Glossary

Discretionary Investment Management

A form of investment management. The term “discretionary” refers to the fact that the investment decisions about what should be bought and sold on the portfolio is made by the portfolio manager at their discretion.

Platform

A sophisticated, technology-based service which enables the investor to acquire, hold and trade a wide range of investments, within the administrative convenience of one central location.

Portfolio

A range of investments held by an individual, organisation, pension fund or trust.

Investment Management Costs

The costs associated with the investment management of the portfolio. These are typically deducted directly from the portfolio.  Frequently there is more than one organisation involved in the maintenance and management of the portfolio and this can result in multiple charges being deducted. It is therefore important to understand the charges you are paying for your portfolio.

Active stock picking / actively managed funds

Funds where an appointed investment manager, or team of managers, seek to benefit from market price fluctuations, in terms of their investment portfolio decisions, with the aim of out-performing their benchmark over the medium to longer-term.

Tracker / passively managed funds

Funds which use technology to replicate one or more selected indices, with a view to following it as closely as possible.

Securities

A broad term which indicates an ownership position in more than one type of tradable financial assets.

Strategic Asset Allocation

The longer-term target asset allocation for a portfolio, i.e. the mix of investments between its different building blocks. Market movements mean the asset allocation will deviate over time, therefore periodic re-balancing is required to reset the asset allocations.

Tactical Asset Allocation

Shorter-term active management decisions relating to the portfolio’s asset allocation. These are intended to capitalise on shorter-term market pricing anomalies or market trends.

Mean Variance Analysis

A means of seeking to identify the optimal mix of portfolio assets to maximise prospective investment returns for a given level of risk.