and Contact Information
Absolute return: Used to describe investments which seek to achieve a positive return over an explicit timeframe. Typically funds with this performance aim use different strategies to make a return even when markets are falling, although this is never guaranteed.
Annual (Management) Charge: An ongoing fee paid to the management company for managing an investment, usually charged as a percentage of the investment.
Asset-backed bonds: A type of security backed by a pool of assets, such as loans or credit card debt, that have been securitised.
Asset classes: A broad group of securities or investments that have similar financial characteristics. Cash is considered an asset class.
Asset servicing: An umbrella term to describe the broad range of services involved in the safekeeping and administration of assets.
Authorised Corporate Director: The ACD acts as an independent steward protecting the interests of investors in a fund. Overseeing the investment manager to ensure the fund is run in accordance with its stated objectives and UK regulations, rules and principles, the ACD has the ultimate regulatory responsibility for a fund. They are accountable to the UK regulator, the Financial Conduct Authority.
Benchmark: A baseline for comparison.
Bond: A loan of money by an investor to a company or government for a stated period of time in exchange for a fixed interest rate payment and the repayment of the initial amount at its conclusion.
Custody: securing and managing the securities held within a fund. External custodians are used to provide this service (see third party services on following page).
Derivatives: A financial instrument that derives its value from something else. They can be used to gain exposure to, or help protect against, expected changes in the value of the underlying investments. They can be traded on a regulated exchange or over the counter.
Dividends: a sum of money paid regularly by a company or investment fund, to its shareholders out of its profits.
Equity: Shares issued by a company, representing an ownership interest.
Exchange-traded fund (ETF): is a security that tracks a particular set of equities or index but trades like a stock on an exchange. It is considered to be a low cost index fund.
FCA: The Financial Conduct Authority is responsible for oversight of the UK asset management industry.
Index: A hypothetical portfolio of securities representing a particular market or a portion of it. For example, the S&P 500 is an index of the 500 largest publicly traded companies in the US.
Institutional investor: A company or organisation (such as pensions and insurance companies) that invests money on behalf of other people.
Investment grade bonds: A rating given by a recognised credit rating agency to indicate the company or government behind a bond has relatively less risk of defaulting compared to lower rated investments.
Ongoing Charge Figure (OCF): this is the amount in percentage points, an investor will pay for the services provided by a fund. This is made up of a manager's fees for running the portfolio, along with other costs, such as administration. It's meant to be used as a standardised method of comparing the costs of funds.
Platform: A service that allows fund investments to be bought online, often used by financial advisers buying on behalf of their clients.
Quasi-government: A quasi-government organisation is one supported by the government but is managed privately.
Rolling (returns): annualised average returns for a period, ending with the listed year.
Retail investors: An individual, non-professional investor in funds who tends to purchase securities for their own personal accounts. They often trade in smaller amounts compared to institutional investors.
Share (or unit) class: An investment fund has different types of shares (or units in the case of a unit trust) investors can buy. Each ‘class’ has varying benefits and drawbacks.
Total returns: it is the total amount - capital gains and any income distributed - made, or lost, from an investment.
Volatility: Large and/or frequent moves up or down in the price or value of an investment or market.
Yield: The income return from an investment, be it interest from a bond or a dividend from an equity.
FCA’s Seven-factor criteria for analysis:
Performance: The net-of-fees return provided to investors in the fund, this is to be measured over the appropriate timescale and against the fund’s objective, as stated in the prospectus.
Quality of service: The range and the quality of service provided to holders of the fund. This is to take into account services provided to the fund by third parties, along with the services investors receive.
Comparable Market Rates: A comparison between the charges of the fund and those levied by similar funds in the market. Comparability is determined by the size, investment objectives and policies of the fund.
Comparable Services: This is an internal comparison, similar to comparable market rates but based on comparable services offered by the firm.
Costs: A breakdown of all costs borne by the fund, and an identification of whether that charge was fair or not. Costs will not only related to annual charges but also other costs charged by the fund, relative to the cost base.
Economies of scale: An assessment of whether savings were able to be achieved due to greater fund size and whether these savings were passed on to investors.
Classes of shares/units: An assessment of whether all the investors within a fund are in the appropriate investment class, and whether they could be in a cheaper class for their investor type and investment amount.
Write: BNY Mellon Fund Managers Limited Client Service Centre PO Box 366 Darlington DL1 9RF Retail investors Tel: 0800 614 330/ +44 (0)20 3528 4002 Fax: 0870 275 0010/ +44 (0)20 7964 2708 Email: clientservices@bnymellon.com
Institutional Investors Tel: 0344 892 0149/ +44 (0)20 3528 4157 Fax: 0844 892 2716/ +44 (0)20 7964 2708 Email: institutions@bnymellon.com
Pension Funds and Charity Organisations Tel: 0344 892 2715/ +44 (0)20 3528 4070 Fax: 0844 892 2716/ +44 (0)20 7964 2708 Email: pfco@bnymellon.com
Our phone lines are open Monday to Friday 8.30am until 5.30pm, UK time. Telephone calls may be recorded for monitoring and training purposes.