FTSE 100 The FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange by market capitalisation. It is a key benchmark for the UK stock market, often used by investors to gauge the overall health of the UK economy and track the performance of blue-chip stocks.
FTSE 250 The FTSE 250 is an index of the next 250 largest companies listed on the London Stock Exchange after the FTSE 100. It includes mid-cap companies and provides a more diverse view of the UK economy, often reflecting domestic market conditions more than the FTSE 100.
Fixed-Income Security A fixed-income security is a financial instrument that provides regular interest payments and returns the principal at maturity. In the UK, government gilts and corporate bonds are common fixed-income investments, popular among investors seeking stable returns and lower risk compared to equities.
Fundamental Analysis Fundamental analysis involves evaluating a company’s financial statements, industry conditions, and economic factors to assess its intrinsic value. In the UK, this approach is widely used for stock valuation and long-term investment decisions, focusing on metrics like earnings, revenue, and cash flow.
Free Float Free float refers to the portion of a company’s shares that are publicly available for trading. In the UK, indices like the FTSE 100 use free-float market capitalisation to determine the weighting of companies, ensuring that the index reflects actual tradable shares rather than total issued shares.
Fiscal Policy Fiscal policy refers to government decisions on taxation and public spending to influence economic activity. In the UK, fiscal policy is a key factor for investors, as changes in tax rates, government spending, or deficits affect business profitability, consumer behaviour, and overall market sentiment.
Forward Contract A forward contract is a customised agreement between two parties to buy or sell an asset at a predetermined price on a future date. In the UK, forward contracts are commonly used in commodities and foreign exchange markets to hedge against price volatility, providing certainty for future transactions.
FTSE All-Share Index The FTSE All-Share Index includes all companies listed on the London Stock Exchange’s main market, providing a comprehensive view of UK equity performance. It is used as a benchmark by investors and fund managers to evaluate the overall performance of the UK stock market.
Fund Manager A fund manager is a professional responsible for making investment decisions on behalf of a fund’s investors. In the UK, fund managers play a vital role in mutual funds, investment trusts, and pension funds, aiming to maximise returns while managing risks according to the fund’s objectives.
Financial Conduct Authority (FCA) The Financial Conduct Authority (FCA) is the UK regulator responsible for overseeing financial markets, ensuring transparency, and protecting investors. The FCA enforces rules and guidelines for financial institutions, creating a fair and secure environment for investing and trading.
Fiscal Year A fiscal year is a 12-month period used for accounting and tax purposes. In the UK, many companies align their fiscal year with the government’s tax year (April 6 to April 5), though others use calendar years or alternative periods. Investors consider fiscal year-end reports for assessing company performance.
Floating Rate Note (FRN) A Floating Rate Note (FRN) is a bond with interest payments that adjust based on a benchmark rate, such as LIBOR or SONIA. In the UK, FRNs appeal to investors in rising interest rate environments, offering protection against inflation and higher yields compared to fixed-rate bonds.
Foreign Exchange Market (Forex) The Foreign Exchange Market (Forex) is a global marketplace for trading currencies. In the UK, London is a major hub for Forex trading, with investors participating to hedge currency risk, speculate on price movements, or diversify portfolios with international exposure.
Franking Credit Franking credit represents tax already paid on corporate earnings distributed as dividends. While the UK does not have a franking credit system, it offers a tax-free dividend allowance, making dividend-paying stocks attractive for income-seeking investors within the tax-free limit.
Fundamental Indexing Fundamental indexing is an investment strategy that weights index components based on financial metrics like earnings or book value instead of market capitalisation. In the UK, fundamental indexing is used as an alternative to traditional indices, aiming to achieve better risk-adjusted returns by focusing on company fundamentals.
Forward Rate Agreement (FRA) A Forward Rate Agreement (FRA) is a financial contract that allows parties to lock in an interest rate for a future period. In the UK, FRAs are used by financial institutions and corporations to hedge interest rate risk, ensuring stable borrowing or lending costs.
Fixed Charge Coverage Ratio The fixed charge coverage ratio measures a company’s ability to cover fixed financial obligations, such as interest and lease payments, with its earnings. In the UK, this ratio helps investors assess financial stability, particularly for companies with significant fixed expenses in sectors like real estate or retail.
Franchise Value Franchise value represents the premium a company earns from its established brand, customer loyalty, or competitive advantages. In the UK, companies with high franchise value are attractive to investors, as they often generate consistent earnings and maintain pricing power, particularly in consumer and luxury sectors.
Fund of Funds (FoF) A Fund of Funds (FoF) is a mutual fund or investment trust that invests in other funds rather than individual securities. In the UK, FoFs provide diversification and professional management but often come with higher fees. They appeal to investors seeking broad exposure across asset classes or strategies.
Forward P/E Ratio The forward P/E ratio is a valuation metric that uses forecasted earnings to assess a stock’s price. In the UK, investors use forward P/E ratios to compare companies’ future growth potential and valuation relative to peers, providing insight into whether a stock is undervalued or overvalued.
Financial Stability Report The Financial Stability Report is a publication by the Bank of England that assesses risks to the UK financial system. Investors monitor this report for insights into macroeconomic trends, regulatory changes, and systemic risks that could impact financial markets and investment portfolios.
Fiscal Multiplier The fiscal multiplier measures the impact of government spending on economic output. In the UK, fiscal policy decisions, such as infrastructure spending or tax cuts, influence the fiscal multiplier, affecting GDP growth and investor sentiment, particularly in sectors reliant on government contracts.
Fair Value Fair value represents the estimated intrinsic value of an asset based on market conditions, demand, and future cash flows. In the UK, fair value is a key concept in valuing stocks, bonds, and derivatives, helping investors identify overvalued or undervalued assets.
FTSE AIM Index The FTSE AIM Index tracks the performance of companies listed on the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange designed for smaller, high-growth firms. The index appeals to investors seeking exposure to innovative UK companies, though AIM stocks often carry higher risk.
Fixed Asset Turnover Ratio The fixed asset turnover ratio measures a company’s efficiency in generating sales from its fixed assets. In the UK, this ratio is used to evaluate asset-heavy industries like manufacturing and utilities, helping investors assess operational efficiency and asset utilisation.
FTSE 350 Index The FTSE 350 Index combines the FTSE 100 and FTSE 250, covering the 350 largest companies listed on the London Stock Exchange. In the UK, it serves as a broad benchmark for the overall performance of large and mid-cap companies, offering insights into both international and domestic market trends.
Foreign Direct Investment (FDI) Foreign Direct Investment (FDI) involves investments made by companies or individuals in one country into business interests in another country. In the UK, FDI is crucial for economic growth, particularly in sectors like finance, technology, and real estate. Investors track FDI flows to gauge economic confidence and opportunities.
First-Mover Advantage First-mover advantage refers to the competitive edge gained by being the first to enter a market or adopt a strategy. In the UK, companies with first-mover advantage often dominate emerging sectors, like fintech or renewable energy, offering significant growth opportunities for early investors.
Financial Engineering Financial engineering involves using mathematical techniques and financial instruments to design investment strategies, optimise returns, or manage risk. In the UK, financial engineering is employed in derivatives trading, structured products, and portfolio optimisation, appealing to sophisticated investors and institutions.
Fiscal Stimulus Fiscal stimulus refers to government measures, such as increased public spending or tax cuts, to boost economic activity. In the UK, fiscal stimulus is a key tool for managing economic downturns, affecting sectors like construction, healthcare, and retail, where government spending plays a significant role.
Fixed-Term Deposit A fixed-term deposit is a savings product where funds are locked in for a specified period, earning a fixed interest rate. In the UK, fixed-term deposits are popular among conservative investors seeking guaranteed returns, though they offer lower liquidity compared to instant-access accounts.
Flat Yield Curve A flat yield curve occurs when short-term and long-term interest rates are similar, indicating uncertainty about future economic growth. In the UK, a flat yield curve can signal a potential economic slowdown, influencing bond investments and broader market sentiment.
Foreign Exchange Reserves Foreign exchange reserves are assets held by a central bank in foreign currencies, used to stabilise the national currency and meet international obligations. In the UK, the Bank of England manages reserves to maintain financial stability, indirectly affecting exchange rates and investor confidence.
Fractional Shares Fractional shares allow investors to buy less than a full share of a stock, enabling investment in high-priced companies with smaller capital. In the UK, platforms offering fractional shares have made investing more accessible, particularly for retail investors seeking diversification in expensive markets like technology.
Fundamental Growth Rate The fundamental growth rate is the sustainable growth a company can achieve based on its earnings, reinvestment rate, and return on equity. In the UK, investors use this metric to assess long-term growth potential, particularly in stable sectors like consumer goods or utilities.
Fiduciary Duty Fiduciary duty is the legal obligation to act in the best interests of another party, such as a client or shareholder. In the UK, fund managers, advisors, and corporate directors are bound by fiduciary duties, ensuring ethical behaviour and alignment with investor interests.
Fundamental Risk Fundamental risk arises from a company’s financial or operational weaknesses, such as declining revenue or poor management. In the UK, fundamental risk is a key consideration in stock analysis, as it directly affects a company’s profitability and long-term viability.
Free Cash Flow (FCF) Free Cash Flow (FCF) represents the cash generated by a company after accounting for capital expenditures. In the UK, investors use FCF to evaluate a company’s ability to pay dividends, reduce debt, or reinvest in growth. Strong FCF is a sign of financial health and operational efficiency.
Fair Market Value (FMV) Fair Market Value (FMV) is the price an asset would fetch in an open market under normal conditions. In the UK, FMV is crucial for property valuation, tax assessments, and mergers, providing a baseline for investment decisions and negotiations.
Forward Guidance Forward guidance is a communication tool used by central banks to signal future monetary policy intentions. In the UK, the Bank of England’s forward guidance affects interest rates, inflation expectations, and market sentiment, providing investors with insights into economic outlook and policy direction.
Fixed Interest Investment Fixed interest investments provide regular, predetermined interest payments, such as government gilts or corporate bonds. In the UK, these investments appeal to risk-averse investors seeking steady income, particularly in low-yield environments or for portfolio diversification.
FinTech FinTech refers to technology-driven financial services, including online banking, payment apps, and robo-advisors. In the UK, FinTech is a rapidly growing sector, centred in London, attracting both venture capital and retail investors seeking exposure to innovative solutions in financial markets.
Forward Integration Forward integration occurs when a company expands its operations to include distribution or retailing of its products. In the UK, forward integration is common in sectors like manufacturing and retail, where companies aim to control their supply chains and improve margins.
Fixed Overhead Fixed overhead refers to business expenses that do not vary with production levels, such as rent and salaries. In the UK, understanding fixed overhead is essential for assessing a company’s break-even point and operational efficiency, particularly in industries with high fixed costs like real estate or energy.
Fundamental Value Fundamental value is the intrinsic worth of an asset based on its financial and economic characteristics. In the UK, fundamental value is central to value investing, where investors seek undervalued stocks trading below their intrinsic worth for potential capital appreciation.
Forward Pricing Forward pricing is the method of determining the price of a fund or security based on the next net asset value calculation. In the UK, forward pricing is standard for mutual funds, ensuring fair treatment of investors by reflecting the latest market values.
Fixed Expense Ratio The fixed expense ratio measures a company’s fixed costs as a percentage of total revenue. In the UK, this ratio is used to assess operational leverage and cost management efficiency, helping investors understand how fixed costs impact profitability.
Foreign Portfolio Investment (FPI) Foreign Portfolio Investment (FPI) involves investing in foreign financial assets, such as stocks and bonds, without direct control over the entities. In the UK, FPI provides diversification benefits and access to global markets, though it carries currency and geopolitical risks.
Fair Trade Investing Fair trade investing focuses on companies that adhere to fair trade practices, ensuring ethical treatment of workers and sustainable sourcing. In the UK, fair trade investing aligns with ESG principles, appealing to socially conscious investors seeking both financial returns and positive social impact.
Fiscal Drag Fiscal drag occurs when inflation and wage growth push taxpayers into higher tax brackets, increasing tax revenue without policy changes. In the UK, fiscal drag affects disposable income and consumer spending, impacting sectors like retail and real estate, which rely on consumer demand.
Floating Stock Floating stock refers to the shares of a company that are available for trading in the open market, excluding restricted and closely held shares. In the UK, floating stock is used by investors to assess liquidity, as higher float typically indicates a more actively traded stock.
Fiscal Deficit Fiscal deficit occurs when a government’s total expenditure exceeds its revenue. In the UK, fiscal deficits impact government borrowing, interest rates, and bond markets. Investors monitor the deficit as it influences public debt levels and the issuance of government gilts.
Futures Contract A futures contract is a standardised agreement to buy or sell an asset at a predetermined price on a future date. In the UK, futures are used by investors to hedge risks or speculate on price movements, particularly in commodities, stock indices, and interest rates.
Fixed Income ETF A Fixed Income ETF is an exchange-traded fund that invests in bonds and other fixed-income securities. In the UK, these ETFs provide a liquid, diversified way to gain exposure to bond markets, appealing to investors seeking regular income and lower risk compared to equities.
Fundamental Attribution Error Fundamental Attribution Error occurs when investors attribute a company’s performance to management or internal factors, ignoring external factors like market conditions. In the UK, this bias can affect investment decisions, leading to misjudgment of a company’s long-term potential.
Flat Tax Flat tax refers to a tax system where all income levels are taxed at the same rate. In the UK, flat tax proposals are debated for their simplicity and fairness, though they are not currently in use. Investors consider flat tax systems for their potential effects on disposable income and investment decisions.
Financial Intermediary A financial intermediary is an entity that facilitates transactions between investors and borrowers, such as banks, brokers, and investment funds. In the UK, intermediaries play a critical role in providing access to financial markets and investment opportunities for retail and institutional investors.
FTSE SmallCap Index The FTSE SmallCap Index tracks the performance of smaller companies listed on the London Stock Exchange that are not included in the FTSE 100 or FTSE 250. In the UK, this index is monitored by investors seeking exposure to higher-risk, higher-growth opportunities in small-cap stocks.
Funding Gap A funding gap occurs when a company or government has insufficient resources to meet financial obligations or capital needs. In the UK, funding gaps are a concern in sectors like healthcare and infrastructure, where public and private investment is critical for closing shortfalls.
Fair Disclosure (Regulation FD) Although Regulation FD is a US rule, its principles influence transparency standards globally. In the UK, similar requirements ensure that companies disclose material information to all investors simultaneously, promoting fair access to market-moving information.
Fixed-Interest Coverage Ratio The fixed-interest coverage ratio measures a company’s ability to meet its interest payment obligations with its earnings. In the UK, a higher ratio indicates financial stability and lower credit risk, important for bond investors assessing the safety of fixed-income securities.
Fringe Benefits Tax (FBT) Fringe Benefits Tax (FBT) is a tax on non-cash benefits provided to employees, such as company cars or private healthcare. In the UK, FBT-like considerations are part of income tax calculations, influencing the cost of employee benefits for businesses and their attractiveness to employees.
Financial Leverage Financial leverage refers to the use of borrowed funds to increase potential returns on investment. In the UK, companies with high leverage are scrutinised for their ability to manage debt, as excessive leverage can amplify losses during economic downturns.
Fundamental Metric A fundamental metric is a financial measure, such as earnings or revenue, used to evaluate a company’s performance. In the UK, fundamental metrics underpin stock valuations, helping investors identify high-quality investments and avoid overvalued or underperforming companies.
Financial Repression Financial repression occurs when governments implement policies to channel funds to public debt, often through low interest rates or capital controls. In the UK, financial repression impacts bond yields and savings rates, prompting investors to seek alternative assets for better returns.
Free Reserves Free reserves are the excess reserves a bank holds beyond the required reserve amount. In the UK, free reserves indicate the banking sector’s liquidity and its ability to support lending during economic fluctuations, which can influence market conditions and investor confidence.
Franking Privilege Franking privilege refers to a company’s ability to pay tax on earnings before distributing dividends, avoiding double taxation. While the UK does not use franking systems like Australia, its tax-free dividend allowance offers similar benefits for investors receiving dividends.
Fundamental Return Fundamental return measures the gains generated from dividends and earnings growth rather than market speculation. In the UK, this concept is key for income-focused investors who prioritise long-term stability and value over short-term price movements.
Fixed-Rate Bond A fixed-rate bond is a debt instrument that pays a consistent interest rate throughout its term. In the UK, government gilts and corporate bonds are common examples, appealing to investors seeking predictable income without exposure to fluctuating interest rates.
Financial Risk Financial risk refers to the possibility of losing money on an investment due to factors like market volatility, credit issues, or currency fluctuations. In the UK, financial risk is a primary consideration in portfolio construction, influencing asset allocation and risk management strategies.
Financial Times Stock Exchange (FTSE) The Financial Times Stock Exchange (FTSE) is a series of indices that track the performance of UK stocks, such as the FTSE 100 and FTSE 250. These indices are widely used by investors to gauge market performance and benchmark portfolio returns.
Fixed Return Investment Fixed return investments provide predetermined income or returns, such as bonds, fixed deposits, or annuities. In the UK, these investments are favoured by conservative investors seeking stability and predictable income, particularly in retirement planning.
Free Market Economy A free market economy is one where supply and demand dictate prices with minimal government intervention. In the UK, the balance between free market principles and government regulation influences economic growth, market dynamics, and investor confidence.
Fiscal Prudence Fiscal prudence refers to responsible management of government spending and debt levels. In the UK, fiscal prudence is a critical consideration for bond investors, as high debt levels or irresponsible spending can lead to increased borrowing costs and reduced economic stability.
Financial Modelling Financial modelling involves creating quantitative representations of a company’s financial performance to forecast future outcomes. In the UK, financial modelling is widely used in investment banking, private equity, and corporate finance to value assets and assess investment opportunities.
Fixed Costs Fixed costs are business expenses that remain constant regardless of production levels, such as rent, insurance, or salaries. In the UK, understanding fixed costs helps investors assess a company’s operating leverage and breakeven point, particularly in capital-intensive industries.
Free Cash Flow Yield Free Cash Flow Yield is the ratio of a company’s free cash flow to its market capitalisation, expressed as a percentage. In the UK, this metric is used by value investors to identify undervalued stocks with strong cash-generating capabilities, particularly in industries like utilities and consumer staples.
Fundamental Law of Active Management The Fundamental Law of Active Management links the success of an active manager to their skill and breadth of investment opportunities. In the UK, it is used to evaluate fund managers’ ability to outperform benchmarks, helping investors choose between active and passive strategies.
Forward Looking Statement A forward-looking statement provides guidance or forecasts about a company’s future performance. In the UK, these statements are common in earnings reports and must comply with regulations to avoid misleading investors. They influence stock prices as they shape market expectations.
Fiscal Responsibility Fiscal responsibility involves managing public finances efficiently to avoid excessive deficits and debt. In the UK, fiscal responsibility is a key factor for bond investors, as it affects government borrowing costs and economic stability, influencing the attractiveness of UK gilts.
Fair Value Accounting Fair value accounting is a financial reporting approach where assets and liabilities are measured at their current market value. In the UK, fair value accounting standards ensure transparency and relevance in financial statements, impacting valuation and investment decisions.
Fixed-to-Floating Rate Bond A fixed-to-floating rate bond starts with a fixed interest rate, which later transitions to a floating rate tied to a benchmark. In the UK, these bonds appeal to investors seeking initial rate stability with the potential for higher returns in rising interest rate environments.
Financial Aggregator A financial aggregator is a platform that consolidates financial information from multiple sources, such as accounts, investments, and loans. In the UK, these platforms help investors monitor their portfolios and make informed decisions by providing a unified view of financial data.
Funding Liquidity Risk Funding liquidity risk is the risk that a company cannot meet its short-term financial obligations due to insufficient cash or credit availability. In the UK, this risk is closely monitored by banks, as it impacts credit ratings and market confidence.
Fundamental Trend Analysis Fundamental trend analysis involves evaluating long-term trends in financial metrics, such as revenue growth or profit margins. In the UK, this technique helps investors identify companies with consistent performance, particularly in defensive sectors like healthcare and consumer goods.
Financial Distress Financial distress occurs when a company struggles to meet its financial obligations, potentially leading to default or bankruptcy. In the UK, investors assess financial distress by analysing debt levels, cash flow, and profitability, particularly in high-leverage sectors like real estate and retail.
Fiscal Surplus A fiscal surplus occurs when a government’s revenue exceeds its expenditure. In the UK, fiscal surpluses are rare but indicate strong public finances, which can lead to lower borrowing costs and higher confidence in government bonds (gilts).
Free Float Adjusted Market Capitalisation Free float adjusted market capitalisation considers only the shares available for public trading, excluding locked-in shares. In the UK, this metric is used to calculate index weights, ensuring that indices like the FTSE 100 reflect tradable market values rather than total issued shares.
Fixed Maturity Plan (FMP) A Fixed Maturity Plan (FMP) is a closed-ended debt fund that invests in fixed-income securities with matching maturity dates. In the UK, FMPs offer predictable returns and capital protection, appealing to conservative investors seeking stable income without interest rate volatility.
Foreign Exchange Hedge A foreign exchange hedge is a strategy to protect against currency fluctuations affecting international investments. In the UK, investors use forex hedging to mitigate risks in portfolios with significant exposure to foreign currencies, ensuring more predictable returns.
Financial Inclusion Financial inclusion refers to providing access to affordable financial services to all segments of society. In the UK, initiatives like open banking aim to increase financial inclusion, creating investment opportunities in FinTech and digital payment platforms.
Fair Trade Bond A fair trade bond is a debt instrument issued to fund ethical projects, ensuring fair wages and sustainable practices. In the UK, these bonds appeal to ESG-focused investors seeking financial returns alongside positive social impact, particularly in agriculture and developing markets.
Financial Market Infrastructure (FMI) Financial Market Infrastructure (FMI) refers to systems that facilitate trading, clearing, settlement, and payment of financial instruments. In the UK, FMIs like CREST for securities settlement ensure smooth market operations, providing critical support for investor confidence and liquidity.
Fixed-Rate Mortgage A fixed-rate mortgage has a constant interest rate over its term, ensuring predictable monthly payments. In the UK, fixed-rate mortgages are popular among homeowners and real estate investors seeking stability, particularly in uncertain economic conditions.
Floating Interest Rate A floating interest rate fluctuates based on market conditions or a benchmark index. In the UK, floating rates are tied to metrics like SONIA (Sterling Overnight Index Average), appealing to borrowers in declining interest rate environments but carrying more risk for investors.
Forward Dividend Yield Forward dividend yield is the estimated annual dividend of a stock divided by its current price. In the UK, this metric helps income investors evaluate future returns from dividends, considering company guidance and market conditions.
Fiscal Autonomy Fiscal autonomy refers to a government’s ability to control its tax and spending policies. In the UK, devolved administrations in Scotland, Wales, and Northern Ireland have varying levels of fiscal autonomy, impacting local investment opportunities and infrastructure funding.
Financial Independence, Retire Early (FIRE) The FIRE movement focuses on achieving financial independence through disciplined saving and investing to retire early. In the UK, FIRE advocates use tax-efficient accounts like ISAs and SIPPs to maximise returns while minimising tax burdens, aiming for long-term financial freedom.
Fixed Capital Investment Fixed capital investment refers to spending on physical assets like machinery, buildings, or equipment. In the UK, fixed capital investments drive economic growth, with sectors like manufacturing and infrastructure benefiting from increased investment activity.
Fiscal Stimulus Package A fiscal stimulus package includes government measures like tax cuts, direct payments, or infrastructure spending to boost economic activity. In the UK, stimulus packages are implemented during economic downturns to support businesses and consumers, influencing market performance and investor sentiment.
