Magnus Jargon Buster
Discretionary Fund Management sometimes involves technical terms and industry jargon.
While we aim to keep our communications simple and easy to understand, occasionally these terms are necessary. That’s why we’ve created this Jargon Buster to help you.
Please remember Magnus does not provide financial advice, so if you need further information, please contact your Financial Adviser.
Jargon Buster
Account Types
General Investment Account (GIA)
A flexible account for holding investments outside ISAs or pensions.
There’s no tax relief, and you may pay tax on any gains or income.
Individual Savings Account (ISA)
A tax-efficient account where your investments can grow free from UK income and capital gains tax, within the annual limit set by the Government.
Junior ISA (JISA)
A tax-free savings or investment account for children under 18. Money belongs to the child and can’t be withdrawn until they turn 18.
Offshore bonds
Investment products held outside the UK, usually the Isle of Man or Republic or Ireland, often used to manage or delay tax until money is withdrawn.
Pension accounts – SIPPs and SSAS
- SIPP (Self-Invested Personal Pension): A pension that gives you greater control over where your money is invested.
- SSAS (Small Self-Administered Scheme): A pension scheme usually set up by a business for a small group of directors or senior employees.
Jargon Buster
Common Investment Types
Cash and cash-like investments
Money held in cash or short-term deposits that can be easily accessed.
They tend to offer lower returns but more stability.
Commodities
Raw materials or natural resources that can be traded, such as gold, oil, or wheat. Their prices often move differently to shares and bonds, so they can help diversify a portfolio.
Corporate bonds
Issued by companies to borrow money from investors.
They usually offer higher interest than government bonds but carry more risk.
Equities
Also known as ‘shares’ or ‘stocks’. When you buy equities, you own a small part of a company and benefit if its value grows.
Government bonds
Issued by a government to raise money. UK government bonds are known as gilts.
Infrastructure
Investments in essential projects such as roads, energy, or schools.
They often provide steady, long-term income.
Money market funds
Funds that invest in short-term loans and deposits.
Often used as a place to hold cash while earning some interest.
Private markets
Investments not traded on public stock markets, such as private companies or property developments.
Property (non-residential)
Investing in buildings like offices, shops, or warehouses to earn rent and potential growth in value.
Jargon Buster
Fee Structure
Additional costs
Other small charges that may apply, such as custody or platform fees, depending on where your investments are held.
Annual Management Charge (AMC)
The yearly fee paid to the discretionary investment manager (DIM) for managing your portfolio. It covers the cost of research, decision-making, monitoring, and reporting. It’s shown as a percentage of the amount invested and is separate from fund-level costs.
Ongoing Charges Figure (OCF)
The yearly cost of running a fund, shown as a percentage of your investment. It includes management and administration costs but not transaction costs.n
Total Expense Ratio (TER)
The total cost of holding an investment fund. It includes the Ongoing Charges Figure (OCF) plus any additional costs involved in running the fund, such as legal or audit fees. It gives a more complete picture of what you pay at the fund level, but does not include adviser or DIM fees.
Transaction costs
The costs of buying and selling investments, such as broker fees or the difference between buying and selling prices.
Jargon Buster
Savings and Spending
Accumulation
When you’re saving and building up your wealth for the future.
Decumulation
When you start using your savings to provide an income or lump sums in retirement.
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Active management
An investment style where managers choose what to buy and sell based on research, experience, and market insight.
The aim is to outperform the market by identifying opportunities and managing risks along the way.
Alpha
A measure of how much an investment has performed better or worse than its benchmark, such as a stock market index.
Beta
Shows how much an investment tends to move compared with the wider market.
A beta above 1 means it moves more; below 1 means less.
Factor investing
An investment approach that targets specific characteristics — or “factors” — that have been shown to drive returns over time.
Common factors include value (buying shares that appear cheap), size (focusing on smaller companies), quality (investing in financially strong companies), and momentum (backing shares that have performed well recently).
It sits between active and passive investing — rules-based like an index but designed to capture certain patterns or themes in the market.
Passive management
An investment style that aims to match the performance of a specific market or index, such as the FTSE 100.
It uses index or tracker funds, which are typically lower in cost because there’s no active decision-making about which investments to hold.
SAA (Strategic Asset Allocation)
The long-term balance between different investment types, such as shares, bonds, and property.
TAA (Tactical Asset Allocation)
Short-term adjustments made to a portfolio to take advantage of market changes.