This investment terminology guide is designed to help you understand the information contained in our fund factsheets. If you are in doubt as to whether any of the Aviva Investors collective investment funds are suitable for you and you wish to seek financial advice, you should contact your financial adviser. An adviser is likely to charge you for advice. However, they can assess your situation and tell you whether the fund you’re thinking about investing in is suitable for you. If you do not have a financial adviser, you can find one by visiting www.unbiased.co.uk.

If you have any questions, please call us on 0800 051 2003*.

A

Absolute return

This measure looks at the appreciation or depreciation, expressed as a percentage, which an asset, such as a stock or a mutual fund, achieves over a given period of time.

Accumulation Shares/Units

These are shares or units where income is kept within the fund and is reflected in the price of the shares/units.

This type of unit/share typically attracts investors looking for growth rather than income.

Active investing

Where the fund manager uses their expertise to pick investments to achieve the fund’s objectives – we state clearly which of our funds are actively managed, which is the vast majority.

Advanced/developed markets

Countries with relatively high levels of personal income and established economies.

Adventurous (risk range)

A fund/portfolio that seeks to provide higher levels of capital growth by taking on more risk.

Aggressive asset allocation

A fund of this type will typically be invested in a variety of stocks, bonds and cash. An aggressive asset allocation takes on higher risks, and as such has a relatively high exposure to equities.

Alternative investments

Usually refers to a range of investment assets excluding the mainstream categories of equities, bonds and cash or cash-like assets. The most prominent examples of alternatives are derivatives, hedge funds, property, infrastructure and commodities.

Alternative trading strategies

These could enable investors to access a wide range of markets and asset classes, including indices, commodities, foreign exchange and equities. They can include derivatives, absolute-return funds, hedge funds and private equity.

Any given three-year period

Any period of three years, no matter which day you start on.

Asset- and mortgage-backed securities

Asset-backed securities are securities where payments to investors come from the income generated by a specific pool of assets; examples of assets that have been securitised include residential mortgages, car loans, future ticket receipts by football clubs and royalties on record sales by musical artists.

If these securities are paid off substantially earlier or later than expected, the sub-fund could experience lower earnings than expected. These securities also carry market risk, interest rate risk, and above-average liquidity risk.

Asset allocation

Funds invest in different types of assets such as equities (shares), bonds, property and cash. The asset allocation shows the types of assets the fund invests in and the proportion of the fund invested in each one.

Asset class

The different financial instruments or types of investment which investors, including fund managers, can buy, such as shares, bonds, commodities or property. Each asset class has different characteristics in terms of income and capital generated. The choice of which asset class to invest in can depend on your view of the economy, risk appetite and investment needs and goals.

Auditor

An individual or company who inspects and verifies the accuracy of a company’s operational and/or financial records.

Aviva Investors Responsible Investment Policy

The framework for responsible investment that Aviva Investors applies taking into consideration environmental, social and governance factors on investment opportunities.

B

Balanced

Balanced funds are mutual funds that invest money across asset classes, a mix of low- to medium-risk stocks, bonds, and other securities. Their holdings are balanced between equity and debt, with their objective between growth and income.

Bank of England base rate

The interest rate that the Bank of England will charge to lend money to a commercial bank.

Benchmark

The performance of a fund is often compared with a benchmark or a performance indicator. A benchmark can be an index, combination of indices, hypothetical fund, or peer group universe. When a fund is managed against a specified benchmark, it aims to match or outperform this benchmark. Only a few of our funds are managed against a benchmark. These include the Aviva Investors UK Index Tracking Fund and the Aviva Investors International Index Tracking Fund.

Beta

In relation to investment, beta is a measure of the volatility of a security’s price relative to the market as a whole, usually represented by an index. When beta is high, the movement in a security’s price is closely correlated to the movement in the overall market price.

Bid to bid

The bid price is usually the selling price of a share or unit as it is the highest price a buyer is willing to pay. Bid to bid simply means performance has been calculated on a like for like basis.

Bitcoin (BTC)

Bitcoin is a decentralised cryptocurrency that can be sent from end users to other end users directly on a peer-to-peer bitcoin network. The process of transactions does not involve any intermediaries, central banks or administrators and its safety is verified by network nodes through cryptography and blockchain. 

Bonds

These are interest bearing securities which entitle holders to regular interest and repayment at maturity. They are commonly issued by companies and governments and include UK gilts, UK corporate bonds, global bonds and emerging-market bonds.

Bottom-up

An investment approach that focuses on analysing individual companies and their securities rather than the overall market.

C

Capital gains tax

Capital gains tax refers to a federal fee paid from the profit made from a sale of certain types of assets, such as stocks and property. The tax will not be incurred until the asset is sold, despite how long you own it or how much it increases in value.

Capital growth

The increase in the value of your capital (i.e. the amount you invest), excluding income. Capital growth funds aim to choose investments that will increase in value over time. They are not constrained to provide an income. They may, for example, seek out undervalued companies.

Capital markets

Markets that raise money from those who want to invest and make those funds available to businesses or governments.

Cash and equivalents

Cash equivalents are one of the three main asset classes, along with shares and bonds. These securities have a low-risk, low-return profile. Cash equivalents include US government Treasury bills, bank certificates of deposit, bankers’ acceptances, corporate commercial paper and other money market instruments.

Cashflows

The movement of money into or out of a business/financial product during a specified period of time.

Climate transition

Referring to climate change and the long-term shifts in the earth’s environment, this is the term given to the efforts of economies and businesses to pivot to a net-zero future within a certain timeframe. 

Collective investment risk

Investing in any type of collective investment involves certain risks and limitations that you would not face if investing in markets directly, including the risk of delay in liquidating your investment.

Collective investment schemes

Generally, funds which pool investors’ money and invest on their behalf. The only forms of collective investment scheme permitted in the UK for offer to members of the public are unit trusts and investment companies of variable capital.

Commodities

Physical resources such as sugar, wheat, oil, copper and precious metals (e.g. gold).

Comparator benchmark

A benchmark referenced by a fund for the purposes of performance comparison. Many Aviva Investors funds have comparator benchmarks, they are named in the Risk and Performance Management section and we will show the fund’s performance against them. It is also an FCA defined term.

Composite benchmark

This is where more than one index is combined to make a new combined benchmark. Each fund that uses a composite benchmark will describe which mixture of indices are used to create the hybrid benchmark.

Constraining benchmark

This is an FCA term to describe when a benchmark is used to restrict where and how a fund can invest; an example would be when an index-tracking fund passively tracks an index, it is constrained and has to invest in the index benchmark named. Most Aviva Investors actively managed funds do not have constraining benchmarks.

Consumer goods

Consumer goods are purchased for consumption by the average consumer. Consumer goods are the end result of production and manufacturing and are what a consumer will see on the store shelf. Clothing, food and jewellery are all examples. Basic materials such as copper are not considered consumer goods because they must be transformed into usable products.

Consumer price index (CPI)

A consumer price index represents the variation in prices over time for a basket of retail goods and other items, such as transportation, food, and medical care. Changes in CPI are used to evaluate changes associated with living costs. In other words, it can be used to identify periods of inflation or deflation.

Contingent convertible securities (coco bonds)

Contingent convertibles, issued by European financial institutions, are similar to traditional convertible bonds. They have a specific strike price that, once triggered, can convert the bond into equity or stock. Coco bonds offer high yields but also carry higher risk than other bonds issued by financial institutions.

Convertible bonds

These are corporate bonds with an equity option embedded, which in certain circumstances allows the investor to exchange the bond for a fixed number of shares.

Core investment

This is the section in a fund’s Objective and Policy that describes the main instruments the fund will invest in to try and deliver its objectives.

Corporate bond

As per bond, these are specific bonds issued by companies.

Counterparty

An opposite party in a contract or financial transaction.

Counterparty risk

This is the risk that an entity a company does business with becomes unwilling or unable to meet its obligations in a contract or financial transaction.

Credit maturity

The time remaining until a bond is scheduled to be repaid. 

Credit rating

Independent rating agencies assign different ratings to bonds depending on the bond issuers’ financial strength and their outlook, as well as their ability to pay interest on time and meet all of their liabilities. We use ratings supplied by Standard & Poor’s. The most secure bonds are rated AAA and those at the lowest end are rated D. NR stands for issuers that are “Not Rated”.

Credit risk

A bond or money market security could lose value if the issuer’s financial health weakens. Sub-investment grade bonds (also known as high yield securities) typically have greater credit risk than investment grade securities.

Cryptocurrency

A digital or virtual currency where its transactions are verified and secured by cryptography, which means it cannot be replicated. They are operating themselves independently on the market and are not issued by any centralised authorities, thus they are theoretically exempt from government involvement and manipulation. 

Currency risk

Changes in exchange rates could reduce investment returns or increase investment losses. Exchange rates can change rapidly, significantly and unpredictably.

Custodian

A firm (often a subsidiary of a major banking group) authorised to keep safe assets for other parties. In relation to authorised investment funds, the trustee or depositary is responsible for custody or safekeeping of fund assets, but it may contract a custodian to undertake this task on its behalf.

D

Decentralisation

The meaning of decentralisation will be different in different contexts. In a business context, decentralisation is the process of divesting power, especially referring to planning and decision making, away from a centralised, authoritative organisation.  

Default risk

The risk that of certain bonds or money market instruments may become unable to make payments on their bonds. Under extreme market or economic conditions, defaults could be widespread and their effect on fund performance significant.

Defensive asset allocation

A fund of this type will typically be invested in a varied range of stocks, bonds and cash. A defensive asset allocation aims to take little risk and, as such, generally has a low exposure to equities.

Defensive sectors

Aims to provide a constant dividend and/or stable earnings regardless of the state of the overall stock market.

Derivatives

These are investments whose value depends on another financial asset, for example the price of a bond, currency or share. Derivatives can be used by fund managers to control particular aspects of a fund’s risk, such as interest rate movements, or as an investment in their own right.

Derivatives risk

Derivatives can be complex and highly volatile, with some degree of unpredictability (especially in unusual market conditions). This can lead to losses significantly greater than the cost of the derivative itself.

Distribution

Income generated which has either been paid to you (income shares) or has been added to the value of your investment in the fund (accumulation shares).

Distribution yield

This reflects the amount expected to be distributed over the next year as a percentage of the share price of the fund on the date shown. It does not include the deduction of entry charges and is the gross return before tax on distributions. You may be subject to further tax on your distributions. The yield is not guaranteed.

Diversification

The process whereby an investment strategy spreads its risk by investing in a broad range of assets. Diversification can be by region, sector, company or asset class.

Duration

A measurement of a bond’s price sensitivity to changes in interest rates. A high-duration bond, or one whose maturity date is a long way out in the future, is more sensitive to interest rate changes than a bond with a shorter maturity date.

E

Efficient portfolio management

Managing the fund in a way designed to reduce risk or cost and/or generate extra income or growth.

Emerging markets

This refers to countries whose financial markets and economies are less developed and where investor protections and market infrastructure is often weaker than in developed markets.

Entry charge

A charge may be taken from your money before it is invested. The charge is usually a percentage of the amount invested and is additional to the price paid for the units/shares. The entry charge is deducted from the investment before units/shares are bought and is also known as the “initial charge”.

Equities (shares)

A security providing ownership rights to a company. Equities can be categorised by geography (such as UK equities, US equities and global equities) or company size (e.g. small cap, mid cap and large cap).

Equity risk

Equities can lose value rapidly, remain at low prices indefinitely, and generally involve higher risks — especially market risk — than bonds or money market instruments. Bankruptcy or other financial restructurings can cause the issuer’s equities to lose most or all of their value.

ESG

Environmental, social and governance (ESG) considerations offer investors important insights into investment risks and opportunities. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights

Exit charge

A charge levied on redemption of units/shares in place of or in combination with an entry charge. This is also known as a “redemption charge”. Aviva Investors’ collective investment funds do not currently have exit charges.

F

Fixed income

Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule.

Fixed income risk

Investments in fixed interest securities are impacted by market and credit risk and sensitive to changes in interest rates and market expectations of inflation. Bonds that produce a higher level of income usually have a greater risk of default.

Fund management fee

A fund management fee is a single fixed rate charge to cover the underlying fees, costs and expenses of operating and administrating a fund. It accrues daily and is calculated as a percentage of the net asset value of the fund. The underlying fees, costs and expenses covered by the fund management fee may fluctuate.

Forwards

A contract between two parties to buy or sell an asset as a specified future time at a price agreed upon today.

Frontier markets

Countries that are more established than the least developed countries but still less established than emerging markets.

FTSE® 100 Index*

An index that measures the performance of the shares of the 100 largest companies listed on the London Stock Exchange. It measures the daily share price performance of those 100 firms.

FTSE® 250 Index*

The FTSE 250 measures the performance of the shares of the 250 largest companies listed on the London Stock Exchange not included in the FTSE 100 index.

FTSE® All Share Index*

An index that measures the performance of the shares of all companies listed on the London Stock Exchange.

FTSE® European Index Series*

These measure the performance of companies resident and incorporated in Europe. They are comprised of three real-time tradable indices, which are designed for trading of derivatives, index-tracking funds, exchange traded funds and performance benchmarks. All indices are calculated and published in euros.

Fund launch date

The date a fund was opened.

Fund manager

The fund manager decides when and where to invest the money pooled from investors in the fund. Their decisions and management of the fund are governed by the investment objective and investment policy of the fund, as set out in the Prospectus.

Fund manager report

This is a brief view from the fund manager of reasons behind the recent performance of the fund, plus the outlook for possible market and economic conditions that may affect the fund.

Fund size

The total value of the assets managed within the fund.

G

Gilts

Bonds issued by the UK government.

Growth

The increase in the value of investments.

H

Hedge – as in “to hedge” a position

Making an investment to reduce the risk of adverse price movements in an asset is known as a hedge. Normally, a hedge consists of taking an offsetting position in a related asset.

Hedging risk

Any measures taken to offset specific risks will generate costs (which reduce performance), could work imperfectly or not at all, and if they do work will reduce opportunities for gain.

High-yield bonds

These bonds generally have a higher risk of issuer default than bonds of a higher credit rating (see Credit Quality). Because of this risk however, the yield on these bonds is typically higher.

Historic yield

This reflects the distributions declared over the past year as a percentage of the share/unit price on the date shown. The reported yield does not include entry charges and you may be subject to further tax on your distributions. If a portion of the fund’s expenses are charged to capital, this has the effect of increasing the distributions for the year and constraining the fund’s capital performance to an equivalent extent. This is calculated by looking at the income the fund has paid over the last year and dividing it by the current price.

For example:

Income paid by each unit/share over the last year: 4.2p.
Current price of each unit/share: 100p.
Historic yield = 4.2 ÷ 100 = 0.042 or 4.2 per cent. 

I

IA Sector

Funds with similar characteristics are classed together. This makes it easier to make a fair comparison of funds. The Investment Association (IA) represents the UK investment management industry. There are over 30 IA sectors, for example UK Equity Income, Property and Specialist sectors. Sectors are mostly based on assets and their geographical focus. You can use sectors to compare funds’ performance and charges.

Illiquid security

An asset that cannot easily be sold or exchanged for cash, particularly during volatile periods.

Income

Money paid out by an investment, such as interest from a bond or a dividend from a share.

Income shares/units

These are shares or units where income is paid out (or reinvested in buying additional shares or units).

This type of unit/share typically attracts investors looking for income rather than capital appreciation.

Index

A recognised industry combination of investments based on specific criteria. An index may be used as a benchmark to measure fund performance against (see Benchmark definition).

Inflation risk

Yields on money market instruments may be less than the rate of inflation, meaning that an investor’s purchasing power may erode over time.

Information ratio

Information ratio shows the consistency of the fund manager in generating superior risk-adjusted performance. A higher information ratio shows that a fund manager has outperformed other fund managers and delivered consistent returns over a specified period.

Interest rate risk — bonds

When interest rates rise, bond values generally fall. This risk is generally greater for longer-term bonds and for bonds of higher credit quality.

Interest rate risk — money market instruments

When short-term interest rates fall, the yield on money market instruments generally falls.

Investment grade

When a bond is rated investment grade, its issuer is considered able to meet its obligations, exposing bondholders to a perceived lower default risk.

Investment manager

The company or individual to whom the fund provider company delegates responsibility for deciding how to invest the funds’ assets.

Investment objective

The aim of a fund will generally be to generate income, capital growth or a combination of the two, and/or to provide capital protection.

Investment trusts

These are listed public companies whose business it is to hold and manage a portfolio of investments. Their shares are dealt on the stock exchange.

Investments

Investments can include equities, bonds, property or other assets, whether owned directly or through an investment fund. For instance, shares/units you have bought from us are investments.

Issuer

An issuer is a legal entity that develops, registers and sells securities for the purpose of raising funds.

K

Key Investor Information Document (KIID)

A document that provides key investor information about an investment fund. The KIID must be made available to an investor before they invest in an authorised investment fund.

L

Leverage

Is the term given to longer term borrowing by a fund. The objective of leverage is to borrow money and invest it in assets that will earn a profit - which is greater than the cost of borrowing, thereby enhancing the return to investors. Authorised investment funds that are UCITS are not permitted to leverage up’ in this way. Generally, they may only borrow for the short term, to a limited extent (up to 10% of the funds value), and only for the purposes of managing cash flow. Non-UCITS Retail funds (e.g. property funds) can undertake a modest amount of leverage.

Leverage risk

A small price decline on a “leveraged” underlying investment will create a correspondingly larger loss for the fund. A high overall level of leverage and/or unusual market conditions could create significant losses.

Liquidity

In investment terms, an investment is ‘liquid’ if it can be bought or sold easily and quickly, and, if it is a listed or traded investment, without its market price moving sharply.

Liquid asset

A liquid asset is one that is easily tradeable and can be converted -  or “liquidated”- to cash in a relatively short amount of time during normal market conditions. This could refer to products such as, but not limited to, money market instruments, company shares, government and government bonds, and currencies.

Liquidity risk

In unusual market conditions, the fund could have difficulty selling securities, which could cause it to suffer losses, defer redemption payments or suspend dealing.

Long (or long position)

This is a position held by a fund, which can increase in value if the underlying asset rises in value. Exposure to long positions are used when there is an expectation that the asset will rise in value.

M

Macroeconomics

This refers to the analysis of the whole of an economy. Macroeconomic factors refer to, but are not limited to: economic output, inflation, interest rates, foreign exchange, geopolitical and government developments, and employment.

Managed funds

Holdings in other funds where no further breakdown of assets is available to incorporate in the chart.

Market capitalisation

The company size, or market capitalisation, is determined by the total current value of the company’s shares. If the fund holds equities (shares) then this chart shows the size bands (£) of the companies in which the fund invests.

Market conditions

A term that refers to the state of an industry or economy.

Market risk

Prices of many securities (including bonds, equities and derivatives) change continuously, and can at times fall rapidly and unpredictably.

Market sentiment

Market sentiment reflects investors’ views on a particular asset or market.

Market share

The portion of a market controlled by a company or product.

Mid to mid

This is a classification of the pricing for a single-priced fund. A mid price is the price between the best price of the sellers of the shares and the best price of the buyers. It represents the average of the current buying and selling prices being quoted. In some cases, the mid price will be rounded up or down to the nearest valid tradable price on the exchange system for convenience purposes and therefore will not be the exact average. Mid to mid means the performance has been calculated on a like-for-like basis.

Modified duration

Modified duration is a formula that expresses the measurable change in the value of a security in response to a change in interest rates. Modified duration follows the concept that interest rates and bond prices move in opposite directions.

Modified duration to worst

Yield change calculated to the priced to worst date; generally used to reflect the behavioural characteristics of a bond as of a specific price/yield and date.

Money market instability risk

In extreme market conditions, the value of money market instruments could fall, perhaps significantly.

Money markets

Markets where borrowers, such as governments or companies, raise money by selling short term debt instruments. The debt instruments usually have a maturity (i.e. the time when debt needs to be repaid) of less than one year, and sometimes as little as a few days or weeks. They appear in a variety of forms, such as commercial paper (issued by anyone), certificates of deposit (issued by banks) or gilts or bills (issued by governments).

Morningstar Analyst Rating™

Ratings are awarded to funds which consistently produce the returns they set out to deliver, and Morningstar Analyst Rating™ believes will continue to do so. The ratings are as follows:

Gold = Exceptional;
Silver = Very good;
Bronze = Good.

MSCI® All Country World Index

The MSCI® All Country World Index (ACWI) is a market capitalisation weighted index designed to provide a broad measure of equity market performance throughout the world.

Multi-asset

Multi-asset investing looks to reduce risk by spreading money across stocks, bonds or other assets.

Multi-strategy

Investment across multiple markets and asset classes. Multi-strategy aims to deliver consistently positive returns regardless of the directional movement in equity, interest rate or currency markets. In general, the risk profile of the multi-strategy classification is significantly lower than equity market risk.

Multi-strategy risk

Because the sub-fund is exposed to the risks of multiple markets and asset classes, there is a risk that some or all of its strategies may not perform or correlate as expected.

N

NAV calculation (Net Asset Value calculation)

The Net Asset Value of all a fund’s assets and liabilities.

Net zero

Net zero refers to an ambition to achieve net-zero carbon emissions. It refers to the ambition to offset greenhouse gases and balance the carbon emitted and the carbon removed from the atmosphere. 

Non-classified/other

This category represents all other assets that the fund invests in. This category may also include holdings where there is no accessible data, or the holdings are newly registered and the data is not accessible yet.

O

Ongoing charge

This charge is levied by the fund management company to cover the costs and expenses of managing funds. The ongoing charge excludes any performance fees or portfolio transaction costs, except where paid to the manager, the depositary or trustee and custodian of the funds.

Where a fund invests a significant proportion of its assets in other funds it includes the impact of the charges made in those other funds. Charges are normally deducted on a daily basis and reflected in the price of the units/shares. This means that you will not see them on your statement and do not need to pay for them separately.

Operational risk

Human error or process/system failures, internally or at our service providers, could create losses for the fund.

Outperformance

Outperform is when an investment is expected to perform better than the return generated by a particular index or the overall market. Since the performance of many investments is compared to a benchmark index, outperform refers to a higher return on an investment than a particular benchmark over time.

P

Passive

The fund manager aims to track the performance of a stock exchange index or another investment.

Past performance

The chart/table in the factsheets shows the performance of the fund in percentage terms over the last one month, three months, six months, year, three years, five years and since inception compared with its benchmark.

Please note past performance is not a guide to the future. The past performance shown in our factsheets is net of ongoing charges but doesn’t take into account any entry or exit charges.

Platform

An online service that allows you to buy and sell shares and funds and see your investments in one place.

Pricing basis risk

If we change the pricing basis of the sub-fund, this may protect investors from the effect of trading costs, but could, based on historical data, decrease the value of the fund by as much as 6% or more.

Primary share class

All share classes are allocated to IA sectors but only one share class is listed for performance comparison. This share class is known as the primary share class. Only primary share classes can show a quartile ranking.

Private debt

This is an asset class that refers to the loans or bonds outside of public markets. Examples include real estate debt and infrastructure debt. 

Property

This includes buildings and/or the land belonging to them. Any property that is attached directly to land, as well as the land itself, is called “Real Property” which not only includes buildings and other structures, but also associated rights and interests.

Property sectors

This may include retail, offices and industrial properties.

Prospectus

A document containing information about the fund. It is more detailed than the Key Investor Information Document (KIID), simplified prospectus and key features document. A copy of the prospectus is available on our website.

Q

Quartile rank

This is a measure of how well a fund has performed against all other funds within its IA sector. Quartile rankings are compiled by sorting the funds by performance over a specified time period. Funds in the top 25 per cent performance bracket are assigned a quartile ranking of one, the next 25 per cent are assigned a ranking of two, the next 25 per cent are given a three and the bottom 25 per cent are assigned a ranking of four.

R

Ratings

There are several independent companies who monitor funds, provide ratings and give awards to top performing funds or fund managers.

Rayner Spencer Mills Research (RSMR Group)

Ratings are given to funds that are believed to have reached the required standard to be the best in their sector by the rating agency RSMR Group. These funds may have different methods of investing but all have produced good performance backed up by a defined and understandable process. RSMR ratings don’t have grades.

Real assets

A real asset is defined as an investment class that encompasses tangible, physical assets with an inherent material value. Examples of real assets include, but are not limited to: real estate, infrastructure, natural resources.

Real estate investment risk

Values of these investments, and any earnings the fund receives from them, could fluctuate more than with bonds or shares, and can be hurt by many factors, such as changing demographics, high tax rates or non-payments of rent. Since real estate valuations are somewhat subjective, an asset may prove to be worth less than it was valued at.

Regional/Country allocation chart

Funds can invest in different countries. The chart in this section shows the top ten countries the fund invests in and the proportion invested in each one. In this chart the “Other” category typically represents all other countries not named that the fund invests a very small proportion in, often less than 1 per cent for each country.

Risk-adjusted return

A risk-adjusted return takes into account the amount of risk required to achieve a return and is typically calculated using one of several formulas.

Risk and performance measurement

This is the section of the prospectus that details how we compare the fund’s performance against benchmarks, it describes the benchmarks used and how we compare against them.

Risk profile

A term used to describe the ability or willingness of an investor to accept the risk of loss of capital or the failure to meet certain financial objectives. If you need help to establish your risk profile, you should contact an independent financial adviser or visit a consumer information website such as the MoneyHelper.

Risk range

The highest and lowest levels of risk that a fund is willing to take on to meet its strategic objectives.

Risk summary

This is a summary of key risks that apply when investing in the fund. Further information about these risks can be found in the Key Investor Information Document and Prospectus. Copies in English can be obtained free of charge from our website www.avivainvestors.com or you can order copies by contacting us on 0800 051 2003*

*Calls to this number may be recorded for training and monitoring purposes, and to comply with applicable law and regulations. Calls are free from UK landlines and mobiles.

S

Sector allocation/Breakdown

A sector breakdown provides details of the sectors represented within a fund or portfolio, usually expressed as a portfolio percentage. The amount allocated to a particular sector can vary depending on the fund’s investment criteria and objective.

Share

An equal portion representing part ownership of a company or fund.

Sharpe ratio

The ratio describes how much excess return you are receiving for the extra volatility you endure for holding a riskier asset.

Short (or short position)

This is a position not “owned” by the fund, which can increase in value if the underlying asset falls in value. Exposure to short positions are gained through derivatives.

Sovereign

Bonds issued by a national government in either its own or a foreign currency.

Speculation

Speculation is an advanced trading strategy that can generate significant returns but comes with high risk. Experienced investors use this strategy to make maximum profits from a highly volatile market. 

Square Mile

Ratings are based on qualitative research designed to offer advisers a solid foundation for client investment propositions and recommendations.

The ratings are as follows:
A (lowest) – AAA (highest);
R = recommended; P+ = positive prospect.

Stewardship

The meaning of stewardship is the  management or oversight of investments in a responsible way. It encompasses micro (or corporate) stewardship, whereby investors engage with companies to drive positive change in their business models and practices, and macro stewardship, where investors engage with governments and other stakeholders to correct market failures, including climate change, inequality and biodiversity loss. 

Stock lending

Process whereby those holding investments (such as a fund) lend them to other parties who pay a fee for borrowing.

Strategy

This is a section of the fund Objective and Policy where we describe the way the investments are chosen for the fund; it details how the fund manager intends to try and achieve the aims of the fund and the type of investments they aim to identify.

Sub Fund

Individual investment funds that when grouped together form a single legal entity.

Sub-investment grade bonds (also known as non-investment grade)

A bond is considered investment grade if it’s rating BBB- or higher by Standard & Poor’s or Baa3 or higher by Moody’s. Any bonds rated lower than this are referred to as sub-investment grade bonds. Lower ratings indicate a lower probability of an issuer being able to meet its payment obligations.

Supranational organisation

An organisation that operates in multiple countries. The term most often describes an international government or quasi-government organisation. Examples include the United Nations and the International Monetary Fund. 

T

Target benchmark

Where a fund has a target benchmark, it will aim to beat the benchmark in terms of income paid or a mixture of income and growth. A target benchmark is usually an index but can be other things too like a set amount of growth. A target benchmark might also be a specific amount of outperformance when compared to a benchmark.

Target outcome risk

Any outcomes stated as targets are not guaranteed and may not be achieved.

Top-down

An investment approach that looks at the overall economy or industry, then at the detail, like how individual shares are performing.

Top ten funds

This section lists the ten largest sub-funds, by value that the fund holds.

Top ten holdings

Some funds invest in hundreds of different companies. This section shows the ten largest assets by value the fund holds. Where percentages are shown, these show how much of the fund is invested in this asset.

Tracking error

A measure of the risk in an investment portfolio that is due to active management decisions made by the portfolio manager; it indicates how closely a portfolio follows the index to which it is benchmarked.

Transaction costs

These are the costs incurred when buying or selling assets.

U

Underlying fund

The investments that make up a mutual fund. The value of a single share or unit of the fund is based on the combined value of its underlying investments.

Underlying fund risk

To the extent that the fund invests in shares of other funds, it takes on the one-time and ongoing costs of those shares. It also takes on the risks of those shares, including the derivatives risk and counterparty risk arising from any embedded derivatives (which are common in exchange-traded funds (ETFs).

Underlying yield

This reflects the annualised income, net of expenses, of the fund as a percentage of the share price of the fund on the date shown. It does not include the deduction of entry charges and is the gross return before tax on distributions.

Note: The distribution yield is higher than the underlying yield where a portion of the fund’s expenses are charged to capital. This has the effect of increasing the distribution(s) for the year and constraining the fund’s capital performance by an equivalent extent.

Unit

An equal portion representing part ownership of a unit trust fund (note: ‘Share’ has a similar meaning but for funds structured as corporate entities such as an open-ended investment company).

V

Volatility

A measure of how much the value of an asset moves up and down.

Volatility target

Some funds may have a volatility target, for example to deliver returns with half the volatility of global equities.

Y

Year-on-year performance

This displays the performance of the fund in percentage terms, often over the last five years, with this performance split into separate one-year periods. The periods run up to the latest calendar quarter end.

Yield

The income from an investment, usually stated as a percentage of the value of the investment.

Miscellaneous

The following terms are commonly used in investment objectives and policies of funds. It should be noted that this list is not exhaustive. The percentage quoted is the minimum amount of the scheme property which may be invested in, for example, the particular sector or geographic area to which the term is applied:

Almost exclusively: 90%
Chiefly: 80%, Predominantly: 80%
Principally: 80%, Substantially: 80%
Significant: 80%
Aims to invest in: 70%
Primarily: 70%
Tendency: 60%
Orientated/oriented: 60%
Generally: 60%
Emphasis: 60%
General intention: 60%
Majority: 51%
Mainly: 50%

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Important information

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL) as at 07/04/22. Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable, but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. This material is not a recommendation to sell or purchase any investment.

In the UK this is issued by Aviva Investors Global Services Limited. Registered in England No. 1151805.  Registered Office: 80 Fenchurch Street, London EC3M 4AE.  Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178.