1

INVESTMENT GLOSSARY

THE RICHER RETIREMENT SPECIALISTS

2

A

Accrued interestInterest deemed to be earned on a security but not yet paid to the investor.

Active managementAn approach to investing whereby capital is allocated according to the judgment of the investor or fund manager(s). The active investor aims to beat the returns from the stockmarket or specified index/sector, rather than to match them.

Active managerA fund manager who follows an active approach to investing. The active investor aims to beat the returns from the stockmarket or specified index/sector rather than to match them.

AlphaThe excess return of a fund relative to the return of its comparative index. It is often considered to represent the value that a portfolio manager adds to or subtracts from a fund’s return.

Ask price (or offer price)The price at which a seller offers to sell a security.

AssetAnything having commercial or exchange value that is owned by a business, institution or individual.

Asset allocationApportioning a portfolio’s assets according to risk tolerance and investment goals.

Asset classCategory of assets, such as cash, company shares, fixed income securities and their sub-categories, as well as tangible assets such as real estate.

Asset valueThe total of fixed and current assets less current liabilities (see Net asset value).

Average lifeOn a mortgage security, the average length of time that each principal pound is expected to be outstanding, based on certain assumptions about prepayment speeds.

About Avantis WealthAvantis Wealth is an investment broker specialising in high income property investments that typically offer net annual returns in the range of 7% to 15%. We provide our clients with investment opportunities that enable them to achieve market leading returns from their pensions, investments and savings, potentially leading to greater financial security and a better quality of life.

Visit us at www.avantiswealth.com

3

BBasis pointOne one-hundredth (.01) of a percentage point. For example, eight per cent would be equal to 800 basis points. Yield differences are often quoted in basis points (bps).

Bearer bondA physical bond that does not identify its owner and is presumed to be owned by the person who holds it.

Bear marketA market in which the prices of securities are falling, and widespread pessimism often causes the negative sentiment to be self-sustaining.

Bid priceThe price at which a buyer is willing to purchase a bond or share.

BondA loan in the form of a security, usually issued by a government or company, which normally pays a fixed rate of interest over a given time period, at the end of which the initial amount borrowed is repaid.

Bond fundAn investment vehicle, which invests in a portfolio of bonds that is professionally managed. Types of bond funds include open-ended mutual funds, closed-end mutual funds, and exchange traded funds.

Bond issueA set of fixed income securities offered for sale to the public by a company or government. If the bonds are sold for the first time, it is called a ‘new issue’.

Bond insurers and reinsurersSpecialised insurance firms serving the fixed-income market that guarantee the timely payment of principal and interest on bonds they insure in exchange for a fee.

Bond swapThe sale of a block of bonds and the purchase of another block of similar market value.

Book-entryA method of recording and transferring ownership of securities electronically, eliminating the need for physical certificates.

Bottom-up selectionSelecting stocks based on the attractiveness of a company.

Bullet bond / Bullet maturityA bond that pays regular interest, but that does not repay principal until maturity.

Bull marketA market in which the prices of securities are rising, often characterised by investor optimism and confidence in continuing strong returns.

BundsFixed income securities issued by the German government.

4

CCallable bondsBonds that are redeemable by the issuer prior to the maturity date, at a specified price at or above par.

Call premiumThe sterling amount paid to the investor by the issuer for exercising a call provision that is usually stated as a per cent of the principal amount called.

CapThe maximum interest rate that may be paid on a floating-rate security.

CapitalRefers to the financial assets, or resources, that a company has to fund its business operations.

Capital at riskThe risk an investor faces that he or she may lose all or part of the assets invested.

Capital gains taxCapital gains tax is the tax to which the individual is liable on realised capital gains accruing in a year of assessment during any part of which he is resident in the UK. There is a CGT exemption limit - currently £11,100 for the 2015-16 tax year and any gains up to that will not be taxable.

Capital growthOccurs when the current value of an investment is greater than the initial amount invested.

Capital returnThe term for the gain or loss derived from an investment over a particular period. Capital return includes capital gain or loss only and excludes income (in the form of interest or dividend payments).

Capital structureThe composition of a firm’s liabilities - refers to the way a firm finances its assets through a combination of equity, which refers to raising funds by selling shares, and debt. Often when capital structure is referred to, the focus is on the firm’s debt-to-equity ratio, which is an indicator of how risky a company is.

CapitalisationThe total market value of all of a company’s outstanding shares.

Cash equivalentsDeposits or investments with similar characteristics to cash.

Closed-end fundAn investment medium, such as a UK Investment Trust company, with a fixed capital structure. Variations in demand for the shares of the fund are reflected in movements in their market prices and not by an expansion or contraction in their supply.

CollarUpper and lower limits (cap and floor, respectively) on the interest rate of a floating-rate security.

ComplianceKeeping within the rules and regulations of the Financial Conduct Authority (see definition). Each investment business will have its own staff of compliance personnel to carry out self-policing functions.

Compound interestInterest that is calculated on the initial principal and previously paid interest.

Consumer Prices Index (CPI)An index used to measure inflation, which is the rate of change of prices for a basket of goods and services. The contents of the basket are meant to be representative of products and services we typically spend our money on.

5

Convertible bondsFixed income securities that can be exchanged for predetermined amounts of company shares at certain times during their life.

Corporate bondsFixed income securities issued by a company. They are also known as bonds and can offer higher interest payments than bonds issued by governments as they are often considered more risky.

Corporation taxThe tax chargeable on the profits of a UK company.

CouponThe interest paid by the government or company that has raised a loan by selling bonds.

Coupon paymentThe actual pound amount of interest paid to an investor. The amount is calculated by multiplying the interest of the bond by its face value.

Coupon rateThe interest rate on a bond, expressed as a percentage of the bond’s face value. Typically, it is expressed on a semi-annual basis.

CreditThe borrowing capacity of an individual, company or government. More narrowly, the term is often used as a synonym for fixed income securities issued by companies.

Credit default swaps (CDS)Are a type of derivative, namely financial instruments whose value, and price, are dependent on one or more underlying assets. CDS are insurance-like contracts that allow investors to transfer the risk of a fixed income security defaulting to another investor.

Credit ratingAn independent assessment of a borrower’s ability to repay its debts. A high rating indicates that the credit rating agency considers the issuer to be at low risk of default; likewise, a low rating indicates high risk of default. Standard & Poor’s, Fitch and Moody’s are the three most prominent credit rating agencies. Default means that a company or government is unable to meet interest payments or repay the inital investment amount at the end of security’s life.

Credit rating agencyA company that analyses the financial strength of issuers of fixed income securities and attaches a rating to their debt. Examples include Standard & Poor’s and Moody’s.

Credit researchThe process of evaluating a fixed income security, also called a bond, in order to ascertain the ability of the borrower to meet its debt obligations. This research seeks to identify the appropriate level of default risk associated with investing in that particular bond.

Credit riskRisk that a financial obligation will not be paid and a loss will result for the lender.

Credit spreadThe difference between the yield of a corporate bond, a fixed income security issued by a company, and a government bond of the same life span. Yield refers to the income received from an investment and is expressed as a percentage of the investment’s current market value, and a bond is a fixed income security.

Credit systemRefers to the means of making loans; a set of regulations and institutions involved in making loans on a commercial basis.

Current yieldThe ratio of the interest rate payable on a bond to the actual market price of the bond, stated as a percentage. For example, a bond with a current market price of par (£1000) that pays eighty pounds (£80) per year would have a current yield of eight per cent.

6

DDated date (or Issue date)The date of a bond issue from which a bond begins to accrue interest.

DefaultWhen a borrower does not maintain interest payments or repay the amount borrowed when due.

Default riskRisk that a debtholder will not receive interest and full repayment of the loan when due.

DerivativesFinancial instruments whose value, and price, are dependent on one or more underlying assets. Derivatives can be used to gain exposure to, or to help protect against, expected changes in the value of the underlying investments. Derivatives may be traded on a regulated exchange or traded over the counter.

Developed economy/marketWell-established economies with a high degree of industrialisation, standard of living and security.

Diluted net asset valueA method of calculating the net asset value of a company that has issued and has outstanding convertible loan stocks (see definition), warrants (see definition) or options. The calculation assumes that the holders have exercised their right to convert or subscribe, thus increasing the number of shares among which the assets are divided.

DiscountThe condition under which the par value of a bond exceeds its market price. For example, a £1,000 par amount bond, which is valued at £980 would be said to be trading at a 2% discount [(£1000-£980)/£1000=2%].

Discount noteShort-term obligations issued at a discount from face value, with maturities ranging from one to 360 days. Discount notes have no periodic interest payments; the investor receives the note’s face value at maturity. For example, a one year, £1,000 face value discount note purchased at issue at a price of £950, would yield £50 or 5.26 per cent (£50/£950).

DistributionRefers to the periodical paying-out of interest or dividends received by funds to their shareholders. Dividends represent a share in the profits of a company and are paid out to the owners of company shares at certain times during the year.

Distribution yieldExpresses the amount that is expected to be distributed over the next 12 months by a fund as a percentage of the share price of this fund as at a certain date.

DiversificationThe practice of investing in a variety of assets. This is a risk management technique where, in a well-diversified portfolio, any loss from an individual holding should be offset by gains in other holdings, thereby lessening the impact on the overall portfolio.

DividendDividends represent a share in the profits of the company and are paid out to a company’s shareholders at set times of the year.

Duration riskThe longer a fixed income security, also called a bond, or bond fund’s duration, the more sensitive and therefore at risk it is to changes in interest rates.

7

EEarnings per shareAn indicator of a company’s profitability - calculated as the net profit of a company divided by the number of shares in issue.

Embedded optionA provision that gives the issuer or the bondholder an option, but not the obligation, to take an action against the other party. The most common embedded option is a call option, giving the issuer the right to call, or redeem, the principal of a bond before the scheduled maturity date.

Emerging economy or marketEconomies in the process of rapid growth and increasing industrialisation. Investments in emerging markets are generally considered to be riskier than those in developed markets.

EpisodeA phase during which investors allow their emotions to affect their decision making, which can cause financial markets to move irrationally.

EquitiesShares of ownership in a company.

Equity capitalThat part of a company’s capital entitled to the residue of capital and income after all prior claims have been discharged. Usually equity capital is expressed as ordinary shares or stock units, but it may be a combination of different classes of capital (e.g. ordinary and deferred, ‘A’ ordinary and ‘B’ ordinary shares).

Exchange tradedCan be said of any asset traded on an exchange, such as company shares on a stock exchange.

Exchange-traded fundA fund that tracks an index, a commodity or a basket of assets. It is passively-managed like an index fund, but traded like a stock on an exchange, experiencing price changes throughout the day as they are bought and sold. Bond ETFs like bond mutual funds, hold a portfolio of bonds and can differ widely in their investment strategies.

Ex-dividend dateThe date on which declared distributions officially belong to underlying investors, rather than the fund, usually the first business day of the month.

ExposureThe proportion of a fund invested in a particular share/fixed income security, sector/region, usually expressed as a percentage of the overall portfolio.

Extension riskThe risk that investors’ principal will be committed for a longer period of time than expected. In the context of mortgage- or asset-backed securities, this may be due to rising interest rates or other factors that slow the rate at which loans are repaid.

8

FFace (or Par value or Principal value)The principal amount of a security that appears on the face of the instrument.

Financial Conduct Authority (FCA)The independent body that regulates the financial services industry in the UK. It was given statutory powers by the Financial Services and Markets Act 2000.

Financial Times Stock Exchange Actuaries All-Share Index (The All-Share)A broadly based index covering listed UK industrial, commercial and financial companies, including Investment Trusts.

Financial Times Stock Exchange 100 Index (FTSE 100)A computerised Stock Exchange index launched on 13th February 1984 (3rd January 1984=1,000). It is a weighted arithmetic index based on the minute-by-minute share price movements of 100 of the most highly capitalised companies listed on the London Stock Exchange.

Fiscal policyGovernment policy on taxation, spending and borrowing.

Fixed income securityA loan in the form of a security, usually issued by by a government or company, which normally pays a fixed rate of interest over a given time period, at the end of which the initial amount borrowed is repaid.

Fixed rate bondA long-term bond with a set interest rate to maturity.

Floating rate notes (FRNs)Securites whose interest (income) payments are periodically adjusted depending on the change in a reference interest rate.

FloorThe lower limit for the interest rate on a floating-rate bond.

F.R.E.S.H. investment philosophyThe F.R.E.S.H. investment philosophy was developed by Rod Thomas FCA, to select only the best property investments to offer clients. F.R.E.S.H. investments satisfy the following criteria:

• Fixed returns – this means that you know in advance the income that you receive in years to come.

• Regular high income – we expect investments to provide regular income, unless compound growth is chosen.

• Exit strategy defined – getting into an investment is easy. We also want our clients to be able to exit at the end of the investment without drama.

• Security – we require all investments to be legally secured.

• Hands-off – all our investments are fully managed and require zero involvement.

Visit www.avantiswealth.com for more information on our unique investment philosophy

9

Foreign exchangeThe exchange of one currency for another, or the conversion of one currency into another currency. Foreign exchange also refers to the global market where currencies are traded virtually around the clock. The term foreign exchange is usually abbreviated as ‘forex’ and occasionally as ‘FX’.

Foreign exchange (FX) strategyCan be considered as an asset class in its own right, along with company shares, fixed income securities, property and cash. Currencies can therefore be used as a source of investment returns.

Forward contractA contract between two parties to buy or sell a particular commodity or financial instrument at a pre-determined price at a future date. Foward contracts are negotiated between two parties and are traded privately, or usually referred to as ‘over-the-counter’.

Fundamentals (company)A basic principle, rule, law, or the like, that serves as the groundwork of a system. A company’s fundamentals pertain specifically to that company, and are factors such as its business model, earnings, balance sheet and debt.

Fundamentals (economic)A basic principle, rule, law, or the like, that serves as the groundwork of a system. Economic fundamentals are factors such as inflation, employment, economic growth.

FuturesA futures contract is a contract between two parties to buy or sell a particular commodity or financial instrument at a pre-determined price at a future date. Futures are traded on a regulated exchange.

Future valueThe value of an asset at a specified date in the future, calculated using a specified rate of return.

10

GGearingIs the level of a company’s debt in relation to its assets. A company with significantly more debt than capital is considered to be geared.

GiltsFixed income securities issued by the UK government.

Government bondsFixed income securities issued by governments, that normally pay a fixed rate of interest over a given time period, at the end of which the initial investment is repaid.

Gross redemption yieldReturn on a fixed interest security, or any investment with a known life, expressed as an annual percentage. Redemption yield measures the capital as well as income return on investments with a fixed life.

Gross yield on assetsThe total gross revenue that would be earned in a complete year from all securities and investments held as a percentage of total assets less current liabilities.

HHedgingA method of reducing unnecessary or unintended risk.

High grade bondSee Investment-grade bond.

High water mark (HWM)The highest level that a fund’s NAV (net asset value) has reached at the end of any 12-month accounting period.

High yield bondsFixed income securities issued by companies with a low credit rating from a recognised credit rating agency. They are considered to be at higher risk of default than better quality, ie higher-rated fixed income securities but have the potential for higher rewards. Default means that a company or government is unable to meet interest payments or repay the initial investment amount at the end of security’s life.

Hurdle rateIndicates the compound rate of growth of the total assets required each year between now and the wind-up date if they are to be sufficient to repay the shareholders the predetermined redemption price. Any class of share ranking for prior payment should be taken into account in this calculation.

11

IIncome yieldRefers to the income received from an investment and is usually expressed annually as a percentage based on the investment’s cost, its current market value or face value.

IndexAn index represents a particular market or a portion of it, serving as a performance indicator for that market.

Index trackingA fund management strategy that aims to match the returns from a particular index.

Index-linked bondsFixed income securities where both the value of the loan and the interest payments are adjusted in line with inflation over the life of the security. Also referred to as inflation-linked bonds.

Index-linked fundA mutual fund that invests in index-linked bonds. The latter are fixed income securities where both the value of the loan and the interest payments are adjusted in line with inflation over the life of the securitiy.

InflationThe rate of increase in the cost of living. Inflation is usually quoted as an annual percentage, comparing the average price this month with the same month a year earlier.

Inflation riskThe risk that inflation will reduce the return of an investment in real terms.

Inflation-linked bondsFixed income securities where both the value of the loan and the interest payments are adjusted in line with inflation over the life of the security. Also referred to as index-linked bonds.

Initial public offering (IPO)The first sale of shares by a private company to the public.

InterestCompensation paid or to be paid for the use of assets, generally expressed as a percentage rate of par.

Interest rate riskThe risk that a fixed income investment will lose value if interest rates rise.

Interest rate swapAn agreement between two parties to swap a fixed interest payment with a variable interest payment over a specified period of time.

Investment grade bondsFixed income securities issued by a company with a medium or high credit rating from a recognised credit rating agency. They are considered to be at lower risk from default than those issued by companies with lower credit ratings. Default means that a company or government is unable to meet interest payments or repay the inital investment amount at the end of a security’s life.

Investment Trust companyA public limited company that uses the funds provided by its shareholders to invest in other companies.

Issue dateSee Dated date.

IssuerAn entity that sells securities, such as fixed income securities and company shares.

12

JJunk bondSee High-yield bond.

KKey Investor Information Documents (KIIDs)These documents provide you with key investor information about the funds. It is not marketing material. The information is required by law to help you understand the nature and the risks of investing in each fund. You are advised to read it so you can make an informed decision about whether to invest.

13

LLeverageWhen referring to a company, leverage is the level of a company’s debt in relation to its assets. A company with significantly more debt than capital is considered to be leveraged. It can also refer to a fund that borrows money or uses derivatives to magnify an investment position.

LiquidityA company is considered highly liquid if it has plenty of cash at its disposal. A company’s shares are considered highly liquid if they can be easily bought or sold since large amounts are regularly traded.

Listed investmentsInvestments which have an official listing on one of the world’s recognised stock markets.

LIBOR (London Interbank Offered Rate)The interest rates banks charge each other for short-term eurodollar loans. LIBOR is frequently used as the base for resetting rates on floating-rate securities.

Liquidity (or marketability)A measure of the relative ease and speed with which a security can be purchased or sold in a secondary market.

Loan noteAn extended form of an IOU from one party to another that enables a payee to receive payments (possibly with interest) over a set period of time, ending with the date at which the entire loan is to be repaid.

Long positionRefers to ownership of a security held in the expectation that the security will rise in value.

14

MMacroeconomicRefers to the performance and behaviour of an economy at the regional or national level. Macroeconomic factors such as economic output, unemployment, inflation and investment are key indicators of economic performance. Sometimes abbreviated to ‘macro’.

MarketabilitySee Liquidity.

Management chargeThe cost of managing the investments of a fund, charged annually against its income and/or capital.

Market capitalisationThe value of a company as determined by multiplying the number of shares in issue by the price of the shares.

Market priceThere are two prices quoted to dealers by stockbrokers: the higher or offer price at which they will sell you shares and the lower or bid price at which they will buy your shares. The difference between the two is known as the ‘spread’ or ‘turn’ (see Mid-market price).

MaturityThe length of time until the initial investment amount of a fixed income security is due to be repaid to the holder of the security.

Modified durationA measure of the sensitivity of a fixed income security, called a bond, or bond fund to changes in interest rates. The longer a bond or bond fund’s duration, the more sensitive it is to interest rate movements.

Monetary easingWhen central banks lower interest rates or buy securities on the open market to increase the money in circulation.

Monetary policyA central bank’s regulation of money in circulation and interest rates.

Monetary tighteningWhen central banks raise interest rates or sell securities on the open market to decrease the money in circulation.

Mortgage-backed bonds or securities (MBS)Mortgage-backed securities, called MBS are bonds or notes backed by mortgages on residential or commercial properties—an investor is purchasing an interest in pools of loans or other financial assets. As the underlying loans are paid off by the borrowers, the investors in MBS receive payments of interest and principal over time.

Mutual fund (or Open-end fund)Investment companies that invest pooled cash of many investors to meet the fund’s stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund’s current net asset value: total fund assets divided by shares outstanding.

15

NNear cashDeposits or investments with similar characteristics to cash.

NetThe proportion of a fund invested in, for example, different sectors. Derivatives are included. The latter are financial instruments whose value, and price, are dependent on one or more underlying assets.

Net asset value (NAV)The net worth of a company’s equity capital usually expressed in pence per share.

NAV total returnMeasures the performance of shareholders’ funds per share and thus assesses the management of the company. It is the theoretical total return on shareholders’ funds per share, reflecting the change in NAV assuming that net dividends paid to shareholders were reinvested in the NAV (see also Share price total return).

Nominee companyA company formed by a bank or other organisation for the purpose of holding shares on behalf of the beneficial owner. Nominee company employees carry out all the paperwork and other work associated with the documentation of shareholding and arrange for necessary transfers when a share is sold.

Non-callable bondA bond that cannot be called for redemption by the issuer before its specified maturity date.

16

OOffer priceSee Ask.

Offering document (Official statement or Prospectus)The disclosure document prepared by the issuer that gives in detail security and financial information about the issuer and the bonds or notes.

Official statementSee Offering document.

Offshore fundAn investment scheme in which the company running the scheme is legally based outside the tax regime of the country whose residents are investing in it. Frequently the host country for the company deliberately offers legal or tax privileges; at other times, the tax regime is simply more beneficial to such schemes than that of the investors’ country of residence. Such host countries are often referred to as tax havens.

Open-ended investment company (OEIC)A type of managed fund, whose value is directly linked to the value of the fund’s underlying investments.

Open-end mutual fundSee Mutual fund and above.

OptionsFinancial contracts that offer the right, but not the obligation, to buy or sell an asset at a given price on or before a given date in the future.

Ordinary sharesThe main type of equity capital, and the main sort of Investment Trust share which is of interest to the private investor (see Equity Capital).

Over-the-counter (OTC)Whereby financial assets are traded directly between two parties. This is in contrast to exchange trading, which is carried out through exchanges set up specifically for the purpose of trading. OTC is also known as off-exchange trading.

OverweightIf a fund is ‘overweight’ a stock, it holds a larger proportion of that stock than the comparable index or sector.

17

PPar valueSee Face.

Passive managementAn approach to investing whereby capital is allocated according to the stock or sector weightings of an index. Passive management is also referred to as ‘indexing’ or ‘tracking’.

Passive managerA fund manager who takes a passive approach to investing. The passive investor aims to match the returns from the stockmarket or specified index/sector, rather than to beat them.

Paying agentThe entity, usually a designated bank or the office of the treasurer of the issuer, that pays the principal and interest of a bond.

Payment dateThe date on which distributions will be paid by the fund to investors, usually the last business day of the month.

Pension ReviewA pension review will show you what your existing pension(s) may give you in retirement. Unfortunately, this might be less than you expect, and less than you need. If you’re worried about not having enough income to maintain your lifestyle in retirement, apply for a complimentary pension review with Avantis Wealth and our preferred IFA today. It’s quick, easy, and will leave you in a strong position to make good decisions about the future. The pension review will show you:

• The five year performance of your fund

• Costs and charges you are incurring• The current value of your pension

fund• Your possible income on retirement

if you make no changes

As a result you will be in an informed position to explore options and make good decisions about the future of your pension.

Request your complimentary pension review at www.avantiswealth.com/pensions/pension-review

18

PhysicalThe fund’s exposure excluding derivatives, which are financial instruments whose value, and price, is dependent on one or more underlying securities.

Physical assetsAn item of value that has tangible existence, for example, cash, equipment, inventory or real estate. Physical assets can also refer to securities, such as company shares or fixed income securities.

PremiumThe amount by which the price of a bond exceeds its principal amount.

PrepaymentThe unscheduled partial or complete payment of the principal amount outstanding on a loan, such as a mortgage, before it is due.

Prepayment riskThe risk that principal repayment will occur earlier than scheduled, forcing the investor to receive principal sooner than anticipated and reinvested at lower prevailing rates. The measurement of prepayment risk is a key consideration for investors in mortgage and asset-backed securities.

Present valueThe current value of a future payment or stream of payments, given a specified interest rate; also referred to as a discount rate.

Price-earnings ratioA measure that compares a company’s current share price to its earnings per share. It provides a guide to the market’s opinion about the company’s future earnings prospects. Calculated by dividing the market value per share by the earnings per share.

Primary marketThe market for new issues.

PrincipalThe face value of a fixed income security, which is the amount due back to the investor by the borrower when the security reaches the end of its life.

Private placementAn offer of sale of securities to a relatively small number of investors selected by the company, generally investment banks, mutual funds, insurance companies or pension funds.

Profit & loss (P&L)A financial statement that summarises a company’s revenues, costs and expenses during a specific time period - usually a quarter or year.

ProspectusA document required by law to be published on the occasion of an issue of shares or fixed interest securities to the public. A prospectus gives details of the company and the issue. In the case of listed investments, stock exchanges usually require the publication of more information than the legal minimum obligation. It is a useful document for prospective investors.

19

RRatingsDesignations used by credit rating agencies to give relative indications as to opinions of credit quality.

Real yieldThe return of an investment, adjusted for changes in prices in an economy.

Redemption valueThe amount at which a prior charge is due to be repaid on the expiry of the loan period or on liquidation (see definition). Prior charges are usually repaid at par, but in some cases they may be redeemed above par as a bonus to holders.

Redemption yieldReturn on a fixed interest security or any investment with a known life expressed as an annual percentage. Redemption yield measures the capital as well as income return on investments with a fixed life.

Registered bondA bond whose owner is registered with the issuer or its agent. Transfer of ownership can only be accomplished if the bonds are properly endorsed by the registered owner.

Reinvestment riskThe risk that interest income or principal repayments will have to be reinvested at lower rates in a declining rate environment.

Retail Prices Index (RPI)A UK inflation index that measures the rate of change of prices for a basket of goods and services in the UK, including mortgage payments and council tax.

RevenueIncome from investments is the main item of revenue of an Investment Trust but it will take into account the difference between franked income and un-franked income and between income arising from investments in the United Kingdom, from overseas and from unlisted investments.

Revenue bondA municipal bond payable from income derived from tolls, charges or rents paid by users of the facility constructed with the proceeds of the bond issue.

RiskThe measurable probability that an actual return will be different than expected. There are many types of risk such as market risk, credit risk, interest rate risk, exchange rate risk, liquidity risk, and political risk.

Risk managementThe term used to describe the activities the fund manager undertakes to limit the risk of a loss in a fund.

Risk premiumThe difference between the return from a risk-free asset, such as a high-quality government bond or cash, and the return from an investment in any other asset. The risk premium can be considered the ‘price’ or ‘pay-off’ for taking on increased risk. A higher risk premium implies higher risk.

Risk/reward ratioA ratio comparing the expected returns of an investment with the amount of risk undertaken.

Risk-free assetAn asset that notionally carries no risk of non-payment by the borrower such as a high-quality fixed income security issued by a government or cash.

20

SSafe-haven assetsRefers to assets that investors perceive to be relatively safe from suffering a loss in times of market turmoil.

Savings schemeA facility to enable purchases of company shares to be made easily by the investment of regular (usually monthly) sums of money or by occasional lump sum contributions.

Secondary marketMarket for issues previously offered or sold.

Secured bondA bond that is backed by collateral.

SecurityFinancial term for a paper asset – usually a share in a company or a fixed income security also known as a bond.

Senior bondA bond that has a higher priority than another bond’s claim to the same class of assets.

Settlement dateThe date for the delivery of bonds and payment of funds agreed to in a transaction.

Share price total returnThe share price return including reinvestment of dividends in additional shares at their market price (see also NAV total return).

Short positionA way for a fund manager to express his or her view that the market might fall in value.

Short sellingThis often refers to the practice whereby an investor sells an asset they do not own. The investor borrows the asset from someone who does own it and pays a fee. The investor must eventually return the borrowed asset by buying it in the open market. If the asset has fallen in price, the investor buys it for less than they sold it for, thus making a profit. The contrary may also occur.

Short-dated corporate bondsFixed income securities issued by companies and repaid over relatively short periods.

Short-dated government bondsFixed income securities issued by governments and repaid over relatively short periods.

Sinking fundMoney set aside by an issuer of bonds on a regular basis, for the specific purpose of redeeming debt. Bonds with such a feature are known as “sinkers.”

Sovereign debtDebt of a government.

Standard deviationA statistical measure of dispersion of a set of data from its mean, indicating the spread of a fund’s returns over a certain period of time.

Stamp dutyA tax payable on purchase of ordinary shares, preference shares and convertible loan stocks (and on certain other transactions). Other loan stocks, including debentures, are exempt.

21

Subordinated bondA bond that has a lower priority than another bond’s claim to the same assets.

Sub-investment grade bondsFixed income securities issued by a company with a low rating from a recognised credit rating agency. They are considered to be at higher risk from default than those issued by companies with higher credit ratings. Default means that a company or government is unable to meet interest payments or repay the inital investment amount at the end of a security’s life.

Supplementary Information Document (SID)These documents set out additional information in relation to Complaints, Compensation (that might be available from the Financial Services Compensation Scheme) and Cancellation, where applicable. These should be read in conjunction with the appropriate Key Investor Information Document (KIID).

22

TTax creditCompanies are required to deduct tax when paying a dividend. The company pays over the tax it has deducted to the Inland Revenue as Advance Corporation Tax (ACT) and issues the investor with a voucher showing the amount of tax which has been deducted. The investor records the gross amount in his tax return and receives credit against his total tax bill for the tax which the company has paid on his behalf.

Total Expense Ratio (TER)Total annual charges are expressed as the Total Expense Ratio (TER).

Total returnThe term for the gain or loss derived from an investment over a particular period. Total return includes income (in the form of interest or dividend payments) and capital gains.

Trade dateThe date upon which a bond is purchased or sold.

Transaction costThe cost of trading, such as brokerage, clearing and exchange fees as well as taxes such as stamp duty.

Transfer agentThe party appointed by an issuer to maintain records of bondholders, cancel and issue certificates, and address issues arising from lost, destroyed or stolen certificates.

TreasuriesFixed income securities issued by the US government.

Triple A or AAA ratedThe highest possible rating a fixed income security, also called a bond, can be assigned by credit rating agencies. Bonds that are rated AAA are perceived to have the lowest risk of default. Default means that a company or government is unable to meet interest payments or repay the initial investment amount at the end of a security’s life.

TrusteeAn institution, usually a bank, designated by the issuer as the custodian of funds and official representative of bondholders. Trustees are appointed to ensure compliance with the trust indenture and represent bondholders to enforce their contract with the issuers.

23

UUCITSStands for Undertakings for Collective Investments in Transferable Securities. This is the European regulatory framework for an investment vehicle that can be marketed across the European Union and is designed to enhance the single market in financial assets while maintaining high levels of investor protection.

UnconstrainedThe term used to describe the mandate of a fund whereby the manager has the freedom to invest according to his or her own strategy, not being obliged to allocate capital according to the weightings of any index, for example.

Underlying valueThe fundamental value of a company, reflecting both tangible and intangible assets, rather than the current market value.

Underlying yieldRefers to the income received by a managed fund, and is usually expressed annually as a percentage based on the fund’s current value.

UnderweightIf a portfolio is ‘underweight’ a stock, it holds a smaller proportion of that stock than the comparable index or sector.

Unfranked incomeUnfranked income includes income from all untaxed sources.

Unit trustA type of managed fund, whose value is directly linked to the value of the fund’s underlying investments.

Unsecured bondA bond that is not secured by collateral.

24

VValuationThe worth of an asset or company based on its current price.

Valuation metricsMeasures used for determining the current worth of an asset or company.

VolatileWhen the value of a particular share, market or sector swings up and down fairly frequently and/or significantly, it is considered volatile.

VolatilityA measure of the variability of returns of an asset.

WWarrantA security issued by a company that gives the holder the right to buy shares in that company at a specified price and within a certain timeframe.

Winding upThe process of terminating a company by realising its assets, paying off creditors and holders of loan capital and distributing the remaining assets among shareholders, according to the correct order of priority.

25

YYieldThe annual percentage rate of return earned on a bond calculated by dividing the coupon interest rate by its purchase price.

Yield curveA line tracing relative yields on a type of bond over a spectrum of maturities ranging from three months to 30 years.

Yield to callA yield on a bond calculated by dividing the value all interest payments that will be paid until the call date, plus interest on interest, by the principal amount received on the call date at the call price, taking into consideration whatever gain or loss is realised from the bond at the call date. Example: You pay £900 for a five year bond with a face value of £1,000. The bond pays an annual coupon of ten per cent. This bond is called at year three for £1,100. The yield to call of this bond is 18.4 per cent. This reflects the three years of coupon payments and the difference between the price paid and the call price. Had the bond not been called, the yield to maturity would have been 12.8 per cent.

Yield to maturityA yield on a bond calculated by dividing the value of all the interest payments that will be paid until the maturity date, plus interest on interest, by the principal amount received at the maturity date, taking in to consideration whatever gain or loss is realised from the bond at the maturity date. Example: You pay £900 for a five year bond at a face value of £1,000. The bond pays an annual coupon of ten per cent. Here the yield to maturity is 12.8 per cent. This reflects the coupon payments and the difference between the price and the face value of the bond.

Yield (bonds)This refers to the interest received from a fixed income security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value.

Yield (equity)Refers to the dividends received by a holder of company shares and is usually expressed annually as a percentage based on the investment’s cost, its current market value or face value. Dividends represent a share in the profits of the company and are paid out to a company’s shareholders at set times of the year.

Yield (income)Refers to the income received from an investment and is usually expressed annually as a percentage based on the investment’s cost, its current market value or face value.

26

ZZero-coupon bondA bond which does not make periodic interest payments; instead the investor receives one payment, which includes principal and interest, at redemption (call or maturity). See Discount note.

Zero dividend preference shareA share with no right to receive a dividend. It is entitled instead to a fixed sum on repayment. This figure is usually expressed as an annual percentage and accrues annually.

27

Introducing the Avantis Wealth Bond Collection

Avantis Wealth has since its inception offered a range of property backed investments, many of which are structured like a bond, in the form of a debt instrument known as a Loan Note (see glossary). These low-risk investments typically offer fixed returns in the range of 7 per cent to 15 per cent per annum, offering significantly higher returns than many traditional unit trust bond funds.

In July 2015, we launched a select portfolio of bonds that are listed on the GXG Main Quote Exchange, in response to our clients’ need for higher income from savings held within Individual Savings Accounts.

Avantis Wealth GXG Listed Bond Collection

Current fact sheets can be downloaded on our website.

*Listed on Luxembourg stock exchange

GXG MarketsOriginally established in 1998 as a Danish Authorised Marketplace, GXG Markets operate a European Regulated Market.

GXG is gaining in popularity for companies seeking to raise capital.

GXG Markets provides a three-tier market solution, allowing companies to choose a market best suited to their needs:

1. GXG Markets First Quote: For early-stage growth companies

2. Main Quote: For growth companies looking for a public quote

3. Official List: For companies seeking a full listing on a regulated market

GXG Markets provide a very competitive alternative to the traditional British exchanges particularly AIM. GXG is looking to undercut established small company markets such as PLUS and the primary junior market, AIM. It is expecting to attract businesses with a market capitalisation of between £3m and £50m.

GXG markets use so called ‘matched bargain’ trading, allowing buyers and sellers to transact at the same price. GXG will remove the spreads between buy and sell prices often seen on PLUS and AIM.

Helix ‘B’ 9.85% Bond* Sector: Consumer Finance

Affinity Property 9.2% Bond Sector: Property Development

Blueprint 7.5% Bond Sector: Engineering

Swestate 8.0% Bond Sector: Property Development

CLICK HERE TO VISIT OUR WEBSITE

THE RICHER RETIREMENT SPECIALISTS

DISCLAIMER

Avantis Wealth Ltd is not authorised or regulated by the Financial Conduct Authority (FCA). This is not a financial promotion or an invitation to invest.

Avantis Wealth Ltd does not provide any financial or investment advice. We provide a referral to a regulated advisor who will offer appropriate advice, or to the company offering an investment who will determine your suitability for the investment prior to any offer being made. We strongly recommend that you seek appropriate professional advice before entering into any contract. The value of any investments can go down as well as up and you might not get back what you put in. You may have difficulty selling any investment at a reasonable price and in some circumstances it might be difficult to sell at any price.

Do not invest unless you have carefully thought about whether you can afford it and whether it is right for you and if necessary consult with a professional adviser in accordance with the Financial Services and Markets Act 2000. These products are not regulated by the FCA or covered by the Financial Services Compensation Scheme and you will not have access to the financial ombudsman service.

This page does not constitute an offer to invest but is for information only. Persons expressing an interest in the bond will receive an invitation document, which they should read and ensure they fully understand prior to making any decision to subscribe. Persons in any doubt regarding the risks associated with investments of this nature should consult a suitable qualified and authorised advisor.

VERSION: BGIG-1.0

To arrange a pension review with us or to find out about our high income investment

opportunities please get in touch.

FREEPHONE: 0800 612 0880 LANDLINE: 01273 447 299

INVEST@AVANTISWEALTH.COM WWW.AVANTISWEALTH.COM