Guide to Investment Terminology
Guide to investment terminology
Risk and return
- The risk-return spectrum is the relationship between the amount of return gained on an investment and the amount of risk undertaken to obtain that return. Generally, the higher the return sought, the greater the risk experienced.
Passive currency management
- Smoothing up the ups-and-downs generated by exchange rate movements on the value of international investments, with the focus on risk and not return.
Fully hedged
- Protecting investments against a number of unwanted risks by taking an offsetting position in a related security.
Diversification
- The spreading of investments across different classes of assets and securities within these asset classes, and different types of investment vehicles.
Pooled investment
- A collective scheme allowing individuals to invest in a large portfolio of assets and a wid range of investments. Costs and benefits are shared and risk is reduced due to the wider spread of investments in the portfolio.
