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Glossary of Investment Terms (F)

The following are useful investment terms beginning with ‘F’

Face Value
Face value is ordinarily the amount that the issuer promises to pay at maturity, and is not an indication of current market value. Often referred to as the nominal value of a bond.

A person or organisation entrusted with the responsibility of managing, holding or investing assets in the best interest of the owner of the assets. Trustees of pension funds are fiduciaries in respect of the members of their funds.

Final Salary Scheme
An occupational pension scheme where the final pension an employee receives is linked to the size of their final salary, and their service with the company (often referred to as Defined Benefits schemes).

Financial Adviser
Financial advisers can advise and sell products for a range of insurance companies and investment companies with the more common form of payment being a commission from the product provider. Financial Advisers will no longer be able to receive commission on the sale of investment products after the Retail Distribution Review in December 2012.

Financial Ombudsman
The Financial Ombudsman was set up to provide a free and independent service to resolve disputes between consumers and financial firms.

Fixed Income
An alternative name for Fixed Interest. See Fixed Interest

Fixed Interest
Referring to income from an investment which remains constant and does not fluctuate, such as income derived from bonds, annuities etc. Any debt security which has a fixed flow of income is known as a fixed interest security.

Fixed Interest Rate
An interest rate which does not change during an investment or borrowing period.

Forward Contract
A cash market transaction in which two parties agree to the purchase and sale of a commodity (including exchange rates).

Forward Rate Agreement (FRA)
A contract for borrowing or lending at a stated interest rate over a stated period that begins at some time in the future. FRAs are used by parties wishing to protect themselves against future interest-rate movements - "hedging".

Financial Ombudsman Service

Abbreviation for floating rate notes which are long-term (5 years or more) debt securities, whose interest rates are adjusted periodically in line with a benchmark rate.

Front End Fee
A fee charged to a borrower at the commencement of a loan, or a commission levied on an investor to buy into a unit trust (also referred to as a front end load).

FSA (Financial Services Authority)
This is the financial services industry regulator charged with the task of protecting the consumer.

FSAVC (Free Standing Additional Voluntary Contribution)
Non compulsory payments made by a member of an occupational pension scheme.

Financial Services Compensation Scheme.

FTSE 100 Index
An index of the 100 largest companies (by market capitalisation) in the UK.

FTSE All-Share Index
An index of the Share prices of over 800 leading companies and Investment Trusts on the London Stock Exchange. See also FTSE 100 Index.

Fully Contracted Out
Pension policy where the only premium received is the Department of Work and Pensions rebate. Please note that pension regulations and rules can change on a regular basis, and professional advice should be sought before an action is taken.

Fundamental Analysis
Analysis of share values based on factors such as sales, earnings and assets that are "fundamental" to the enterprise of the company in question.

Fund Manager
The professional management company responsible for the day to day running of a fund.

Fund Size
The value of all the assets held in a fund. Usually based on the bid or selling price of the underlying assets.

Fund Yield
A fund yield expresses the amount of income that a fund has paid out in proportion to its price, and is usually stated in annualized terms. It may express either actual or expected distributions.

Futures Contract
An obligation to make or take delivery of a specified quantity of an underlying asset at a particular time in the future, and at a price agreed when the contract was executed.

Futures Exchange
A market in which futures contracts are transacted

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