Welcome to the Charities Aid Foundation

We help donors to give more impactfully and charities to build their resilience so they can do more of their life-changing work.

Personal giving From one-off donations to long-term giving, or designing your personal philanthropic strategy, we work together to help you realise your giving ambitions. Corporate giving You have the vision for making a difference. So do we. We help you plan how to give based on your goals. Services for charities Helping your charity or social enterprise become more resilient. Insights Discover the latest insights for donors and charitable organisations to help create a greater impact About us We are a leading charity, working at the centre of the giving world. We help donors to give more impactfully and charities to build their resilience so they can do more of their life-changing work. Donate  
 
 
 

Personal giving

From one-off donations to long-term giving, or designing your personal philanthropic strategy, we work together to help you realise your giving ambitions.

DISCOVER OUR PERSONAL GIVING SOLUTIONS

Corporate giving

You have the vision for making a difference. So do we. We help you plan how to give based on your goals.

DISCOVER OUR CORPORATE GIVING SOLUTIONS

Services for charities

Helping your charity or social enterprise become more resilient.

DISCOVER HOW WE SUPPORT CHARITIES

Insights

Discover the latest insights for donors and charitable organisations to help create a greater impact

Explore

About us

We are a leading charity, working at the centre of the giving world. We help donors to give more impactfully and charities to build their resilience so they can do more of their life-changing work.

Find out more about CAF

Know your terms

A guide to common investment jargon.

The world of charity investing can sometimes feel like it has its own language. While it would take a whole book to cover every term, for those who want to dive deeper, there are some great resources out there — for example the FCA Glossary and Investopedia. 

To help you get started, we have pulled together a handful of the most commonly asked-about phrases from investors in the IFSL CAF ESG Funds.
 

What is advice and do I need it?

Advice refers to tailored recommendations provided to your charity based on its specific needs and circumstances. This should include the adviser clearly explaining why the recommended investment product or service is suitable for your charity’s needs, along with its features, costs, and risks.

Only your charity’s trustees or decision-makers can determine whether financial advice is required. There is a great deal of information available about most investments, and we would suggest avoiding any investment if that information is not readily accessible or presented in a clear, easy-to-understand format. If you need assistance interpreting this information or are uncertain about whether a particular charity investment aligns with your organisation’s values and long-term goals, seeking specialist advice may be the most appropriate option.

 

Why to funds quote an annual management charge (AMC) and talk about ongoing costs (OCFS) as well?

A charity investment fund can charge in different ways. Generally, the fund manager or Authorised Corporate Director (ACD) of a fund is entitled to take an Annual Management Charge (AMC) out of the fund for operating it. This is typically a percentage of the fund being managed, e.g. 0.75% per annum. 

There may also be extra costs for other fund activities, which can come from the AMC or directly from the fund.

All these fees together make up the Ongoing Charge Figure (OCF). The OCF shows the total cost you, as a charity investor, pay to invest in the fund each year.

 

Is there a difference between benchmarks and targets?

The target is what the fund is aiming to achieve. A benchmark is something you use to measure or compare the actual results against. So, for example the target might be to protect the purchasing power of your money over 10 years or more. The investment manager has a plan to do this by investing in companies around the world. You agree to this plan by investing, but you will want to know if it is working so you could compare it to an appropriate benchmark such as a world global equity index. How well the investment manager does against the benchmark will give you an indication of whether the target is likely to be achieved.

 

Bull vs Bear: Market moods explained

These are old terms, but they are still used. A bull market means prices are going up. A bear market means prices are going down. If you are bullish, you expect values to rise. If you are a bear, you expect them to fall.

 

What are distributions, dividends & yields?

A distribution is when a fund, account, or investment pays money to its investors. This money can come from net capital gains made from the profitable sale of investments, dividends from companies, or interest earned. For stocks and bonds, a distribution is the payment investors receive, such as interest or dividends.

Dividends are the percentage of a company's earnings that are paid to its shareholders as their share of the profits.

A yield is how much income an investment pays each year, shown as a percentage of its price. For example, if a share costs £2 and pays 10p in dividends each year, the yield is 5%. A historic yield shows what was paid over the past 12 months, while a distribution yield estimates what might be paid over the next 12 months. Make sure to check if the yield includes the fund’s fees, as this can change the amount.

 

Understanding unit types: Income or Accumulation?

Where offered, income and accumulation units (or shares) allow investors to choose how the income arising from fund investments is distributed to them. 

  • Income (or Distribution) units pay out the income received by the fund to the investor. This income could come from profits distributed to investors by companies or from coupon payments from bonds, which are like the interest paid on a loan. 
  • Accumulation units reinvest any income received from the underlying assets back into the fund to increase overall growth potential. The income becomes part of the capital value of the fund. This is either reflected in the value of each existing accumulation unit, or occasionally by the issuing of further units to the investor.

 

What is an ISIN or SEDOL number and why is it needed?

Investment names can be confusing and many are very similar. ISIN or Sedol numbers are unique identifiers that ensure administrators know exactly which investment they are dealing with. 

For example, the IFSL CAF ESG Cautious Fund has two types of unit available, income and accumulation. Whereas they are both part of the same fund, the way in which the income arises on the funds’ investments is distributed differently. To avoid potential confusion, each unit type is given a different ISIN and / or Sedol number. This may be why you are asked to quote these codes in correspondence, so it is easy to identify exactly what investment you have. ISINs are issued for use globally, whilst Sedols are specific to UK markets.

 

Why do funds often quote cumulative and annual performance figures?

Cumulative figures show you the performance of your fund over set periods from beginning to end, say over 3, 5 or 10 years. However, in most cases the increase or decrease will not be nice and smooth.

Annual figures show each year’s performance uniquely, e.g. 2023, 2024, 2025 etc but you must work out the cumulative position should you wish to do so. 

Using an example, a fund has cumulatively increased by 20% over the three years from 1 January 2022 to 31 December 2024. If we look at this annually then it could have gone up 40% during 2022; fallen by 30% in 2023 and increased by 22.5% in 2024. This combination of data shows how the fund behaved during set periods of the cumulative return. 

 

What is a fund redemption?

A fund will sell you its units or shares or buy them back from you. A redemption is where the fund buys its own shares or units back from you, i.e. you are redeeming the value of your units from the fund.

 

What is a fund settlement date?

The settlement date is the date on which a sale or purchase of fund units (or shares) is finalised and is usually a few days after the instruction is confirmed. These days are crucial for ensuring the completion of financial transactions and the transfer of ownership or rights associated with the securities or assets.

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