Our jargon buster is here to give simple explanations of typical technical words and jargon used in investment management to help you understand the terms that are used to describe your investments and how we manage them on your behalf.

Please remember Tatton does not provide financial advice, so if you need further information, please contact your Financial Adviser.

Active Fund:

A fund that seeks to outperform the market by selecting and trading equities and other assets using human judgment and/or quantitative methods. Active fund managers strive to outperform benchmarks or achieve specified total return goals. Index fund managers, on the other hand, try to replicate the performance of indices as precisely as possible.

Annual Turnover:

Each year, a percentage of securities in a portfolio are sold and replaced with new ones, this is the annual turnover. Index funds typically have lower turnover than active funds and hence have fewer trading costs to pass on to investors and detract from performance.

Bear Market:

A bear market is a general downturn in investment markets over time. Investors typically define it as a 20% drop in market value over at least two months.

People who lack confidence sell their shares, lowering stock prices and creating a vicious spiral. Bear markets occurred during the Wall Street Crash, the global financial crisis, and, most recently, the coronavirus pandemic.


Bonds are a wide range of assets that fall into many different categories, but the two most common are corporate bonds and government bonds. Companies issue corporate bonds, whereas governments offer government bonds.

Companies frequently need to raise funds to pay for items like new factories and machinery. Bonds are one way to accomplish this. Investors expect to receive their money back plus interest in exchange for turning over money for an agreed-upon number of years.

Bull Market:

Investment markets frequently rise when investors are especially optimistic about the economy and expect companies to perform well. A bull market is defined as a prolonged period of investment market expansion and an overall sense of optimism. For example, when the stock market’s value grows by 20% or more without a substantial decrease, many investors say there is a bull market.


Commodities include wheat, oil, gold, and sugar. They are raw materials used to make a variety of consumer goods. Commodity investors research the market for these items to forecast how prices will change in the future. Commodity prices have historically been quite volatile, reacting quickly to changes in the political and economic environment.


A financial contract is a derivative. The contract is tied to a specific investment; for example, the price of a company’s shares. Derivatives can also be linked to bonds, commodities, interest rates, and currencies.

Discretionary fund Management:

This is a type of investment management in which a portfolio manager makes buying and selling choices within agreed-upon parameters. Managers often charge a portion of the assets under-managed as a fee. In exchange, they use their investing skill to manage a client’s portfolio.


Spreading risk through investing across companies, asset classes, industries, and geographies. Diversification aims to enhance the possibility that losses from one investment will be offset by gains from another, lowering the risk that all assets in a portfolio would lose value at the same time.

Emerging Markets:

Emerging markets are growing countries whose economies are not yet fully established, but where considerable economic development is expected in the future. The BRIC countries are the most well-known emerging market economies.

Investors pay careful attention to developing markets because the share prices of firms in these countries might skyrocket if the region has strong economic development or increasing global commerce. However, they can also see significant drops in share price, which is why developing markets are sometimes regarded as highly volatile (see Volatility) and best suited to high-risk investing techniques.


‘Equity’ is merely another term for corporate shares. Equities are popular among investors who want to make more money than they might with savings accounts or bonds but are willing to face more risk as a consequence.

Exchange Traded Funds ( ETF ) :

Most exchange-traded funds are intended to mimic indexes. They are a hybrid that combine characteristics of stocks and funds  to provide the benefits of both Exchange-traded funds are open-ended funds with no set maturity that are traded on a variety of stock exchanges worldwide. They can be exchanged at any time of day. ETFs are becoming increasingly popular  for a wide range of applications including portfolio construction, long and short investment strategies, cost and risk management.


A fund pools money from many people and puts it into different types of investments.

Every investment fund has a particular objective, which could be steady growth or high risk for potentially larger rewards. The fund manager is there to oversee and make new investments, to generate profit for the investors, while also sticking to the objectives of that fund.


Gilts is another name for bonds issued by the UK government.

Government Bonds:

Government bonds, regarded as one of the safest kinds of long-term investment, are popular among financial institutions and private investors seeking low risk and a fixed rate of yearly return. In essence, you lend the government the funds they require. The initial investment is repaid along with the pre-arranged interest after an agreed term when the bond is said to have ‘matured.’ Government bonds, while generally seen as low risk, are not risk-free investments, since governments have been known to fail on their commitments on occasion, the price can also move significantly between the date of issue and maturity, even should the government not default.


The rate of inflation is the rate at which prices for goods and services rise over time. It’s important for savers and investors since inflation may affect interest rates on deposits, as well as company performance and, hence, share prices.


Individual savings accounts, abbreviated ISAs, have been accessible in various forms since 1999 and provide a tax-free or tax-efficient means to save money. There are four categories of ISAs: stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs. Junior ISAs are also available for youngsters.

Market Correction:

Although there is no common definition, when a stock index falls by 10% to 20%, the market is said to be in a correction. These episodes can be brief or prolonged, but they are so-called because, historically, the decline frequently “corrects” and restores prices to their longer-term trend.

Market Volatility:

Volatility is a metric to describe of how much an asset’s price rises and falls. Highly volatile equities are more likely to change in price quickly, whereas low-volatility assets have a more consistent value. Investors prepared to take a risk by investing in high-volatility firms may profit from larger returns, whereas low-volatility stocks frequently deliver slower growth but less risk.

One of the most important investment realities is that prices can fall as well as rise. Historically, broad exposures to equity or bond markets have tended to produce positive returns, given a long enough time horizon.

Open-ended  Investment Company:

A fund is formed as a business with an open-ended structure, as the name implies. OEICs issue shares, which are formed or dissolved in response to investor demand and thereby represent the fund’s underlying investments’ net asset value. Many OEICs employ “single pricing,” in which shares are purchased and sold at the same current price rather than at a bid or ask price. Many funds use the OEIC structure.

Passive Investing :

A passive investing strategy follows the performance of an index or pool of investments, such as the FTSE 100. The aim is to spread risk and build a portfolio that matches the performance of a broad stock market or index over time.


A financial portfolio is a collection of investments, which might range from cash in the bank to corporate stock. Portfolios are either managed by investors or by financial institutions such as Tatton Investment Management.

The composition of your financial portfolio will influence everything from the degree of risk you face to the amount of money you may make or lose.

Portfolio Rebalancing:

Rebalancing your portfolio is what you do to keep it on track with your initial investment goals and the degree of investment risk you’re comfortable with.

For example;  Assume you begin a portfolio with half of your money invested in equities and half in bonds to match your risk tolerance. Certain investments will do well over time, while others will perform poorly. Assume that your stocks increase in value by 10% but your bonds decrease in value by 5%. Overall, you have made money, but  because you are now overweight in equities, your portfolio has become unbalanced and may no longer meet your ideal risk exposure. To rebalance the portfolio some of the equities need to be sold and the proceeds used to buy bonds to reset the risk to the correct level.


Previously, the term securities referred to paper certificates distributed to investors as proof of investment. Today, the term is used more generally to describe the most prevalent sorts of investments, ranging from stocks and shares to commodities such as oil and gold, as well as bonds.

The issuer is the company that sells the security. The London Stock Exchange is the primary domestic securities market in the United Kingdom.

Stocks, Shares and Equities:

These words are frequently used interchangeably. A stock or an equity, strictly speaking, is a share in a firm. Investors often intend to purchase them at one price and sell them once their worth has improved.

Style Drift:

When an investment portfolio of a fund deviates from its declared investment objective, such as by investing in assets outside of its target asset class.

Tracker Fund:

A tracker fund is an investment fund that invests in the shares form a defined list and so ‘track’ its performance. They can track a range of different areas, from an individual sector to an entire stock market index, such as the leading shares in the London or New York Stock Exchanges.


Many measure of “yield” are used in investment, they can be used to indicate how much has been paid out to shareholders in dividends over the last period (dividend yield), how much a bond will pay in interest over the next year as a percentage of current price (current yield), or what the total return from that bond would be if held without default until maturity (yield to maturity). In general, these measures can be used as a measure of valuation, helpful in deciding how attractive an investment may be, in conjunction with other factors.