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DFM & Investment Glossary.
Plain-English definitions of the investment management terms used across Quorum Capital's portfolios, reports, and regulatory documents.
Investment terms explained.
Alphabetical. Click a letter to jump.
A
- Active Management
- A portfolio management strategy where the investment manager makes specific investment decisions with the aim of outperforming a benchmark index. Quorum Capital's Core Range uses active management. Contrast with Passive Management.
- Asset Allocation
- The process of dividing a portfolio among different asset classes — such as equities, bonds, cash, and alternatives — to balance risk and return. Strategic Asset Allocation (SAA) sets long-term target weights; tactical tilts are short-term deviations.
- ATR (Attitude to Risk)
- A structured questionnaire completed with a financial adviser to determine how much investment risk is appropriate for a client, given their goals, time horizon, and emotional tolerance for market fluctuations.
- AUM (Assets Under Management)
- The total market value of assets that an investment manager manages on behalf of clients. A common measure of a DFM's scale.
B
- Benchmark
- A standard against which a portfolio's performance is measured. Quorum Capital's Core RG3 Balanced portfolio, for example, uses the IA Mixed Investment 40–85% Shares sector as its benchmark.
- Bonds / Fixed Income
- Debt securities issued by governments or companies. Bonds pay regular interest (the coupon) and return the principal at maturity. Lower risk than equities but typically offer lower long-term returns.
C
- Capital at Risk
- A regulatory risk warning meaning the value of investments can fall as well as rise, and you may get back less than you invested. All Quorum Capital portfolios carry this risk.
- Consumer Duty
- An FCA regulatory framework (effective July 2023) requiring financial services firms to deliver good outcomes for retail customers, including fair value, clear communication, and suitable products. Quorum Capital publishes annual Consumer Duty value assessments.
- Custodian
- The regulated institution that holds client assets (cash and securities) on behalf of investors. Quorum Capital does not act as custodian — client assets are held by the regulated platform chosen by the adviser.
D
- DFM (Discretionary Fund Manager)
- A regulated firm authorised to make investment decisions on behalf of clients without requiring approval for each trade. Quorum Capital is a DFM authorised by the FCA (no. 601037). The DFM works within parameters set by the financial adviser.
- Drawdown
- The peak-to-trough decline in portfolio value during a specific period. Maximum drawdown measures the worst-case loss from a peak. Quorum Capital publishes indicative drawdown estimates for each risk grade.
- Diversification
- Spreading investments across different asset classes, regions, sectors, and securities to reduce concentration risk. A core principle of all Quorum Capital portfolios.
E
- Ownership stakes in companies. Equities typically offer higher long-term returns than bonds but with greater short-term volatility. Risk grades RG2–RG5 have increasing equity allocations.
- A framework for evaluating companies based on environmental impact, social responsibility, and governance practices. Quorum Capital's Core RG3 Ethical and Ethical Income portfolios apply ESG screens and exclusions.
- ETF (Exchange Traded Fund)
- A fund that tracks an index and trades on a stock exchange like a share. ETFs typically have lower costs than actively managed funds. Used extensively in Quorum Capital's Passive Range.
F
- The UK's financial services regulator. Quorum Capital Limited is authorised and regulated by the FCA, firm reference number 601037.
- FSCS (Financial Services Compensation Scheme)
- The UK's statutory fund of last resort for customers of failed financial services firms. Investors' assets held on an FCA-regulated platform are protected by the platform's FSCS coverage.
- Fund Selection
- The process of choosing which specific investment funds to include in a portfolio. Quorum Capital's committee selects funds purely on merit — no commercial affiliations.
I
- ICARA (Internal Capital Adequacy and Risk Assessment)
- A regulatory process required of investment firms under MIFIDPRU, assessing capital adequacy and risk management. Quorum Capital's ICARA is an internal governance and regulatory risk-assessment document and is not published publicly.
- ISA (Individual Savings Account)
- A UK tax wrapper that allows investments to grow free of income and capital gains tax. Quorum Capital portfolios can be held within an ISA on supported platforms.
M
- MIFIDPRU
- The UK prudential regime for investment firms, replacing CRD/CRR. Quorum Capital is subject to MIFIDPRU reporting and makes an annual MIFIDPRU public disclosure under MIFIDPRU 8.
- MPS (Model Portfolio Service)
- A discretionary investment management arrangement where a DFM manages standardised risk-graded portfolios on a platform on behalf of multiple advisers and their clients. Quorum Capital operates as an MPS provider.
- Multi-Asset
- A portfolio that invests across more than one asset class — typically equities, bonds, cash, alternatives, and property. All Quorum Capital portfolios are multi-asset.
O
- OCF (Ongoing Charges Figure)
- The annual cost of holding the underlying funds in a portfolio, expressed as a percentage. For Quorum Capital's Core Range, OCF is approximately 0.19–0.22%. For the Passive Range, OCF is as low as 0.06–0.08%. OCF does not include the DFM fee, platform fee, or adviser fee.
- Open Architecture
- An investment approach where the fund manager can select from any fund provider without restriction. Quorum Capital is fully open architecture — no fund affiliations, no exclusivity, no revenue-sharing.
P
- Passive Management
- A portfolio management strategy that tracks a market index rather than making active security selection decisions. Typically lower cost than active management. Quorum Capital's Passive Range uses index-tracking funds and ETFs.
- Platform
- A technology service used by financial advisers to hold, administer, and trade client investments. Quorum Capital is available on Fundment, Aviva, Fidelity, M&G Wealth, Utmost, Chesnara and Quilter.
R
- Rebalancing
- The process of realigning a portfolio's asset weights back to target after market movements have caused drift. Quorum Capital rebalances quarterly and on an exception basis when drift exceeds 5% from target weights.
- RG (Risk Grade)
- Quorum Capital's risk classification system for portfolios, from RG1 (most cautious — no portfolio offered) through RG5 (adventurous). Each grade has defined equity ranges, volatility targets, and recommended investment horizons.
- Risk Profile
- An assessment of how much investment risk is appropriate for an investor. Determined by a financial adviser using an ATR questionnaire. Maps to a Quorum Capital risk grade (RG2–RG5).
S
- SAA (Strategic Asset Allocation)
- The long-term target mix of asset classes for a portfolio, set by the Investment Committee based on capital market return and volatility expectations. Reviewed annually by Quorum Capital's committee.
- SIPP (Self-Invested Personal Pension)
- A pension wrapper that gives investors (and their advisers) flexibility over investment choices. Quorum Capital portfolios can be held within a SIPP on supported platforms.
V
- Volatility
- A statistical measure of how much a portfolio's returns fluctuate over time. Higher volatility means more extreme short-term price movements. Quorum Capital publishes 3-year annualised volatility for each portfolio.
Still have questions?
Speak with our Business Development team — or ask your financial adviser.