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Glossary / A

AIM

Alternative Investment Market. An investment exchange initially established in 1995 to promote the growth of smaller companies seeking public equity finance. Owned by the London Stock Exchange group, AIM is a Recognised Investment Exchange.

AGM

Annual General Meeting - a mandatory annual assembly of a company's executives, directors, and interested shareholders.

Asset Class

This refers to the different types of investments with similar features. The most common asset classes which investors, including fund managers, can buy, include shares, bonds, property and cash equivalents. Each asset class has different characteristics in terms of the income or capital it generates, and the level of risk involved. The choice of which asset class to invest in can depend on your view of the economy, risk appetite and investment needs and goals.

Glossary / B

Bitcoin

A digital cryptocurrency.

Glossary / C

Carbon Capture and Storage

Carbon Capture and Storage (CCS) is the process of capturing CO2, transporting it and permanently depositing it in an underground geological formation. This is carried out to reduce the emissions of CO2 by heavy industries such as Utilities, Oil & Gas, Cement, Steel, and other Manufacturers.

Carbon Footprint

Carbon Footprint - A measure of a group, individual, company or country’s greenhouse gas emissions.

Carbon Offsetting

Carbon Offsetting - Compensating your total carbon emissions by funding carbon negative activities elsewhere. Companies often offset their existing emissions by investing in projects such as tree-planting.

Circular Economy

An economy in which there is no waste because resources are never disposed of – they are continually recycled or re-used.

Cryptocurrency

A type of digital currency in which a record of transactions is maintained, and new units of currency are generated by the computational solution of mathematical problems/puzzles (mining).

Glossary / D

Discretionary Fund Management

An agreement between client and investment manager where investment decisions are taken by the investment manager within a detailed mandate agreed with the client.

Diversity and Inclusion

Diversity refers to the differences people have in terms of their gender, age, ethnicity, sexual orientation, disability, religion, beliefs or other characteristics. Inclusion is about embracing and promoting diversity, addressing inequality and ensuring people feel valued and respected irrespective of their background or beliefs.

Divestment

This relates to the sale of an investment. Divestment may occur when the investee company consistently fails to meet investor expectations, often after attempts to engage with the company. Divestment may also be used to achieve social or political goals. For example, investors divested from South African assets during the apartheid era in protest against the regime.

Glossary / E

Engagement

Engagement is about the interactions with an investee company but it is much more than simply meeting with the company's management team. Engagement presents an opportunity to help shape and gain insight into a company’s long-term approach to ESG. It also gives us the opportunity to share our expectations on corporate behaviour and to influence company interactions with their stakeholders; ensuring that the companies we invest in are treating their employees, customers and communities in a responsible way.

Environmental Factors

This relates to the “E” of the term “ESG” (environmental, social and governance) and includes issues related to climate change, energy usage, natural resource use, water and waste management, biodiversity and other environmental challenges and opportunities.

ESG

ESG stands for Environmental, Social and Governance factors that engaged or thoughtful investors may be concerned with. These provide a set of parameters to measure the ethics and credentials of a potential investment. Environmental criteria are used to evaluate the environmental impact a business has (such as its carbon emissions or pollution levels); Social criteria address issues such as human rights policies and responsible employment practices, while Governance criteria include the running of a business or best practice, such as its political contributions, executive pay or shareholder rights.

Ethical Investing

Dating back to the nineteenth century, the roots of ethical investment can be found among religious movements including the Quakers and Methodists, whose concerns included issues such as temperance and fair employment conditions. Ethical Investing includes taking a values-based approach to investment, selecting investments based on ethical or moral principles.

Ethical ‘Negative’ screening

An investment approach that attempts to exclude certain companies and industry sectors from the list of investable stocks based on a predetermined list of “unacceptable” activities.

Ethical ‘Positive’ screening

An investment approach that actively includes or places increased emphasis on companies or industry sectors which “promote” certain activities deemed to meet a list of desirable environmental or socially beneficial activities.

Equity

Equity is a term used in investing to describe ownership of a portion of a company (also known as stocks or shares). Equity may also be used in an ESG sense to relate to fairness within society and the workplace - in terms of being free from bias or favoritism. For example with regards to inclusive product design and how companies need to embrace the diversity of consumers they are selling to, in order to design more suitable products. e.g. some automatic taps, hand dryers and soap dispensers in public bathrooms have difficulties detecting the hands of darker skinned users - as they have been modelled to work for white-skinned hands.

Glossary / F

Fixed Income

Fixed income broadly refers to those types of investment that pay investors fixed interest or dividend payments until maturity date. At maturity, investors are repaid the principal amount they had invested.

FTSE

The Financial Times Stock Exchange 100 or informally, the "Footsie", is a share index of the top 100 companies listed on the London Stock Exchange with the highest market capitalisation.

Glossary / G

Gender Pay Gap

A gender equality measure that shows the difference in average or median earnings between men and women.

Governance Factors

This is the “G” in “ESG” and is about assessing how well a company is run. Governance factors include remuneration, board structure and corporate strategy

Greenwashing

This relates to the false communication as to the environmental or ESG credentials of a product, service, fund or organisation in order to make it appear to be more environmentally-friendly than it really is.

Glossary / H

Hedge

A hedge normally consists of taking an offsetting or opposite position in a related security, with the intention of reducing the risk of an adverse price movement in an asset.

Glossary / I

IHT

Inheritance tax. The tax payable by UK resident taxpayers to HMRC on the value of their estate at death, over and above the prevailing threshold limit at the time.

ISA

Individual Savings Account. An investment account operated within the UK whereby individual investors can deposit money to be invested in a broad range of investment products. Capital gains and investment income within the ISA “wrapper” are free from Capital Gains Tax and Income Tax respectively.

Glossary / J

Joint and several liability

Joint and several liability is a legal term for a responsibility that is shared by two or more parties to a lawsuit.

Glossary / K

Kyoto Protocol

The Kyoto Protocol was an international agreement that aimed to reduce carbon dioxide (CO2) emissions and the presence of greenhouse gases in the atmosphere.

Glossary / L

Leverage

Leverage is the use of borrowed money to increase the potential return of an investment. Leverage can also refer to the amount of debt a firm uses to finance assets.

Liquidity

Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price.

Glossary / M

Microfinance

A broad term to cover financial services, often small business loans and deposit services to customers in developing markets who do not have easy access to such services.

Glossary / N

NYSE

The New York Stock Exchange (NYSE) is a stock exchange located in New York City that is the largest equities-based exchange in the world, based on the total market capitalization of its listed securities.

Glossary / O

OEIC

Open Ended Investment Companies – A form of investment fund similar to Unit-trusts. Investments into and out of the fund are matched by the creation and cancellation of new shares so that the unit price reflects the underlying value of the investment pool.

Online Security

A broad term covering security for transactions made over the internet, particularly web page and email security. For more information on this please see our security alert and our blog post about staying safe online.

Glossary / P

Performance

This relates to the investment performance. The performance of each of the funds within our range is measured against their respective benchmark and can be found on fund factsheets

Portfolio

A collection of investments owned by one organisation or individual, and managed as a collective whole with specific investment goals in mind.

Glossary / Q

QE

Quantitative easing (QE) is a form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment.

Glossary / R

Recession

A recession is when a country's gross domestic product (GDP) shrinks for two consecutive quarters. It’s a general measure of the overall size and health of a country’s economy over a period of time. Essentially, when a country’s economy is shrinking.

Glossary / S

Scope 1 Emissions

Scope 1 Emissions - Relates to the direct emissions that come from sources owned or controlled by the emitter, such as emissions from company vehicles.

Scope 2 Emissions

Scope 2 Emissions - Relates to indirect emissions from sources owned or controlled by the emitter, such as emissions from the electricity used in a company’s office.

Scope 3 Emissions

Scope 3 Emissions - relates to indirect emissions from sources not owned or controlled by the emitter, but which indirectly impact the emitter’s supply chain, such as emissions from a company’s employees commuting to work.

Shareholder Activism

The use of shareholder rights to pressure companies to change environmental or social practices

Shareholder Resolution

A proposal submitted by a shareholder for consideration at a company’s general meeting, requesting that the company takes particular action.

SIPP

Self Invested Personal Pension. A form of private pension where the control over the investment decisions or appointment of investment manager is put more firmly in the control of individual savers.

Social Factors

This relates to the “S” of “ESG”. Social issues relate to how a company interacts with the communities it operates in, its suppliers, employees, customers, communities, governments and regulators. These include, for example, labour standards, health and safety, supply chain management and nutrition and obesity.

SRI

Socially Responsible Investing – a broad catch-all description to describe investing in line with ethical or environmental considerations.

Stewardship

This relates to actively influencing the responsible allocation, management and oversight of an investee’s capital in a way that creates long-term, sustainable value. It includes the voting and engagement activity we carry out as investment managers on behalf of our clients. You can find out more about our stewardship activities and latest stewardship reports on our dedicated stewardship page

Stewardship Codes

These are a set of standards that help set stewardship expectations and best practice for asset managers and asset owners. These codes are established on a country-by-country basis. Castlefield is a signatory to the UK Stewardship Code - the gold standard for the UK.

Glossary / T

Thoughtful Investor ®

Values-based investment delivered from the perspective of being a values-based manager

Trustee

Charity trustees are the people who share ultimate responsibility for governing a charity and directing how it is managed and run.

Glossary / U

Unit Trust

A form of investment fund established to provide access to an underlying investment strategy to a pool of individual investors. New units are created or cancelled as investments are either committed or withdrawn, ensuring the unit price remains in line with the value of the underlying investments.

UN PRI

UN Principles for Responsible Investing (PRI) - A set of six principles under which asset owners and asset managers voluntarily commit to incorporating ESG issues into their investment processes, active ownership and reporting, and promote responsible investment across the industry.

UN SDGs

UN Sustainable Development Goals (SDGs) - A collection of 17 goals reflecting the biggest challenges facing global societies, environments and economies today. The United Nations describes the SDGs as a “blueprint to achieve a better and more sustainable future for all”.

Glossary / V

Voting

Voting is the right of a shareholder to vote on strategic issues such as executive pay, director nominations and political donations.

Glossary / W

Water Scarcity

Water scarcity can mean scarcity in availability due to physical shortage, or scarcity in access due to the failure of institutions to ensure a regular supply or due to a lack of adequate infrastructure.

Glossary / X

X-Ray

The X-Ray is a piece of medical technology used to detect broken bones. While they may not make X-ray machines, Inspiration Healthcare distribute ventilators and incubators - they are a featured holding of ours and a specialist medical technology company focusing on the neonatal intensive care market.

Glossary / Y

Yield Curve

A yield curve is a line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity.

Glossary / Z

Zotefoams

A manufacturer of high-performance technical foams and a holding in the UK Smaller Companies fund.

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