The amount of return expected from an investment from its inherent value.
The yearly audited record of a corporation or a mutual fund's condition and performance that is distributed to shareholders.
Annualised rate of return
The average annual return over a period of years, taking into account the effect of compounding. Annualised rate of return also can be called compound growth rate.
The increase in value of a financial asset.
The process of deciding how a portfolio is divided between different types of asset classes and securities to optimise the balance between risk and reward based on investment needs.
Securities with similar features. The most common asset classes are stocks, bonds and cash equivalents.
For a bond fund, the average of the stated maturity dates of the debt securities in the portfolio. Also called average weighted maturity. In general, the longer the average maturity, the greater the fund's sensitivity to interest-rate changes, which means greater price fluctuation. A shorter average maturity usually means a less sensitive - and consequently, less volatile - portfolio.
A bear market is a prolonged period of falling stock prices, usually marked by a decline of 20% or more. A market in which prices decline sharply against a background of widespread pessimism, growing unemployment or business recession. The opposite of a bull market.
A standard, usually an unmanaged index, used for comparative purposes in assessing performance of a portfolio or mutual fund.
A measurement of volatility where 1 is neutral; above 1 is more volatile; and less than 1 is less volatile.
A high-quality, relatively low-risk investment; the term usually refers to stocks of large, well-established companies that have performed well over a long period.
A bond acts like a loan that is issued by a corporation or government. The issuer promises to repay the full amount of the loan on a specific date and pay a specified rate of return for the use of the money to the investor at specific time intervals.
A mutual fund that invests exclusively in bonds.
Any market in which prices are advancing in an upward trend. In general, someone is bullish if they believe the value of a security or market will rise. The opposite of a bear market.
The difference between a security's purchase price and its selling price, when the difference is positive.
The amount by which the proceeds from a sale of a security are less than its purchase price.
A short-term money-market instrument, such as a Treasury bill or repurchase agreement, of such high liquidity and safety that it is easily converted into cash.
A long-term bond issued by a corporation to raise outside capital.
Breakdown of securities in a portfolio by country.
A bank that holds a mutual fund's assets, settles all portfolio trades and collects most of the valuation data required to calculate a fund's net asset value (NAV).
The time of day when a transaction can no longer be accepted for that trading day.
Failure of a debtor to make timely payments of interest and principal as they come due or to meet some other provision of a bond indenture.
The process of owning different investments that tend to perform well at different times in order to reduce the effects of volatility in a portfolio, and also increase the potential for increasing returns.
A dividend is a portion of a company's profit paid to common and preferred shareholders. Dividends provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends.
Amount paid to the shareholder of record a security or mutual fund.
Dollar cost averaging
Investing the same amount of money at regular intervals over an extended period of time, regardless of the share price. By investing a fixed amount, you purchase more shares when prices are low, and fewer shares when prices are high. This may reduce your overall average cost of investing.
Earnings per share (EPS)
The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.
Shares issued by a company which represent ownership in it. Ownership of property, usually in the form of common stocks, as distinguished from fixed-income securities such as bonds or mortgages. Stock funds may vary depending on the fund's investment objective.
A mutual fund/collective fund in which the money is invested primarily in common and/or preferred stock. Stock funds may vary, depending on the fund's investment objective.
The interval between the announcement and the payment of the next dividend for a stock.
The date on which a stock goes ex-dividend.
The ratio between a mutual fund's operating expenses for the year and the average value of its net assets.
Fixed income fund
A fund or portfolio where bonds are primarily purchased as investments. There is no fixed maturity date and no repayment guarantee.
Investment strategy that focuses on stocks of companies and stock funds where earnings are growing rapidly and are expected to continue growing.
Growth funds focus on future gains. A growth fund manager will typically invest in stocks with earnings that outperform the current market. The manager attempts to achieve success by focusing on rapidly growing sectors of the economy and investing in leading companies with consistent earnings growth. The fund grows primarily as individual share prices climb.
An investment index tracks the performance of many investments as a way of measuring the overall performance of a particular investment type or category.
A rise in the prices of goods and services, often equated with loss of purchasing power.
The fixed amount of money that an issuer agrees to pay the bondholders. It is most often a percentage of the face value of the bond. Interest rates constitute one of the self-regulating mechanisms of the market, falling in response to economic weakness and rising on strength.
The possibility of a reduction in the value of a security, especially a bond, resulting from a rise in interest rates.
Investment grade bonds
A bond generally considered suitable for purchase by prudent investors.
The goal of a mutual fund and its shareholders, e.g. growth, growth and income, income and tax-free income as included in the Offering Document of the Fund.
A lower-rated, usually higher-yielding bond, with a credit rating of BB or lower.
The market capitalisation of the stocks of companies with market values greater than US$10 billion.
The ability to have ready access to invested money.
The amount paid by a mutual fund to the investment advisor for its services.
The market value of a company, calculated by multiplying the number of shares outstanding by the price per share.
The current price of an asset.
The possibility that an investment will not achieve its target.
The date specified in a note or bond on which the debt is due and payable.
The market capitalisation of the stocks of companies with market values between US$3 to US$10 billion.
Net asset value (NAV) per share
The current dollar value of a single mutual fund share; also known as share price. The fund's NAV is calculated daily by taking the fund's total assets, subtracting the fund's liabilities, and dividing by the number of shares outstanding. The NAV does not include the sales charge. The process of calculating the NAV is called pricing.
Number of holdings
Total number of individual securities in a fund or portfolio.
A collection of investments owned by one organisation or individual, and managed as a collective whole with specific investment goals in mind.
Investments included in a portfolio.
The person or entity responsible for making investment decisions of the portfolio to meet the specific investment objective or goal of the portfolio.
A class of stock with a fixed dividend that has preference over a company's common stock in the payment of dividends and the liquidation of assets. There are several kinds of preferred stock, among them adjustable-rate and convertible.
The amount by which a bond or stock sells above its par value.
The price per share of a stock divided by its book value (net worth) per share. For a stock portfolio, the ratio is the weighted average price-to-book ratio of the stocks it holds.
Price-to-earnings (P/E) ratio
A stock's price divided by its earnings per share, which indicates how much investors are paying for a company's earning power.
Legal document containing important information about a mutual fund such as the investment objectives, the risks involved, how fees and charges are applied, etc. Individuals should always refer to this document, sometimes called an Offering document or Prospectus, before investing in a fund.
A shareholder vote on matters that require shareholders' approval.
Evaluations of the credit quality of bonds usually made by independent rating services. Ratings generally measure the probability of timely repayment of principal and interest on debt securities.
A downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country's gross domestic product.
Sale of mutual fund shares by a shareholder.
A group of similar securities, such as equities in a specific industry.
Breakdown of securities in a portfolio by industry categories.
Another name for investments such as stocks or bonds. The name 'securities' comes from the documents that certify an investor's ownership of particular stocks or bonds.
Classes represent ownership in the same fund but charge different fees. This can enable shareholders to choose the type of fee structure that best suits their particular needs.
A risk-adjusted measure that measures reward per unit of risk. The higher the sharpe ratio, the better. The numerator is the difference between the Fund's annualised return and the annualised return of the risk-free instrument (T-Bills).
The market capitalisation of the stocks of companies with market values less than US$3 billion.
A statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution.
The amount of time that you expect to stay invested in an asset or security.
Top 10 holdings
Ten largest holdings in a portfolio based on asset value.
Accounts for all of the dividends and interest earned before deductions for fees and expenses, in addition to any changes in the value of the principal, including share price, assuming the funds' dividends and capital gains are reinvested. Often, this percentage is presented in a specified period of time (one, five, ten years and/or life of fund). Also, a method of calculating an investment's return that takes share price changes and dividends into account.
The active risk of the portfolio. It determines the annualised standard deviation of the excess returns between the portfolio and the benchmark.
An agent, usually a commercial bank, appointed to monitor records of stocks, bonds and shareholders. A transfer agent keeps a record of the name of each registered shareholder, his or her address, the number of shares owned, and sees that certificates presented for the transfer are properly cancelled and new certificates are issued in the name of the new owner.
Negotiable short-term (one year or less) debt obligations issued by the U.S. government and backed by its full faith and credit.
Percentage of holdings in a mutual fund that are sold in a specified period.
An estimate of the value or worth of a company; the price investors assign to an individual stock.
A strategy whereby investors purchase equity securities that they believe are selling below estimated true value.
Value-style funds typically hold company stocks that are undervalued in the market. Fundamentally strong companies whose stocks are inexpensive but trending upward may also be selected for value funds.
The amount and frequency with which an investment fluctuates in value.
Weighted average maturity (WAM)
A Fund's WAM calculates an average time to maturity of all the securities held in the portfolio, weighted by each security's percentage of net assets. The calculation takes into account the final maturity for a fixed income security and the interest rate reset date for floating rate securities held in the portfolio. This is a way to measure a fund's sensitivity to potential interest rate changes.
Year to date (YTD)
Year-to-date return on an investment including appreciation and dividends or interest.
Yield to maturity (YTM)
Concept used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond, is held to its maturity date.