
Diversification	The spreading of a fund's assets amongst different asset classes, markets, sectors and stocks in order to reduce risk. The failure of a few will therefore have less effect on the overall portfolio.
Dividend cover	The extent to which the dividends distributed by the company in any year are covered by the normal earnings of that company. Some proportion of earnings is usually retained by the company in order to fund organic expansion.
Dividend yield	The return that the annual dividend represents relative to the current share price. Calculated by dividing annual dividend per share by current market price.
Dow Jones	The Dow Jones Industrial Average Index. This is an index of the New York Stock Exchange and represents a basket of thirty blue chip shares.
Duration	A measure of the sensitivity of a bond to changes in interest rates. The duration is the weighted average length of time to the receipt of a bond's benefits (coupon and redemption value). In simple terms, it is a composite measure of the interest rate risk of holding a bond, expressed in years.
E
Early Retirement	The retirement of a member with immediate retirement benefit before normal pension date.
Earnings per share (EPS)	A simple and commonly used way of expressing company profits. It is calculated by dividing profits after tax by the number of shares in issue. It allows like for like comparisons to be made between companies.
EBITDA	Earnings Before Interest, Tax, Depreciation and Amortisation. This is intended to be a measure of the amount of cash generated by a company's operations (but leaving out the costs of financing and taxes) and can be useful for cross border comparisons where accounting conventions vary.
Efficient market hypothesis	A theory which argues that within well developed stockmarkets a company's share price will react quickly to all public knowledge about that company. Fundamental analysis would therefore be pointless as the share price already reflects all information available.
Equity	An ownership share in a company's assets. Investors are most likely to hold ordinary shares but can also purchase preference class shares. Holders of equities have the ability to influence the management of a company by using their voting rights (see corporate governance).
Employee Trustees	Trustees of an occupational pension scheme who are employees of a participating employer.
Ethical investing	Choosing to invest in companies that operate ethically, provide social benefits, and are sensitive to the environment. Also known as Socially Responsible Investing. Investors are also encouraged to use their voting rights in order to bring about change within corporations through intervention.
EVA	Economic value added (the abbreviation is a registered trademark of Stern Stewart & Co.) is a measure of corporate performance, designed to identify the economic profit a company is earning. It primarily shows the value which management have brought to the shareholders through their actions. Its main benefit is that it cannot be affected by accounting choices in the way accounting measures can be (e.g. P/E ratio).
Ex dividend	Shares purchased on or after the ex dividend date will not entitle the shareholder to receive the next dividend payment.
F
Final Pensionable Earnings/Pay/Salary	The pensionable earnings on which benefits are calculated in a define benefit scheme. The earnings maybe based on the average over a number of consecutive years prior to retirement, death or leaving pensionable service.
Final Salary Scheme	A defined benefit scheme where the benefit is calculated by reference to the final pensionable earnings of the member, usually also based on pensionable service.
Financial Services Authority (FSA)	The regulator that governs all provision of investment advice to investors.
Floating rate notes (FRN)	A bond whose coupon is adjusted according to the level of some floating index, known as the reference index (for example 6 month LIBOR - London Inter-Bank offer rate). These bonds generally pay lower yields than fixed rate issues, but provide protection against rising interest rates.
FT Indices	A series of commonly used indices covering the world's major bond and equity indices, e.g. the FTSE 100 and FTSE All-Share Index.
FRS	Financial reporting standard - ensures all companies report their financial data in a fair and accurate fashion. Allows for comparison across companies.
Fundamental analysis	Analysis of the underlying characteristics of a company - its structure, management, finances and prospects, all of which are 'fundamental' to its operations. Allows comparison with peer group.
Futures	A type of derivative, a future is a contract which creates a legally binding agreement to buy or sell a specified security or instrument at a future date, for a price agreed today. If the investor believes the price of the asset will rise, they will go long the future (i.e. buy futures). As the price rises, they will have the right to buy the underlying asset, or settle in cash, for the lower price of the futures contract. Conversely, if they believe the price of the asset will fall, they will go short the future (i.e. sell futures), enabling them to sell the asset for a higher price at a given point in the future.
G
GDP	Gross domestic product, a commonly used measure of economic growth as GDP relates to a country's total output.
Gearing	A measure of how much a company has borrowed (usually related to its total assets). Gearing may also refer to a fund's borrowing.
Geopolitical risk	A combination of geographical and political factors affecting a country or area, for example, war or terrorist activities.
Gilts	A bond issued in the UK by the UK Government, may also be known as a Treasury.
Growth manager	A fund manager who aims to select stocks that he believes will achieve above average profits growth.
H
Hedge fund	A type of fund which is allowed to use aggressive strategies that are unavailable to other investment vehicles, including short selling, leveraging, swaps, arbitrage and derivatives. Hedge funds are exempt from many of the rules and regulations governing other mutual funds, which allows them to achieve more aggressive risk and return targets. There are various strategies such as global macro, convertible arbitrage, long short equity. Investment can be directly into the fund itself, or, to create greater diversification, through a hedge fund of funds.
Hedging	A strategy used to reduce the risk of potential losses from existing market positions. Often used with foreign investments to avoid losses due to exchange rate movements. Derivatives are an invaluable hedging tool, allowing the investor to take an equal and opposite position.
I
Ill Health Early Retirement	Retirement on medical grounds before normal pension date. The benefit may exceed that payable on early retirement in other circumstances.
Immunisation	The structuring of a fixed income portfolio, in order to reach a specified rate of return relative to a fixed set of liabilities, regardless of changing yields. This can be achieved by holding a combination of short and long term bonds.
Index	The average value of a basket of shares representative of a particular market. Movements in the value of the index are therefore indicative of the market as a whole.
Indexation/passive management	A fund management style which aims to replicate the structure (and therefore returns) of a chosen index. This can be done on a full replication or sampling basis.
Index-linked gilts (ILG)	A type of bond which makes semi annual coupon payments which are linked to the rate of inflation, and whose final repayment value is also linked to inflation. They are one of the most secure types of investment available, the value of income and underlying capital being protected in real terms against the effects of inflation.
Investment philosophy	The set of principles employed by the fund manager to govern their way of managing funds. Can also be known as investment style, e.g. growth, cyclical, value etc.
L
Leveraged buyout (LBO)	A transaction used to take a public corporation private. The transaction will be financed through bank loans and debt issuance. The debt will usually be rated as below investment grade due to the large ratio of debt relative to equity. Investors can take part in an LBO through the purchase of the debt, or via the purchase of equity through an LBO fund.
Liquidity	The capability of a market to adjust for changes in supply and demand without large swings in price. Liquidity is vital for a healthy capital market.
M
Market timing	The timing of purchasing or selling a security designed to take advantage of short term price movements.
Median	The 'middle' value or item in the population under consideration.
Minimum Funding Requirement (MFR)	A requirement from the Pensions Act of 1995, stating that pension schemes should have sufficient assets to meet their liabilities.
Mortgage backed securities	Securities representing an undivided interest in a pool of mortgages or trust deeds with similar characteristics. Payments on the underlying mortgages are used to make payments to the security holders.
N
Net Asset Value (NAV)	The total assets of a company less its liabilities. Essentially, it is a measure of value and is the amount of money which would be available to shareholders should the company be wound up.
Nominal rate of return	A rate of return which has not been adjusted to take into account inflation and is expressed only in monetary terms. The opposite is a real rate of return.
Nomination of Beneficiary	A means by which a member can indicate a preference as to who should receive any lump sum death benefit. The choice is not binding on the Trustees, and as a result Inheritance Tax are normally avoided.
Normal Pensionable Age (NPA)	Commonly the age by reference to which the normal pension date is determined.
O
OPAS (The Pensions Advisory Service)	An independent organisation, which gives free advice to members of the public who have a problem about an occupational pension scheme or personal pension scheme. It does not give financial advice or advice on state scheme benefits.
Options	A type of derivative, an option is a contract which gives the buyer the right, but not the obligation (unlike a future), to buy or sell an asset at a given price on or before a given date. The buyer, therefore, has potentially unlimited potential gain, with only the risk that they will lose the price of the option. The right to buy and the right to sell an option are given different names. The right to buy is known as a call option The right to sell is known as a put option
Over the counter (OTC)	A financial instrument which cannot be traded on an exchange. It is instead ‘tailor made’ for the client by a financial institution. Many derivatives are OTC products.
P
Passive Management	An investment strategy that seeks to match the risk and reward profile of a particular market segment or index by mirroring its composition. Also called a tracker fund.
Pensionable Earnings	The earnings on which benefits and or contributions are calculated under the scheme rules.
Pensionable Service	The period of service, which is taken into account in calculating pension benefits from the scheme. This is normally based on the number of years and months the individual has been a member of the scheme.
Percentile	A measure of a 100th part of the population to be considered. To make comparisons easier, funds are often ranked in 100ths (i.e. the best performing fund will be in the top percentile, whilst the worst will be in the 100th). Similar measure are deciles (one tenth parts) and quartiles (one quarter parts).
Pooled fund	A fund in which a number of investors hold units. Stocks are not held directly by investors but as part of a pool. Contrasts with segregated accounts.
Preference shares	Preference shares rank before ordinary shares in respect of dividend payments and, usually, capital repayment. Dividends are fixed at issuance and the shareholders usually forego voting rights.
Present value	The discounted value of a series of future payments or receipts, discounted at a rate of interest. For example, the price of a bond can be calculated by discounting back all coupon and redemption payments at the current interest rates.
Price/earnings ratio (P/E Ratio)	A company's current share price divided by its historic earnings per share. This ratio can be seen as a measure of how investors value the future earnings of a company, or to measure the attractiveness of one company against another.
Private equity	Private equity is usually taken to mean equity investment in unquoted companies. It encompasses both venture capital and leveraged buy outs and is also used to support private companies experiencing financial difficulties. Investment in private equity can be made directly in the individual companies, through a private equity fund (or general partner) or through a private equity fund of funds.
Proxy	Written authorisation given by a shareholder to someone else to vote on his behalf at a company's annual or special meeting.
Q
Quantitative analysis	A disciplined mathematical approach to fund management using computers to write statistical programmes.
R
Random walk theory	This theory argues that all share price movements are random and, therefore, cannot be predicted. Consequently, the theory argues that all fundamental and chartist analysis has no merit.
Real assets	An asset which will protect the holder against the effects of inflation as it has an underlying real (rather than monetary) value - for example property or equities as opposed to bonds.
Real rate of return	A return adjusted for inflation. Compares with a nominal rate of return.
Retail price index (RPI)	An index comprising of a basket of goods and services bought by consumers and valued at various points in time. It allows comparison of the relative costs of living over time and is often used as a measure of inflation.
Retirement Annuity	An annuity contract between an insurance company or friendly society and self -employed individual or a person in non-pensionable employment, which was established before 1 July 1988 and is approved under Chapter III Part XIV ICTA 1988.
Rights issue	A company can raise extra capital by offering existing shareholders new shares on a pro rata basis. Although these must be paid for, they are usually offered at a discount to the market price.
Risk	This is generally taken as the variability of returns. If an investment shows greater risk, it must also offer greater returns (this is know as the risk premium) to be attractive to investors.
S
Satellite funds	Part of a fund (usually representing only a small proportion) which is usually managed in a more aggressive manner to produce higher returns. Contrasts with a core portfolio. Satellite funds are often invested in alternative investments such as hedge funds or private equity.
Scrip issue	A share issue which raises no new capital for the company, simply gives extra shares to existing shareholders. The share price will change to reflect the new number of shares in issuance.
Sector	A group of companies in the same, or similar, line of business. For example, retail, financials, pharmaceuticals. Sector analysis takes a view on which of these areas will perform best and the fund manager will position the portfolio accordingly.
Segregated portfolio	A fund in which the assets are owned and managed independently of other portfolios under a fund manager's control. The pension scheme will directly own the stocks within the fund. This is in contrast to a pooled fund.
Self investment	Investment in the shares, or other related assets, of the company sponsoring the pension plan. This is often restricted through the trust deeds and also by law.
Small(er) companies	This is usually defined as the bottom 10% of a market in terms of market capitalisation, i.e. size. In the UK, this is usually represented by the Hoare Govett Smaller Companies Index.
Soft commission	An arrangement between fund manager and broker, whereby the broker will pay some of the fund's costs (for example subscriptions to research) if they receive a certain amount of trades.
Specific risk	The risk of a particular company as a result of specific events or situations which do not affect other stocks. This is in contrast to non specific or market risk.
Standard deviation	The measure of the degree to which an individual probability value varies from the distribution mean. The higher the number, the greater the risk.
State Earnings Related Pension Scheme (SERPS)	The additional pension provisions of the state pension scheme. This has been replaced by the state second pension scheme from 6 April 2002.
State Second Pension (S2P)	The state pension introduced with effect from 6 April 2002 to replace SERPS to enhance the basic pension.
Statement of Investment Principles	A written statement of the principles governing decisions about investment for an occupational pension scheme, which trustees are required to prepare and maintain. Trustees must have regard to advice from a suitable qualified person and consult with the employer.
Stock selection	The selection of a particular equity for investment following analysis of various factors.
Strips	The term stands for Separate Trading of Registered Interest and Principal. The strips market allows for the trading of a bond as a series of individual flows, the coupons are traded as zero coupon bonds.
Style	See investment philosophy
T
Technical analysis	See Chartism
Time deposits	A deposit in an interest bearing account which is required to remain on account for a specific length of time. Early withdrawal may be penalised.
TIPS	TIPS are Treasury Inflation Protected Securities, bonds issued by the US Treasury where the underlying principal of the security is indexed to inflation. The UK equivalent is Index-Linked Gilts. With TIPS, the inflation component reflects changes in the non seasonally adjusted RPI.
Top down	A style of investment whereby the fund manager primarily places emphasis on country and sector selection with stock selection taking place afterwards. This is the opposite of bottom up investing.
Total return	A combination of both income and capital return on an investment. This is usually expressed as a percentage of the value of the fund at the start of the period.
Tracking error	The tracking error of a fund measures how closely a manager's return pattern follows that of a benchmark index and is defined as the standard deviation of the fund's excess return over the benchmark index return.
Trust Deed	A legal document, executed in the form of a deed, which establishes, regulates or amends a trust.
Trustee	An individual or company appointed to carry out the purposes of a trust in accordance with the provisions of the trust instrument and general principles of trust law.
U
Universe of funds	A group of similar funds used by performance measurement companies to produce comparative performance data.
V
Value manager	A fund manager who selects stocks which he believes have potential not reflected in the current price. He will set a fair value based upon this potential and sell the stock when it reaches this level.
Venture capital	Venture capital involves investment in new business ventures, new companies or smaller companies involved in expansion programmes, as with private equity. However, unlike private equity, venture capital usually refers to early-stage financing or late-stage expansion programmes.
W
Warrants	This gives the holder the right to buy shares in a company at a stipulated price within a set timeframe. Warrants can often be attached to other securities as an inducement to buy and can be traded separately.
Y
Yield	The amount of income generated by an investment. This is usually expressed as a percentage of the market price, e.g. an equity dividend or the flat yield on a bond.
Yield curve	A chart demonstrating the relationship between bond yields and different maturities.
Yield gap	The differences in yields between different classes of assets, usually equities and gilts.