Definitions
A risk-adjusted measure of the so-called active return on an investment. It is the return in excess of the compensation for the risk. For example, an alpha of 1 means the investment’s return on investment over a selected period of time was 1% better than the market during that same period; an alpha of -1 means the investment underperformed the market.
One hundredth of a percentage point (0.01%).
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. A beta of 1 indicates that the security’s price moves with the market. A beta of less than 1 means that the security is theoretically less volatile than the market. A beta of greater than 1 indicates that the security’s price is theoretically more volatile than the market.
A measure of the cash produced by the firm in a given period on behalf of equity holders. The true measure of the value of a firm’s equity is considered to be the present value of all free cash flows.
A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.
The Dow Jones Industrial Average is a stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange and Nasdaq. One cannot invest directly in an index.
Used to evaluate how well or poorly an investment manager performed relative to an index during periods when that index has dropped. An investment manager who has a downside capture less than 100 has outperformed the index during the down-market. For example, a manager with downside capture of 80 indicates the manager’s portfolio declined only 80% as much as the index during the period in question.
A peak-to-trough decline during a specific period for an investment, trading account, or fund.
A measure of the sensitivity of the price of a fixed income investment to a change in interest rates.
Earnings growth is the annual rate of growth of earnings from investments.
Stands for earnings before interest, taxes, depreciation and amortization. EBITDA is one indicator of a company’s financial performance and is used as a proxy for a company’s current operating profitability.
A measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization.
Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company’s profitability.
A financial ratio that measures a company’s return on investment (ROI). “EV” stands for enterprise value. “EBITDA” stands for earnings before interest, taxes, depreciation and amortization.
A measure of the cash produced by the firm in a given period on behalf of equity holders. The true measure of the value of a firm’s equity is considered to be the present value of all free cash flows.
The FTSE All World ex-US Index comprises large and mid cap stocks providing coverage of Developed and Emerging Markets excluding the US, which covers 98% of the world’s investable market capitalization.
The ICE BofA U.S. High Yield Index is an unmanaged index that tracks the performance of U.S. dollar denominated, below investment-grade rated corporate debt publicly issued in the U.S. domestic market. One cannot invest directly in an index.
A rating that indicates a municipal or corporate bond has a relatively low risk of default.
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.
An unmanaged index that tracks funds seeking relatively high current income and growth of income by investing at least 65% of their portfolio in dividend-paying equity securities. It is not possible to invest directly in an index.
A widely recognized index of the 30 largest mutual funds that invest primarily in high yield bonds. Performance is presented net of the funds’ fees and expenses. It is not possible to invest directly in an index.
An unmanaged index that measures the performance of the 30 largest mutual funds in the international equity fund objective, as determined by Lipper, Inc. It is not possible to invest directly in an index.
An unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Large-Cap classification. It is not possible to invest directly in an index.
An unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Micro Cap classification. It is not possible to invest directly in an index.
An unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Mid-Cap classification. It is not possible to invest directly in an index.
An unmanaged index considered representative of mixed-asset target allocation moderate funds tracked by Lipper, which would combine the 30 biggest funds, based on asset size, that belong to this asset category. It is not possible to invest directly in an index.
An unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Small-Cap classification. It is not possible to invest directly in an index.
A company’s total stock market value, calculated by multiplying the price of a single share by the total number of shares outstanding.
The mean, or mean return, is the expected value of all likely returns of investments comprising a portfolio.
A meme stock refers to under-the-radar stocks that suddenly catch the fancy of individual investors or day traders because they’re the subject of social media attention.
Compares a firm’s market to book value by dividing price per share by book value per share.
The percentage of a fund or security’s movements that can be explained by movements in a benchmark index.
A profitability ratio measured using net income divided by invested capital.
A portfolio allocation strategy using risk to determine allocations across various components of an investment portfolio.
An unmanaged index that measures the performance of those Russell 2000® Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
An unmanaged index comprised of those Russell 3000® companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000® Growth or the Russell 2000® Growth indices. It is not possible to invest directly in an index.
An unmanaged index that measures the performance of the 800 smallest companies in the Russell 1000® Index. It is not possible to invest directly in an index.
An unmanaged index that measures the performance of those Russell Midcap® Index companies with higher price-to-book ratios and higher forecasted growth values. It is not possible to invest directly in an index.
The average return earned in excess of the risk-free rate per unit of volatility or total risk.
The difference between the bid and the ask price of a security or asset.
Measures the difference from the worst performing security to the best, and can be seen as a measure of dispersion of returns within a given market or between markets.
Measures the distance from the mean in a set of data points, giving analysts an idea of the variance that could occur; used to illustrate volatility in a portfolio.
Used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. An investment manager who has an upside capture greater than 100 has outperformed the index during the up-market.
The average market capitalization of all companies in a fund, with each company weighted according to its percent held in the fund.
The income return on an investment. Refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value.
The lowest potential yield that can be received on a bond without the issuer actually defaulting. The yield to worst is calculated by making worst-case scenario assumptions on the issue by calculating the returns that would be received if provisions, including prepayment, call or sinking fund, are used by the issuer. This metric is used to evaluate the worst-case scenario for yield to help investors manage risks and ensure that specific income requirements will still be met even in the worst scenarios.
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