Investment Glossary

E

Ownership in a company, usually represented by shares of stock.

The process of arranging for the transfer of an individual's assets upon their death, which can be complicated for individuals with assets in both the US and the UK due to differences in tax laws and regulations.

A type of investment fund that trades on a stock exchange like a stock, but represents a diversified portfolio of stocks or other securities.

F

The amount that a bond will be worth at maturity, also known as the nominal value or principal.

The Foreign Account Tax Compliance Act, which requires US taxpayers to report foreign financial assets and offshore accounts to the US Internal Revenue Service (IRS).

The FCA is the UK's financial regulatory body, responsible for regulating and supervising financial firms to ensure that they operate in a way that is fair, transparent, and promotes competition. Its main objectives are to protect consumers, ensure market integrity, and promote competition in the interest of consumers. The FCA oversees a wide range of financial firms, including banks, insurance companies, investment firms, and financial advisors, and has the power to investigate and take enforcement action against firms that breach its rules and regulations.

The process of setting financial goals, developing strategies to achieve them, and monitoring progress towards those goals.

The coupon rate as described above, which remains constant throughout the life of the bond.

The coupon is subject to periodic changes, for example every 3 months, based on pre-defined terms such as 0.2% above the prevailing 3-month deposit rate.

A report required by the US government for US taxpayers who have a financial interest in, or signature authority over, foreign financial accounts, including bank accounts, brokerage accounts, and mutual funds. The FBAR must be filed annually with the US Department of Treasury and failure to do so can result in severe penalties.

A credit available to US taxpayers who have paid foreign taxes on income earned overseas, which can be used to offset their US tax liability.

G

A stock of a company that is expected to grow at a faster rate than the overall market, typically characterized by high price-to-earnings (P/E) ratios and lower dividend yields.

H

Private investment funds that pool capital from accredited investors to pursue complex investment strategies, often involving leverage and derivatives, with the goal of generating high returns and reducing risk.

A bond with a credit rating below investment grade, often associated with higher risk and higher yields.

These are typically corporate bonds that carry long-term credit ratings defined as “investment grade”, indicating a strong ability to honour their debt obligations.

I

The Ifo Business Index measures business confidence and expectations in Germany, based on a monthly survey of companies across key sectors.

The degree to which an investment cannot be easily sold or converted to cash, often a characteristic of alternative investments that can lead to higher risk and potentially higher returns.

Investments made with the goal of generating positive social or environmental outcomes in addition to financial returns, often involving investments in companies focused on sustainability or social responsibility.

A group or basket of securities, derivatives, or other financial instruments that represents and measures the performance of a specific market, asset class, market sector or investment strategy.

A tax-advantaged retirement savings account available to US taxpayers, which allows them to contribute a certain amount of their income each year to the account and defer taxes on the contributions and earnings until retirement. There are two main types of IRAs: traditional and Roth, each with different rules and benefits.

Investments in physical assets that provide essential services, such as highways, airports, and utilities, typically generating steady income streams and offering long-term stability.

The tax on the value of an individual's estate upon their death, which can vary between the US and the UK and may require careful planning to minimize tax liabilities.

A tax on the estate of a deceased person, levied on the portion of the estate that exceeds a certain threshold.

The first sale of a company's stock to the public, typically used to raise capital for the company's operations or to provide liquidity to early investors.

A bond which carries a low risk of default as measured by the credit agencies’ ratings of above BBB- (S&P) and Baa3 (Moody’s).

Fees charged by investment managers for managing portfolios, which can vary depending on the type of investment and the level of service provided.

A collection of investments, such as stocks, bonds and mutual funds, held by an individual or institution.

Closed-end funds that are publicly traded on the UK stock exchange, offering a way for US investors to gain exposure to UK and European markets.

J

The Jackson Hole Symposium is an annual conference where global central bankers and economists discuss key economic and monetary policy issues.

L

The ability to quickly and easily convert an asset into cash.

M

A group of seven well known large technology stocks which account for roughly a third of the value of the US stock market. The seven stocks are Apple, Alphabet, Microsoft, Amazon, Meta, Tesla and Nvidia.

The total value of a company's outstanding shares of stock, calculated by multiplying the current stock price by the number of shares outstanding.

A bond issued by a state or local government to finance public projects or services, often exempt from federal income tax.

An investment vehicle that pools money from multiple investors to purchase a diversified portfolio of securities.

N

Non-doms are individuals whose permanent home, or domicile, is considered to be outside the UK. The current regime allows non-doms who are UK residents to opt to use the remittance basis of taxation. This means that whilst they pay tax on their UK income and gains in the same way as UK domiciles, they pay tax on their foreign income and gains (FIG) only when they are remitted or brought to the UK.

Nonfarm payroll refers to the total number of paid U.S. workers, excluding those in the farming industry, private households, nonprofit organizations, and government employees. This metric is a key economic indicator that reflects the health of the labor market and the overall economy, as it represents the majority of the workforce and their employment status.

P

A retirement savings plan that provides income in retirement, often sponsored by an employer.

Retirement savings plans that are regulated and taxed differently in the US and the UK, and require careful planning for individuals who are subject to tax laws in both countries.

A measure of a company's stock price relative to its earnings per share, used to evaluate a company's valuation and potential for future growth.

Investments in debt securities, such as loans or bonds, issued by private companies or individuals, typically providing a higher rate of return than traditional fixed income securities. Private debt is usually accessed through private investment funds that pool capital from accredited investors.

Investments made in privately-held companies or companies not publicly traded, typically involving a high degree of risk and potential for high returns. Private equity is usually accessed through private investment funds that pool capital from accredited investors.

R

The fees charged by ratings agencies for their services, typically paid by the issuer of the debt securities being rated.

The set of criteria and standards used by ratings agencies to assign credit ratings, typically based on factors such as financial metrics, industry trends, and issuer-specific risks.

An assessment of the potential direction of a credit rating over the near term, typically based on the issuer's current financial position and future prospects.

A designation used by ratings agencies to indicate that a credit rating is under review for a possible upgrade or downgrade, typically due to changes in the issuer's financial position or industry conditions.

An independent organisation that assesses the creditworthiness of issuers of debt securities, such as bonds or commercial paper, and assigns a credit rating based on the issuer's ability to meet its debt obligations.

Physical property, such as land, buildings and homes, that can be purchased and held as an investment, typically generating income through rental income or capital appreciation. Real estate investment can be achieved through private investment funds similar to hedge funds and private equity as well as through listed vehicles.

The oversight and regulation of ratings agencies by government agencies, such as the Securities and Exchange Commission (SEC) in the United States, to ensure that ratings agencies maintain high standards of accuracy and independence.

An individual's ability and willingness to tolerate fluctuations in the value of their investments.

S

The Sahm Rule flags a potential recession when the US unemployment rate rises by 0.5 percentage points or more from its 12-month low.

A group of stocks representing companies operating in a specific industry or market segment, such as technology or healthcare.

The SEC is the US regulatory body responsible for overseeing and regulating the securities industry, including the buying and selling of securities and the disclosure of financial information by publicly traded companies. Its mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The SEC has the power to investigate and take enforcement action against individuals and companies that violate its rules and regulations, including insider trading, fraud, and other violations of securities laws.

A single unit of ownership in a company, typically representing a fractional claim on the company's assets and earnings.

A term used to describe a reduced level of economic activity from previous higher levels but remaining in positive growth territory, and inflation remains stable typically near 2% per annum.

A bond issued by a national government to finance government spending, often considered as the lowest credit risk investment due to the backing of the government's full faith and credit.

A credit rating assigned to a national government, typically based on factors such as economic strength, political stability, and debt levels.

The yields on government debt

A share in the ownership of a corporation, typically representing a claim on a portion of the corporation's assets and earnings.

A marketplace where stocks and other securities are traded between buyers and sellers, typically with the assistance of a broker or dealer.

A credit rating assigned to a complex financial instrument, such as a mortgage-backed security or collateralised debt obligation, typically based on the creditworthiness of the underlying assets and the structure of the instrument.

T

Strategies that aim to minimize the tax impact of investment returns.

The previous Conservative government had proposed a new 12% rate of tax for remittances of foreign income and gains (FIG) made in tax years 2025-26 and 2026-27 where the FIG arose to the individual personally in a year when the individual was taxed on the remittance basis and the individual is UK resident in the relevant tax year. The current Labour government have supported this facility but not committed to a specific tax rate or the two-year period.

U

A determination of an individual's tax status in the UK, which can have significant implications for their tax liabilities in both the UK and the US.

A type of mutual fund that is structured as a trust and divided into units that are owned by individual investors.

A credit rating assigned by a ratings agency without a request from the issuer of the debt securities, typically based on publicly available information and market trends.

V

A stock of a company that is undervalued by the market, typically characterized by low price-to-earnings ratios and high dividend yields.

A subset of private equity that typically invests in early-stage companies with high growth potential, often involving high risk and high reward.

Voluntary contributions paid by individuals who want to complete their National Insurance record for benefit purposes.

W

The professional management of an individual's financial assets and investments, often provided by a financial advisor or wealth manager.

Taxes that are automatically withheld by foreign countries on income earned by US investors, which can be credited against US tax liabilities under certain circumstances.

Y

The income generated by an investment, usually expressed as a percentage of the investment's value.

The total return anticipated on a bond if held until it matures, taking into account the coupon payments receivable throughout the holding period and assumes these payments will be re-invested back into the bond.

Z

A bond that does not pay periodic interest payments, but instead is sold at a discount to its face value and redeemed at the full face value at maturity.