Allen & Overy Pension Scheme
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Glossary of Investment Terms
Additional Voluntary
Contributions (AVCs)
Annual Management Charge (AMC)
Retirement Account
Total Fund Charge

A style of investment management where the fund manager actively manages a fund (i.e. chooses specific investments) with the aim of outperforming other similar funds or a particular index. The fund manager chooses which assets to hold and when to buy and sell assets in order to try to achieve the best returns.

AVCs are extra contributions you can make through the Scheme to your pension savings. AVCs receive tax relief in the same way as your normal contributions. The investment options described by this guide are open for AVCs from both Defined Contribution and Defined Benefit section members.

Every investment fund caries an AMC to cover the running costs. The AMC applies per year to the total value of your investments in that fund. For example an AMC of 0.85% on an annual investment worth 1,000 would attract a charge of 8.50 for that year. AMCs may increase or decrease from time to time. This charge is built into the price of the units.

A regular income purchased from an insurance company which is paid from retirement for the rest of your life (also known as a pension).

These are loans to governments, companies and institutions who need to borrow money. Normally, bonds pay a known rate of interest for the term of the loan, but their value can still vary from time to time due to changes in general investment market conditions and the state of the economy.

This is an investment in various cash deposits and short term financial instruments to generate an expected return similar to short-term deposit-based savings with a bank or building society, meaning that there is a low chance of capital depreciation. However, expected returns will also be lower than other asset classes over the long-term.

These are shares in companies. By buying equities you are taking part ownership of these companies. The day-to-day value of equities will go up and down in value, largely depending on the performance of the companies held, as well as general investment market conditions and the state of the economy. You may see the rapid movements in the value of shares described as volatility.

These are bonds issued by the UK government. There are two main types of gilts. Some work in the same way as standard bonds and pay a fixed rate of interest over the term. The other type is called index-linked gilts and their value and the interest paid are linked to the rate of inflation.

This is a type of fund which invests in a number of underlying investment managers chosen by the Manager of Managers to achieve a greater spread of investments. The MoM regularly researches the current and other managers and makes changes as they are considered appropriate. This means that if any of the underlying managers is believed to have become unsuitable for the future, the MoM can replace them with other managers in whom they have greater confidence.

The date when you reach your normal retirement age. The minimum retirement age is 55.

A style of investment management where the fund manager aims to track the performance of a chosen index, for example, the FTSE All Share Index (which reflects the UK equity market). The underlying assets of the fund are normally held in the same proportions as the index. Passive funds are also described as index tracking funds. Passive funds normally have lower charges than active funds.


This is an investment in commercial property. The return on property reflects the rents received and the increases (or decreases) in the value of the property over time.

The account set up for you as a member of the Scheme. This includes the member and employer contributions invested on your behalf, together with any investment return, which could be positive or negative and after deduction of investment management expenses.

Some investment funds attract expenses in addition to an Annual Management Charge (AMC), for example, legal, audit and accounting fees. The Total Fund Charge is the AMC plus the value of any Additional Expenses. This applies per year to the total value of your investments in that fund. Additional Expenses included in the Total Fund Charge can vary over time and are built into the price of the units.