Glossary continued Inflation Issuer Risk The rate of increase in the cost of living. Inflation is An entity that sells securities, such as fixed income The chance that an investment’s return will be different usually quoted as an annual percentage, comparing securities and company shares. to what is expected. Risk includes the possibility of the average price this month with the same month a Maturity losing some or all of the original investment. year earlier. The length of time until the initial investment amount Total return Inflation-linked bonds/Index-linked bonds of a fixed income security is due to be repaid to the The term for the gain or loss derived from an investment Fixed income securities where both the value of the holder of the security. over a particular period. Total return includes income loan and the interest payments are adjusted in line Par value (in the form of interest or dividend payments) and with inflation over the life of the security. Also referred The initial price of a bond, also known as face value. capital gains. to as index-linked bonds. Treasuries Investment grade corporate bonds Principal Fixed income securities issued by the US government. Fixed income securities issued by a company with a The face value of a fixed income security, which is medium or high credit rating from a recognised credit the amount due back to the investor by the borrower Yield (bonds) rating agency. They are considered to be at lower risk when the security reaches the end of its life. This refers to the interest received from a fixed from default than those issued by companies with Retail Prices Index (RPI) income security and is usually expressed annually as a lower credit ratings. Default means that a company A UK inflation index that measures the rate of change percentage based on the investment’s cost, its current or government is unable to meet interest payments of prices for a basket of goods and services in the UK, market value or its face value. or repay the initial investment amount at the end of a including mortgage payments and council tax. security’s life. Z 14