Term Description
Absolute return funds Funds that aim to deliver returns in both rising and falling markets, often using investment techniques that involve derivatives, short positions, and exotic securities.
Accumulation fund A superannuation fund where the final benefit paid is the amount accumulated in accounts within a member’s fund. Member’s accounts are credited with contributions made for the member together with investment earnings. The accounts are debited with expenses, tax and premiums for any death or disablement insurance. Contributions may be a percentage of salary or a fixed amount and can be paid regularly or as a single lump sum.
Active management Fund managers who aim to attain returns higher than a set benchmark by buying undervalued stocks and selling over valued stocks.
Advisory services guide (ASG) A document explaining the services an adviser offers, their fees and your rights when you get investment advice from them. Licensed security dealers must give you this document at the beginning of a financial planning process.
Allocated pension An investment in a superannuation fund providing regular income payments. The length of time the payments will continue depends on the level of payments you receive each year, the amount of investment earnings during each year and any lump sum withdrawals you make.
see also: Annuity
American style option An option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American style.
Analyst Employee of a brokerage or fund management house who studies companies and makes buy-and-sell recommendations on stocks of these companies.
Annual accounts A disclosure of the financial position of a company or superannuation fund, typically including a balance sheet and profit and loss account.
Annual benefit statement A report from the trustees of a superannuation fund, advising members of their accrued and future benefits in the fund.
Annual General Meeting (AGM) Annual meeting between the directors and shareholders of a company, where shareholders elect the directors, discuss any shareholder resolutions and approve the annual accounts of that year.
Annual report A yearly report on a company's annual accounts, which usually includes a letter from the chairman, a description of the firm's operations and a statement of cash flow.
Annualised return A technique for comparing the returns for investments held for different periods, by taking a return over a given period and converting it to show how this return translates to growth per annum.
Annuity A contract where a person invests a lump sum and receives a portion of the original lump sum, plus interest as a regular payment, usually for retirement income.
see also: Allocated pension
APIR The unique code issued for the fund by Asia Pacific Investment Register (APIR). APIR Codes are standard identifiers for products in the financial services industry.
Appraised value An estimate of the value of a property that is being used as security for a loan.
APRA Abbreviation for Australian Prudential Regulation Authority.
Arbitrage Buying and selling a security at the same time at two different prices in two different markets, resulting in profits without risk.
Arm's length price The price at which a willing buyer and a willing unrelated seller would freely agree to transact.
Assessable income Gross income including salary and wages, dividends, interest and rent before any deductions are allowed. Assessable income also includes net capital gains, Eligible Termination Payments (ETPs) and other amounts that are not ordinarily classed as income.
Asset allocation An investment strategy where you decide what percentage of your investment portfolio should go into shares, bonds, property, cash and overseas investments. You can adjust these holdings regularly to maintain these percentages. The asset allocation model you choose should be based on how much risk you are willing to take.
see also: Strategic asset allocation | Retail fund
Asset backing The value of a company's assets standing behind its issued shares.
Asset classes Asset classes are usually classified according to the type of returns they provide. Some primarily produce income while others provide capital growth. Income or defensive assets include fixed interest and cash investments and are suitable for shorter-term financial goals, while growth assets include shares and property investments and are suitable for longer-term financial goals. Growth assets will generally produce more volatile returns, which can sometimes be negative over the shorter-term, while income assets tend to produce more predictable returns.
Assets Firm's productive resources.
ASX See Australia Securities Exchange
see also: Australian Securities Exchange (ASX)
At market An order to buy or sell a security immediately at the best available price.
At-the-money An option is at-the-money if the strike price of the option is equal to the market price of the underlying security.
Australian Competition and Consumer Commission (ACCC) The Commonwealth Government agency responsible for administering laws about fair trade practices, prices surveillance, competition and consumer protection.
Australian equity

Describes funds that aim to achieve steady capital growth over a medium to long-term investment horizon.

Australian equity

Australian shares and other equity related securities (eg a derivative such as a warrant). Listed property is less than 10% of the total portfolio. These equities are classified in accordance with the following sub categories:

CategoryDefinition
ResourcesMinimum of 95% invested in Australian Resource shares
IndustrialMinimum of 95% invested in Australian Resource shares
LeadersMinimum of 95% invested in ASX Top 50 shares.
Small CompaniesMinimum of 95% invested outside ASX Top 100.
Diverse Equities100% invested in Australian shares.

Indexed equity

Share funds including Australian All Ordinaries indexed, Sector indexed, Overseas indexed and other indexed.

Miscellaneous equity

Default Category for growth funds.

see also: Overseas equity | Asset allocation | Property | Income
Australian Financial Services (AFS) licence A compulsory license, regulated by ASIC, for any person carrying on a financial services business (such as advising on financial products, dealing in financial products or operating a registered scheme). the provision of licences and the conduct of licensees.
Australian Prudential Regulation Authority (APRA) A Federal Government agency, which regulates superannuation funds and other bodies in the financial sector.
Australian Securities and Investments Commission (ASIC) The Australian government organisation that collects information on public and private companies and other corporate bodies registered under the Corporations Law in Australia.
Australian Securities Exchange (ASX) The national organisation for dealing in shares, bonds and certain other securities.
Averaging up or down The practice of purchasing more of the same security at various price levels, thereby arriving at a higher or lower average cost.
Balance sheet A report detailing a company's assets and liabilities. The two quantities that have to "balance" or equal each other are (1) assets and (2) liabilities plus shareholders' equity.
Balanced fund An investment portfolio which diversifies its holdings over a range of asset classes, typically including shares, fixed interest, property, overseas securities and cash.
Balanced risk profile The description of an investor who is comfortable with moderate volatility of investment returns as they understand that market fluctuations should result in higher returns in the medium to long term. They still require income from the portfolio with a reasonable level of funds accessible at short notice. A typical portfolio would consist of 50% in income or defensive assets such as cash or fixed interest, and 50% in growth assets such as shares and property.
see also: Conservative risk profile | Growth risk profile | Asset classes
Bank bill A commercial bill that has been either accepted or endorsed by a bank.
Basis point The smallest measure used for quoting yields, used in the bond market or for interest rates. Each percentage point of yield in bonds equals 100 basis points.
Bear Speculator who sells or goes short or advises others to do so as they have a pessimistic view of the market.
Benchmark The performance of a predetermined set of securities, used for comparison purposes.
Bid The quoted bid, or the highest price an investor is willing to pay to buy a security.
Blue chip A generic term for quality securities.
Bond A long-term financial instrument that makes regular coupon payments, usually every six months, plus a redemption payment, which is usually the bond’s face value.
Bonus shares Shares issued free to existing shareholders in proportion to their current share holding.
Book value The depreciated amount of a firm's assets.
Broker stamp

We have several different broker stamps on our Prospectuses/PDS, due to each Fund Manager's own internal regulations. The stamp will usually include the following information:

  • InvestSMART Financial Services Pty Ltd
  • ABN 700 890 385 31
  • Licence No. 226435
  • Entry Fee Rebate 100%
  • www.investsmart.com.au

Note that the 100% rebate on entry fees applies to all managed funds labelled with "Entry Fee via InvestSMART: 0%" on the applicable Fund Details page. A number of fund managers list numerous funds within any one Prospectus/PDS. You may also invest in these funds with no entry fees. Remember you must use the Prospectus/PDS from the InvestSMART website. The 100% rebate also applies to any regular savings or investment plan available through these stamped Prospectuses/PDS.

The rebate does not apply if you do not use an application form stamped with an InvestSMART broker stamp. These application forms can only be found within the Prospectuses/PDS on the InvestSMART site.

IMPORTANT NOTE: Several fund managers have a NIL ENTRY FEE option within their Prospectuses/PDS. Investors can choose either the NIL ENTRY FEE or ENTRY FEE option when investing in managed funds. If the NIL ENTRY FEE option is chosen you will pay a higher MER (i.e. annual management fee), whereas the ENTRY FEE option incurs the usual lower management fee.

If you invest with InvestSMART you won’t pay any entry fees so it’s best to choose ENTRY FEE option. We have auto completed most of the Prospectuses/PDS found on the InvestSMART website, with the ENTRY FEE option is ticked and the entry fees are auto-completed.
Brokerage The fee charged by a broker for executing a transaction.
Buffer zone The amount that your Current Loan-to-Value Ratio (LVR) can exceed your Maximum LVR before triggering a margin call.
see also: Margin call
Bull (bullish) Name used for a speculator buying or going long or advocating this action in anticipation of an appreciation (i.e. someone who is optimistic about the market).
Business risk The risk that the cash flow of an issuer will adversely be affected by certain economic conditions, making it difficult for the issuer to meet its operating expenses.

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