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8 Bits of Financial Jargon That Must Go — But Won’t

Niels Footman 1 February 2022

Few things divide like jargon.

While inspiring terror or teeth-gnashing rage in communications pros, people using such language might meet it with a shrug of indifference or, worse, a glint of pride.

So what, you might reasonably ask, is so bad about jargon?

Though often superficially appealing – and, we’ll grudgingly admit, useful to financial old hands discussing their trade – jargon is a thief. It deprives words of their meaning, makes off with clarity, and is never satisfied until everyone in the room has been robbed of any understanding of what’s actually going on.

In a field as crucial yet frequently bewildering as finance, those dangers are multiplied, as 2008’s credit crunch – with its CDOs, dead cat bounces and naked shorts – so amply demonstrated.

For these reasons, the battle against jargon remains a thankless but essential one.

Here’s a list of investment terms that we think should be put out of their and our misery (but, alas, probably won’t be):

Overweight (and Underweight)

Rare is the fund commentary that doesn’t contain these words. But as they’ve become ubiquitous in business-to-business investment communication, insiders have become increasingly immune to their opacity.

As the investment industry increasingly focuses its attention on end investors, we investment writers have to shake ourselves out of our cosy world of adviser-facing jargon and realise this: normal human beings think that being “overweight in Nestlé” means the manager has had three KitKats with the mid-morning Earl Grey.

Yes, these terms have their place. But that place is emphatically not in any kind of consumer-facing prose.

Bets (and other gambling-related lingo)

Gambling language is used too often by investment companies with reference to their stock selections, albeit typically only in internal communications and meetings.

Nonetheless, picture your favourite fund manager standing behind the counter in the local betting shop, and the image of the professional money manager rather loses its sheen.

Yes, stock-picking has an element of chance about it, but I’m sure we’re all agreed we’d like our industry to have a more elevated reputation than that of a bookmaker.


The most used word in the compliance officer’s lexicon, “potential” is used as to dampen down any mildly contentious forward-looking statement. Fearful of a smiting from the regulator’s sword, compliance pros like to use this to protect themselves – and often at the expense of the clarity of message.

An example here would be, “The fund aims to deliver [potential] growth through capital appreciation and income”. Unfortunately, it’s probably here to stay.

Quantitative Easing

Not only is this phrase a linguistic gargoyle. Not only is it a shameless bit of newspeak for a practice that, if called by its proper name – creating boatloads of new money – would stir far greater alarm in electorates around the world. No!

This modern scourge does not even accurately describe what its reluctant inventor, a German academic called Richard Werner, intended. Basically, the clever Professor Werner, in a Japanese-language paper, proposed an increase in credit lines at banks, not in central bank reserves.

And the name itself was an awkward translation of a Japanese term. So wrong on so many levels. And yet, like the policy itself, increasingly hard to kill.


A word whose reputation was already so tarnished by being in the title of perhaps the worst Bond movie of all time should have no business appearing in thoughtful investment prose. But appear it does.

Quantum is one of that peculiar brand of jargon that substitutes perfectly good, universally understood words – in this case “size” or “quantity” – with something complex and technical-sounding, for no other conceivable reason than to clearly segregate who does and doesn’t understand it.

Call me a starry-eyed optimist, but we still dream of a day when “quantum” is banished from investment writing. Now that really would be a cause for solace.


Constructive, adjective.

1. Helping to improve; promoting further development.

2. Of, relating to, or of the nature of construction.

3. Deduced by inference or interpretation.

4. Law. Denoting an act or condition not directly expressed from other acts or conditions.

Which of these meanings, dear readers, is being used in the investment phrase du jour, “We are constructive on the outlook for the asset class”?

None? Then why not let’s just use one of the blizzard of terms that actually make sense in this context – positive, upbeat, optimistic, etc – and be done with it.

Smart Beta

On the face of it, who could object to a smart investment strategy? Surely, “smarts” are exactly what we look for when we place our trust in financial advisors.

The problem, of course, is that investments that aren’t labelled “smart” are presumably something else – an implication that may not sit too well with people invested in other strategies or passive funds.

At the very least, if we’re going to stick with “smart” beta, then brainy bonds, genius global equities, and erudite absolute return should all be fair game, too.

Assorted Painful Abbreviations

Smids, govies and zirps may sound like some of Captain Kirk’s most implacable foes, but they are, in fact, very important concepts in modern finance and business.

So while it may be acceptable to use such shorthand terms when you’re chatting in the pub with folks from the equities desk – though really, is saying “small- and mid-caps” such an imposition? – with anyone in the real world, it’s unforgivable.

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