Understanding investment speak

Active managed funds

Actively managed funds are funds in which portfolio manager(s) take a hands-on approach in the buying, holding, selling, selection and weightings of assets within a fund with the goal outperforming a given benchmark.

Passively managed funds

A Passively managed fund is a fund designed to track the performance of a given index. The fund manager(s) do not take an active role in managing the funds they will only select funds and weightings that mimic a chosen index.

Currency Appreciation

An increase in the value of one currency relative to that of another currency.

Currency Depreciation

A decrease in the value of one currency relative to that of another currency.


A Bond is a type of investment vehicle where the investor/lender will purchase a bond from the issuer/borrower in exchange for interest payments.

Common Stocks

A Common Stock is a type of security that represents partial ownership in a company. Investors buy stocks for a number of reasons, including capital appreciation, dividends or to have influence in a company.


Diversification of assets is a risk management strategy that spreads an investors portfolio over a wide range of asset classes, financial instruments, industries and other categories with low correlation to each other. The goal is to maximize investor returns while simultaneously reducing risk.

Balance fund

A balanced fund is a type of fund that holds a combination of underlying securities such as stocks, bonds, money market and property. The fund works by investing in a mixed selection of assets with low correlation to each other, to offer the investor an option to invest in one fund that has already been diversified to some extent. There are different types of balanced funds for investors to choose from depending on their risk appetite and investment objectives.


Dividends are paid to investors from the companies they are invested in. Companies use dividends as a means of distributing company profits to their shareholders (Investors). It is important to note that not all companies pay dividends.


A return is money made or lost on your investment over a given time period. Returns can be expressed in monetary terms or as a change in percentage and are often annualized for comparative purposes. Returns are often spoken about in nominal, and real terms, where nominal returns are not adjusted for inflation, and real returns are the retunes an investor has generated after accounting for inflation over the period.

Money market

Money market refers to a section of the financial market where trading mainly takes place in very short-term and highly liquid debt instruments. Due to the nature of the underlying’s the money market is often seen as a safe and reliable haven for investors; however, money market funds are not entirely risk-free. These funds are exposed to several factors which can result in the funds having losses in real terms (after-tax interest earned fails to beat inflation) and in extreme circumstances, these funds can be exposed to nominal capital loss.

Capital market

The intention behind the Capital market is primarily for the issuance and subsequent trading of long-term securities. The capital market consists of two types:

  • The Primary Market: when public companies issue new securities in exchange for capital.
  • The Secondary Market: Trading of previously issued securities among investors separate from the issuing company.