Glossary of Investment Terms (M)

Macroeconomics
This is a form of economic analysis which looks at the wider picture as oppose to Microeconomics which concentrates on specific elements and issues affecting an economy.

Managed Fund
A common investment vehicle which is traditional made up of a variety of specialised funds allowing the investment managers to concentrate of the specific investment spread of the overall fund. Often referred to as an umbrella fund, i.e. one fund which contains exposure to a variety of other specialist funds.

Mandate
In simple terms this is the instructions agreed with your investment managers so that each party knows exactly what is required and what is expected.

Marginal Tax Rate
This is the additional tax which a taxpayer pays on each £1 increase in their taxable income. Please note that tax rates change on a regular basis.

Market Capitalisation
This is the overall value of a company quoted on the stock market when taking into account the value of all shares in existence.

Market Level Indicator
This is an index which offers a comparison between the value of fixed interest securities and Shares, used in determining State scheme premiums

Market Price
In simple terms this is the last price at which a share changed hands, or the quoted buying and selling price.

Market Risk
This relates to the risk associated with any particular market, i.e. if the UK stock market collapsed tomorrow, even the best performing shares on the market would be affected.

Market Timing
This is the ability to time your investment purchases and sales to perfection - in reality this is very difficult to achieve.

Market Value
The value of an investment instrument on the open market, i.e. the price others are prepared to pay.

Market Value Reduction (adjustment)
This is the reduction in the value of a claim on a Unitised With-Profits Bond which reflects the movement of assets underlying the policy.

Matching
This is the process by which assets are arranged to create specific income streams in the future to match liabilities.

Maturity
This is the date on which a loan, bond, mortgage, life policy, or other debt or security is due to be repaid in full.

Maximum Contributions
Pension contracts have maximum contribution levels which are set by the Inland Revenue. Professional advice should be taken as contribution levels can fluctuate over time.

Maximum gain
The Maximum Gain represents the best case scenario for an investment.

Maximum Loss
The Maximum Loss represents the worst case scenario for an investment.

Median
This is the middle value of a range of values - not to be confused with the mean which is the average. For example, if five items cost £20, £80, £100, £300 and £500 respectively, the median value would be £100, whereas the mean or average would be £200.

Member
Commonly used in the pensions industry to describe a person who has been admitted to membership of a pension scheme and is entitled to benefits under the scheme.

Member Choice
This is the option which allows members of a defined contribution fund to decide the proportion of funds to be allocated between high and low risk investment strategies, sectors and/or managers.

Microeconomics
This is the study of specific markets or companies and their impact upon the wider economy.

Middle Band Earnings
Earnings between the lower earnings limit and upper earnings limit.

Mini ISA
There are currently three types of Mini ISA you can invest in, these being cash life assurance, and stocks and shares. You can buy up to three mini ISAs in any financial year: one for cash, one for stocks and shares and one for life assurance. Unlike a maxi ISA, each one of these can come from a different provider. The income earned will be free of tax.

Allowances and regulation relating to ISAs change on a regular basis and professional advice should always be taken.

Minimum Contributions
This refers to minimum contribution levels that can be paid into a financial product whether this is a pension of any other financial instrument.

Minimum Income Guarantee (MIG)
This is a means-tested benefit that helps individuals on low incomes at retirement where further financial assistance may be available from the state.

Modified Duration
The level of interest rate sensitivity resulting from small changes in the yield to maturity of a bond, i.e. how a bond price will perform under different circumstances.

Momentum
This is a measurement of strength in the direction of a financial investment or market, which may be up or down.

Money Market
The market for trade in short-term securities such as Bills of Exchange, Promissory Notes and Government and Semi-Government bonds which is vital to the smooth running of any economy.

Money Purchase Schemes
An occupational pension scheme where the contributions made by the employer and employee are set and the final pension an employee receives depends on the size of their fund on retirement and the annuity rates available at the time.

Moody's
American credit rating organisation - operates in similar fashion to Standard & Poor 's.

Mortgage Indemnity Insurance
Insurance that covers the mortgage lender, in the event that the property is repossessed and its value when sold does not cover the remaining loan.

MSCI Index
Abbreviation for Morgan Stanley Capital International Index, a series of country indexes of equity prices.

Mutual Fund
Mutual funds are similar to unit trusts in that individual investors are entitled to an interest in a portfolio of securities, but different in the sense that they are offered through a corporate legal structure rather than through a trust arrangement.