Glossary of terms

No doubt you've heard the term 'financial jargon'. This glossary provides you with a simple guide to the investment terms you'll find on the RaboPlus website. Click on the alphabet letters below to help yourself to a clearer understanding.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Balanced Fund: A fund that seeks both growth and income, with diversity, through a portfolio that includes investments from most or all of the major asset classes.
Basis Point: One hundredth of a percentage point (0.01%). For example, 50 basis points equals 0.5%. Basis points are often used to measure changes in or differences between yields on fixed income securities, since they change by very small amounts.
Bear Market: A long-term downward trend in the market.
Benchmark: The yardstick that a fund manager uses to compare the performance of their fund, such as the All Ordinaries index with an Australian shares fund.
Beneficial Interest: Although investors do not legally own the asset or pool of assets in a fund or trust, they do have an equitable interest, or beneficial interest. They are entitled to a profit from the investment.
Beneficiary: A person who has a beneficial interest in a fund, scheme or trust.
Benefit: A superannuation or a managed investment fund benefit refers to the entitlement of a fund member in respect of fund assets.
Benefit Accrual Rate: A rate usually shown as a percentage, used to calculate a benefit under a defined benefit fund.
Blue-Chip: A high-quality, relatively low-risk investment. The term usually refers to shares of large, well-established companies that have performed well over a long period.
Bond: A debt security issued by a government, government body or corporation that pays a fixed rate of interest and returns the face value on the maturity date. A type of fixed interest investment.
Bottom-Up Approach: An investment approach that de-emphasizes the significance of economic and market cycles. This approach focuses on the analysis of individual stocks. The bottom-up approach assumes that individual companies can do well even in an industry that is not performing very well.
Bubble: A theory that security prices rise above their true value and will continue to do so until prices go into freefall and the bubble bursts. Recently, newspaper reports have contained references to the property market bubble.
Bull Market: A long-term upward trend in the market.
Business Cycle: Describes the phases of the economy from expansion and boom, through to contraction and recession, and back to expansion. Generally these phases follow each other, but the length of each phase is indeterminate. Also known as the economic cycle.
Buy/Sell Spread: The difference between the entry and exit price of a fund.