Website Glossary

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E

Effective Yield

Method for calculating bond *income* which takes account of all expected cash flows from a bond over its lifetime. Click here for further information.

Equities

*Shares* in a company (see also *stocks and shares*).

Equity exposure

Usually expressed in percentage form. This illustrates the proportion of a fund which is invested in *stocks and shares* (equities).

Ethical funds

Also known as Socially Responsible Investments (SRIs). These funds aim to avoid investing in activities which may be harmful to society, such as tobacco production or child labour. Some funds also aim to actively invest in companies which promote ethical policies such as recycling.

Ex-dividend (xd)

For funds, the period between its *accounting date* and when it pays out its *income*. If you buy a *unit trust* or *OEIC* in this period, you do not get the income, but if you sell, you do.

Exempt funds

Refers to funds that are only open to institutional investors which are exempt from paying *capital gains tax*, such as pension funds and charities.

Exit charge

Also known as a redemption charge. A charge taken by some *fund managers* when you sell your *units*/*shares*.  In many cases, the charge will only be applied if you sell within, say, five years. Exit charges are usually applied instead of, rather than in addition to, an *initial charge*.

Expenses charged to capital

Expenses incurred by the fund can either be taken out of the *income* received by the fund or from the fund’s *capital*. Charging expenses to capital will increase the amount that can be paid out to investors as *distributions* but will reduce the capital value of the fund.