A simple glossary of investing terms
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A simple glossary of investing terms

13 Jun
13 Jun

To get started in investing, pick up these handy definitions of common investing terms so you can invest with peace of mind.

1. Net asset value (NAV)

Net asset value (NAV) of a fund refers to a unit trust’s total assets after deducting its total liabilities. It is commonly calculated to indicate the per share value of a unit trust (mutual fund) or an exchange-traded fund (ETF).

2. Unit trust

Unit trusts are a type of mutual fund that pools money from different investors to invest in assets. The investor of a unit trust is the beneficiary of the trust.

3. Equity fund

Also known as a stock fund, an equity fund is a type of unit trust (mutual fund) that invests primarily in common stocks. Typically categorised by regions, types, and sizes, equity funds can either be actively or passively managed.

4. Bond fund

A bond fund is a type of unit trust (mutual fund) that invests primarily in fixed income securities. Bonds offer a regular coupon that is paid to investors through the fund.

5. Index

A basket of securities that is a representative sampling of a specific market. It is used as a benchmark to evaluate an investment’s performance. One example is the Standard & Poor’s 500 Index (S&P 500), which represents the big-cap segment of the US equity market. Or closer to home, the Hang Seng Index (HSI), which is a market value-weighted index tracking the largest companies on the Hong Kong stock market.

6. Passive investing

A relatively low-cost investment strategy for wealth building over the long term. It aims to maximise returns by minimising buying and selling. One common form would be index investing; investors can do so by buying an index fund that tracks an index’s performance.

7. Exchange-traded fund (ETF)

A basket of securities that can be bought and sold on a stock exchange. It can include investments such as stocks, bonds, and commodities, and typically tracks a particular index. 

8. Dividend

A portion of profits that a company regularly distributes to its eligible shareholders. It can either be paid in the form of cash, additional stock or sometimes a mix of both.

9. Capital gain or loss

The amount of profit an investor earns from the sale of an asset when the selling price is higher than the initial purchase price. Conversely, capital loss is the loss from the sale of an asset, occurring when the selling price is lower than the initial purchase price.

10. Bull market 

A market condition where prices of securities are rising for sustained periods of time. It is usually fuelled by optimism, and investors are typically eager to buy or hold onto securities in this period. 

11. Bear market

A market condition where overall stock prices fall for an extended period, usually marked by a drop of 20% or more from the most recent peak on an index. It is often driven by negative sentiments of the economy such as inflation, growing unemployment, or business recession. 

12. Alpha

Often used as a measure of performance, it calculates the amount of excess return of a fund relative to the return of a benchmark index. 

13. Beta

Measures the volatility of a stock or fund relative to the overall market. A beta greater than 1 signals that the security is more volatile than the market.

14. Market capitalisation

The total market value of a company in the stock market in dollar terms. It is calculated by multiplying the price per share with the number of shares outstanding.

15. Blue-chip stocks

Shares of well-established companies with a strong track record of good performance; they typically have a large market capitalisation with relatively low-risk investment. 

16. Small-cap stocks

Shares of companies with a smaller market capitalisation. These firms can hold the promise of bigger returns since they are expected to grow quicker than large companies, but the trading tends to be more volatile as well.  

17. Total expense ratio (TER)

A measurement of the total costs or expenses of managing and operating an investment fund such as unit trusts. It is found by dividing the total cost of the fund by total assets; this is why TER is expressed as a percentage of a fund’s net asset value (NAV). 

18. Portfolio allocation

Also known as asset allocation, it refers to the type and weightage of assets specifically chosen to be designated to a portfolio. 

19. Volatility

The amount and frequency of fluctuation in the price of an individual security, asset class, or market. 

20. Interest rates

An interest rate is the fee that borrowers must pay on the capital that they borrowed. In the bond market, it determines the amount of money that an issuer pays bondholders. Interest rates tend to fall when the economy contracts and rises when the economy expands.

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Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. 

This article is not intended to be relied upon as a forecast or research or investment advice, and should not form the basis of any investment or other decisions. The information contained herein is not intended, and should not be construed, as any legal, tax, regulatory, accounting or financial advice. If you would like investment, accounting, tax or legal advice, you should consult with your own professional advisors regarding your individual circumstances and needs.

The information in this article may not be suitable for all investors. You are responsible for any action that you take or decision that you make in reliance on any content in this article, and you agree that Endowus HK Limited (“Endowus”) is not liable under any circumstances.

No invitation or solicitation

Neither the information, nor any opinion, contained in this article constitutes a recommendation, offer or solicitation  by Endowus or its affiliates to you to buy or sell any securities, collective investment schemes or other financial instruments or services, nor shall any such security, collective investment scheme, or other financial instruments or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. 

This is not intended to be an invitation or offer made to the public to subscribe for any financial product or to enter into any transaction.

Accuracy of Information

Whilst Endowus has made reasonable efforts to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or errors in any such information. Endowus does not warrant or represent that the information in this article is correct, accurate or reliable. 


Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this article are subject to market influences and contingent upon matters outside the control of Endowus and therefore may not be realised in the future. 

In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

This article has not been reviewed by the Securities and Futures Commission of Hong Kong.

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