Glossary

Every term the Almanac uses, decoded in plain English. Anywhere on the site a word with a dotted underline can be hovered or tapped - and the whole lot is gathered here, A to Z.

#

1W: Last week's move. Green up = a bull (rising) week, red down = a bear (falling) week.
1Y: How much the share price has moved over the past year.
52-week range: The lowest and highest the shares have traded over the past year - a sense of how wide the swings have been.

A

Acc / Dist: Accumulating (Acc) reinvests dividends inside the fund automatically; Distributing (Dist) pays them to you as cash. Same index either way.
accumulating: An 'Acc' fund automatically reinvests its dividends inside the fund instead of paying them out as cash.
Avg volume: How many shares change hands on a typical day. Higher means it's easy to buy or exit without moving the price.

B

Beta: How bumpy the share price is versus the whole market. Above 1 swings more than the market; below 1 is calmer. It's about the ride, not whether it goes up or down.
Bond: A loan you can own - you lend money to a government or company for regular interest and your money back on a set date. Usually steadier than shares.
book value: A company's net assets - what it owns minus what it owes - per share. Price-to-book compares the share price to this figure.

C

Category: The kind of thing the fund holds - global shares, US shares, UK shares, bonds, gold, and so on.
CFD: Contract for difference - a way of betting on a price moving without owning the thing itself, usually with leverage. High-risk; most beginners lose money on them.
Compounding: When the returns you earn start earning returns of their own - growth snowballs, slowly at first, then surprisingly fast.
cyclical: A business whose sales and profits rise and fall with the wider economy - booming in good times, sinking in downturns. Miners, carmakers and banks are classic examples.

D

Day range: The lowest and highest price the shares traded at during the latest day.
defensive: A business whose demand holds up whatever the economy does - food, utilities, medicines. Steadier, though often slower-growing.
distributing: A 'Dist' (or 'Inc') fund pays its dividends out to you as cash rather than reinvesting them.
Div yield: Dividend yield: the yearly dividend as a percentage of the share price - roughly the income you'd earn just from dividends.
Diversification: Spreading your money across many investments so one going wrong doesn't sink you - the closest thing investing has to a free lunch.
Dividend: A share of a company's profits paid out to shareholders, usually as cash a few times a year.
Dividend yield: The yearly dividend as a percentage of the share price - roughly the income you'd earn from dividends alone.
Domicile: The country a fund is legally based in (often Ireland for UK-available ETFs) - it affects some tax details, not what the fund holds.

E

EBITDA: Earnings before interest, tax, depreciation and amortisation - a rough measure of operating profit that strips out financing and accounting effects. It can flatter companies carrying a lot of debt.
ETF: Exchange-Traded Fund - a single fund, bought and sold like a share, that spreads your money across many companies or bonds at once for a small yearly fee.
Expected EPS: The earnings per share analysts expected for the quarter - the average of their forecasts. 'Beating' or 'missing' is measured against this number.

F

Factors: Five 0-100 scores summarising the stock (Value, Quality, Growth, Momentum, Income). The little pentagon shows them at a glance.
Forward P/E: Like P/E, but using analysts' forecast of NEXT year's profit instead of last year's. A much lower forward figure implies profits are expected to jump.
free cash flow: The cash left after a company runs the business and pays for equipment - the money it can actually use for dividends, buybacks or paying down debt.
FTSE 100: The 100 largest companies listed on the London Stock Exchange - the headline UK index.
FTSE 250: The next 250 UK companies below the FTSE 100 - more domestically-focused mid-sized firms.
Fund: A ready-made basket of investments run for a small yearly charge - one purchase gives you a slice of everything it holds.

G

Gilt: A UK government bond.
gross margin: The share of each £1 of sales left after the direct cost of making the product, before other running costs. Higher usually means more pricing power.
Growth: How fast revenue and earnings are growing (higher = faster).

H

Holdings: Roughly how many different investments the fund spreads your money across. More holdings usually means more diversification.

I

Income: The dividend income on offer and how sustainable it looks (higher = more/steadier).
Index: A scoreboard that tracks a basket of investments (like the FTSE 100 or S&P 500). You can't own an index directly, but a tracker fund follows it.
ISA: A Stocks & Shares ISA is a wrapper you hold investments inside; any growth and dividends earned within it are free of UK tax, on up to £20,000 of new money a tax year.

L

large-cap: A large company by stock-market value - usually the household names. 'Mega-cap' is the very biggest; 'mid-cap' and 'small-cap' are progressively smaller.
Leverage: Trading with borrowed money, which multiplies both the gains and the losses.

M

Market cap: The company's total value on the stock market - share price times the number of shares. Big = 'large-cap', small = 'small-cap'.
Momentum: How the share price has been trending recently (higher = stronger recent run).

N

Nasdaq 100: The 100 largest non-financial companies on the US Nasdaq exchange - very tech-heavy.
NAV: Net asset value: what a fund's or trust's holdings are actually worth per share. Investment-trust shares can trade above (a premium) or below (a discount) their NAV.
Net interest margin: For a bank: the gap between the interest it earns on loans and the interest it pays on deposits - a core gauge of how profitably it lends.
Net margin: How much of each £1 of sales becomes profit after all costs. Higher = more profitable per sale.

O

OCF: Ongoing Charge Figure: the fund's yearly running cost, taken automatically. 0.22% is about £2.20 a year for every £1,000 you hold.
Ongoing charge: The fund's yearly running cost, taken automatically from the fund - the same thing as the OCF.

P

P/E: Price-to-earnings: the share price divided by yearly profit per share. Lower can mean cheaper; higher often means investors expect fast growth.
P/E ratio: Price-to-earnings: the share price divided by yearly profit per share. Lower can mean cheaper; higher often means investors expect fast growth.
payout ratio: The share of profits paid out as dividends. A very high ratio can mean the dividend is stretched; a low one leaves room to grow it.
Price-to-book: The share price versus the company's net assets per share (its book value). Under 1 can look cheap, though it varies a lot by industry.

Q

Quality: How profitable and financially healthy the company is (higher = stronger).

R

Return on equity: How much profit the company makes for each £1 shareholders have put in. Higher usually means a more efficient business.
Revenue growth: How fast the company's sales grew versus a year ago.

S

S&P 500: The 500 largest companies listed in the United States - the headline US index.
Spread bet: A UK-tax-free bet on a price going up or down, usually leveraged. High-risk, and not the same as investing.
Stamp duty: A 0.5% UK tax on buying UK shares (not most funds or overseas shares), charged inside an ISA too.

T

total return: Your full return: the change in the price PLUS any dividends, added together.
Tracker fund: A fund that simply copies an index rather than trying to beat it - usually the cheapest way to own a whole market.

U

UCITS: A UK/EU standard for funds sold to the public - a sign the fund follows common investor-protection rules.

V

Value: How cheap the stock looks versus profits, sales and assets (higher = cheaper).
Volatility: How much a price bounces around. Higher volatility means a bumpier ride, up and down.

Y

Yield: The income the fund has paid out over the past year as a percentage of its price. Accumulating funds reinvest this for you instead of paying cash.