The Moneywise Investment Jargon Buster

1. Unit trust/OEIC

A collective investment, where your money is put together with that of other investors and invested by a professional.

2. Investment trust

Another collective investment but where only a limited number of investors can put their money in, and the value depends not just on the performance of the investments but also on the demand from investors.

3. NAV

If you take all the available shareholder funds in an investment trust – the company's assets less its liabilities – and divide it by the total number of shares in that company, you get the net asset value, or NAV, per share.

4. Discount/premium

Because investment trust companies are quoted on the stock exchange, the price of shares is determined by the stockmarket, according to supply and demand, and may not equal the NAV per share. This means they can be sold at a discount or a premium from that value.

5. Quartile

The worst-performing investments in the bottom 25% are fourth quartile. Those above the bottom 25% and below the halfway mark are third. Those which are between average and the top 25% are second quartile, and the top 25% are first quartile.

6. Cumulative performance

This is the performance over a number of years. It is usually expressed as what you could expect to get back if you invested £1,000 a year ago, three years ago or five years ago.

7. Discreet performance

This takes out individual years and looks, for example, at how the fund performed in the whole of 2009, 2010 and 2011.

8. Volatility

This is a measure of how much of a rollercoaster ride investors get and whether there are wide swings in the value of funds.

9. AMC

The annual management charge is the portion of the annual fee that comes directly from the amount the fund manager swallows up in managing your fund, from their remuneration to the cost of their research and their team.

10. TER

The total expense ratio shows your total costs, including the AMC, administrative charges, transaction charges and fees.