Investment jargon

 

Fund Manager

The company/person responsible for choosing the individual assets within a fund in which your money will be invested.

 

Benchmark

The ‘benchmark’ provides a standard to compare a fund’s performance against. Whereas the fund performance will depend on the assets the fund manager chose to invest in, the benchmark which is typically an investment index, will represent how the market performed as a whole. Examples include the FTSE 100 Index and the S&P 500 Index.

 

Active or passive management

You have two types of investment management style available to you: active and passive.

A passive investment style will involve the Fund Manager trying to match the performance of the Benchmark; such funds are commonly referred to as ‘tracker’ funds. Typically, the Fund Manager would do this by holding stocks in roughly the same proportions as the Benchmark. This approach takes most of the risk out of performing worse than a market. However, it does not remove the risk that the market itself will fall. Typically passive funds will have lower fees than similar active funds.

The passive funds available to you are:

 

 

An active investment style will involve the Fund Manager trying to ‘beat’, i.e. perform better than, the Benchmark. The Fund Manager will attempt to do this by using his/her knowledge to select individual investments that he/she believes will do better than the market on average.

 

An actively managed fund aims to give higher returns than a passive fund, but there is a risk of it giving lower returns. Typically active funds will have higher fees than similar passive funds.

The active funds available to you are:

 

 

Lifestyle

A Lifestyle option automatically changes how your money is invested as you approach retirement. The intention is to maximise returns while you are far away from retirement while switching your money into more ‘secure’ assets as you approach retirement. The exact mechanics of the Plan's Lifestyle options are explained on the Lifestyle investment option page.