Glossary
A
Active Share - A measure of the percentage of stock holdings in a manager's portfolio that differ from the benchmark index.
ADR - An American Depositary Receipt (ADR) is a stock representing a specified number of shares in a foreign corporation. ADRs are bought and sold in the American markets just like regular stocks. An ADR is issued by a U.S. Bank, consisting of a bundle of shares of a foreign corporation that are being held in custody overseas. The foreign entity must provide financial information to the sponsor bank. ADRs do not eliminate the currency and economic risks for the underlying shares in another country. ADRs are listed on either the NYSE, AMEX, or NASDAQ.
Alpha - A measure of the difference between a portfolio's actual returns and its expected performance, given its level of risk as measured by beta. A positive alpha figure indicates the portfolio performed better than its beta would predict. In contrast, a negative alpha indicates under-performance, given the expectations established by the beta.
Alternative Minimum Tax (AMT) - A federal tax aimed at ensuring that high-income individuals, estates, trusts, and corporations pay a minimal level income tax. For individuals, the AMT is calculated by adding tax preference items to regular taxable income.
AMAR - Audit of Minimum Assessing Requirements.
Annualized Distribution Yield - The distribution yield reflects actual distributions made to shareholders. The annualized distribution yield is calculated by summing the last 30 days of income at a given month end and annualizing to a 360-day year. The result is divided by the ending maximum offering price or net asset value.
Asset-backed Security (ABS) - A security whose value and income payments are derived from and collateralized (or "backed") by a specified pool of underlying assets. The pool of assets is typically a group of small and illiquid assets that are unable to be sold individually. Pooling the assets into financial instruments allows them to be sold to general investors, a process called securitization, and allows the risk of investing in the underlying assets to be diversified because each security will represent a fraction of the total value of the diverse pool of underlying assets.
Average Effective Maturity - Average length of time until fixed income securities held by a fund reach maturity and are repaid.
B
Barbell Structure - A bond investment strategy that concentrates holdings in shorter-term and longer-term maturities, forming a structure that resembles a barbell.
Basel III - A set of standards and practices developed by the Basel Committee on Banking Supervision to ensure that international banks maintain adequate capital during periods of economic strain.
Basel III CET1 - A comprehensive set of reform measures designed to improve the regulation, supervision and risk management within the banking sector. The common equity tier 1 (CET1) ratio is a measurement of a bank's core equity capital compared with its total risk-weighted assets, and it excludes any preferred shares or non-controlling interests when determining the calculation.
Basis Point (bp) - A unit equal to 1/100th of 1%. 1% = 100 basis points (bps).
Batting Average - A measure of a manager's record of consistently beating the fund's benchmark. It is calculated by dividing the number of periods in which the manager's portfolio has beaten its index by the total number of periods within a given time horizon. For example, a portfolio that meets or outperforms its benchmark every period over a given amount of time would have a batting average of 100%, while a portfolio that beats the index half of the time would yield a 50% batting average.
Beta - A measure of market-related risk. Less than one means the portfolio is less volatile than the index, while greater than one indicates more volatility than the index.
The Big Mac Index is published by The Economist as an informal way of measuring the purchasing power parity (PPP) between nations, using the price of a Big Mac as the benchmark.
The Bloomberg 5-Year Municipal Bond Index covers USD-denominated, investment-grade, tax-exempt bonds with maturities between four and six years. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds.
The Bloomberg Agency Mortgage-backed Securities (MBS) Index is the U.S. MBS component of the U.S. Aggregate Index.
The Bloomberg Asset-backed Securities (ABS) Index is the ABS component of the U.S. Aggregate index.
The Bloomberg Commercial Mortgage-backed Securities (CMBS) Index is the CMBS component of the U.S. Aggregate Index.
The Bloomberg Emerging Markets U.S. Aggregate Bond Index is a hard currency emerging markets debt benchmark that includes fixed and floating-rate U.S. dollar-denominated debt issued from sovereign, quasi-sovereign, and corporate EM issuers.
The Bloomberg Global Aggregate Index (BBG Global-Agg TR Value) provides a broad-based measure of the global investment-grade fixed-rate debt markets.
The Bloomberg Intermediate U.S. Government/Credit Index (BBG Int US Govt/Credit TR Value) is an unmanaged, market-weighted index generally representative of intermediate government and investment-grade corporate debt securities having maturities from one up to ten years.
The Bloomberg Intermediate U.S. Treasury Index includes all publicly issued, U.S. Treasury securities that have a remaining maturity of greater than or equal to 1 year and less than 10 years, are rated investment grade, and have $250 million or more of outstanding face value.
The Bloomberg U.S. Government Intermediate Index (BBG US Govt Int TR Value) is an unmanaged, market-weighted index generally representative of all public obligations of the U.S. Government, its agencies and instrumentalities having maturities from one up to ten years.
The Bloomberg Municipal Index covers the USD-denominated, investment-grade, long-term, tax-exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds.
The Bloomberg U.S. Aggregate 1-3 Year Index (BBG US Agg 1-3 Yr TR Value) measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market with maturities between 1 and 3 years, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM passthroughs), ABS, and CMBS.
The Bloomberg U.S. Aggregate Index (BBG US Agg TR Value) is composed of approximately 8,000 publicly traded bonds including U.S. government, mortgage-backed, corporate and Yankee bonds.
The Bloomberg U.S. Aggregate Index (BBG US Agg TR Value) is composed of approximately 8,000 publicly traded bonds including U.S. government, mortgage-backed, corporate and Yankee bonds. The index is weighted by the market value of the bonds included in the index.
The Bloomberg Intermediate Corporate Index (BBG Int Corp TR Value) measures the investment grade, fixed-rate taxable corporate bond market.
The Bloomberg U.S. Corporate High Yield Index (BBG US Corp High Yield TR Value) measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging market debt.
TIPS (Treasury Inflation Protected Securities) - A U.S. Treasury note or bond that offers protection from the effects of inflation. Using the Consumer Price Index as a guide, the value of the principal is adjusted to reflect the effects of inflation. A fixed interest rate is paid semi-annually on the adjusted amount. At maturity, if inflation has increased the value of the principal, the investor receives the higher value. If deflation has decreased the value, the investor receives the original face amount of the security.
Class I shares may not be available to all investors. Minimum investments for the I share class may be higher than those for other classes.
The Bloomberg U.S. Credit Index is composed of the U.S. Corporate Index and a non-corporate component that includes foreign agencies, sovereigns, supranationals and local authorities. The U.S. Credit Index is a subset of the U.S. Government/Credit Index and the U.S. Aggregate Index.
The Bloomberg U.S. High Yield Index covers the universe of fixed-rate, non-investment grade debt.
The Bloomberg U.S. Government Index is composed of securities issued by the U.S. Government (i.e., securities in the Treasury and Agency Indices).
The Bloomberg U.S. Universal Index (BBG US Universal TR Value) represents the union of the U.S. Aggregate Index, U.S. Corporate High-Yield, Investment Grade 144A Index, Eurodollar Index, U.S. Emerging Markets Index, and the non-ERISA eligible portion of the CMBS Index. The index covers USD denominated, taxable bonds that are rated either investment-grade or below investment-grade.
Book Value - The value of a security or asset as entered in a company's books.
A bond credit rating assesses the financial ability of a debt issuer to make timely payments of principal and interest. Ratings of AAA (the highest), AA, A, and BBB are investment-grade quality. Ratings of BB, B, CCC, CC, C and D (the lowest) are considered below investment grade, speculative grade, or junk bonds.
The Brazil Bovespa Index tracks around 50 stocks traded on the São Paulo Stock, Mercantile & Futures Exchange. The term Bovespa is derived from Bolsa de Valores do Estado de São Paulo, the Portugese name for the exchange.
Brent Crude Oil - A major trading classification of sweet light crude oil that serves as a benchmark price for purchases of oil worldwide.
The NYSE Arca Biotechnology Index (BTK) is an equal-dollar-weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services.
Build America Bonds - Taxable bonds issued by state and local governments. The U.S. Treasury then provides these entities with a direct federal subsidy for a portion of the borrowing costs.
Bullet Structure - A bond investment strategy that concentrates holdings in intermediate-term maturities and avoids shorter-term or longer-term maturities.
C
Call protection is a protective provision of a callable security prohibiting the issuer from forcing redemption early on in the life of the security.
CapEx - Capital expenditures are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.
Carry Trade - A strategy in which an investor sells a certain financial instrument with a relatively low interest rate and uses the funds to purchase a different financial instrument yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.
FTSE Economic Surprise Index - Tracks how economic data is faring relative to expectations. The index rises when economic data exceeds economists' consensus estimates and falls when data comes in below estimates.
CBOE Volatility Index (VIX Index) shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 Index options. This volatility is meant to be forward looking and is calculated from both calls and puts.
Closed-end funds (CEFs) - Closed-end funds are actively managed investment vehicles that are registered with the SEC under the 1940 Act. Listed CEFs are exchange-traded and typically do not continuously offer or redeem shares directly to and from investors. Different types of CEFs include listed CEFs, interval funds, tender offer funds and auction funds.
COFINA - Puerto Rico Sales Tax Financing Corporation
Collateralized Debt Obligation (CDO) - An investment-grade security backed by a pool of bonds, loans and other assets. CDOs do not specialize in one type of debt but are often non-mortgage loans or bonds.
Collateralized Loan Obligations (CLOs) - A form of securitization in which payments from multiple business loans are pooled together, backed with some form of collateral, and passed on to different classes of owners in various tranches, or slices.
Collateralized Mortgage Obligation (CMO) - A type of mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities, called tranches. The repayments from the pool of pass-through securities are used to retire the bonds in the order specified by the bonds' prospectus.
Commercial Paper - Unsecured, short-term debt instrument issued by large corporations, typically for the financing of accounts receivable, inventories, and other short-term liabilities.
Compound Annual Growth Rate (CAGR) - The year-over-year growth rate of an investment over a specified period of time. It describes the rate at which an investment would have grown if it grew at a steady rate.
Consistent Earners: Companies which generally exhibit predictable growth, profitability, cash flow and/or dividends.
Consistent Growers: generally exhibit steady earnings and revenue growth, often with subscription or other recurring revenue profiles. These firms tend to buoy the portfolio in weak markets.
Consumer Price Index (CPI) - Index that measures prices of a fixed basket of goods bought by a typical consumer, including food, transportation, shelter, utilities, clothing, medical care, entertainment and other items. The CPI, published by the Bureau of Labor Statistics in the Department of Labor, is based at 100 in 1982 and is released monthly. It is widely used as a cost-of-living benchmark to adjust Social Security payments and other payment schedules, union contracts and tax brackets. Also known as the cost-of-living index.
Convexity - A measure of the curvature in the relationship between bond prices and bond yields that demonstrates how the duration of a bond changes as the interest rate changes.
Core Personal Consumption Expenditure Index is a measure of the Personal Consumption Expenditure Index that excludes the more volatile and seasonal food and energy prices.
Correlation - Measurement of the degree to which two variables move together. A correlation coefficient of 1 (the highest) would indicate the returns of the mutual funds and/or indices move in the same direction to equal degrees. A correlation of 0 indicates that there is no relationship between returns. And a correlation of -1 (the lowest) would indicate the performance moved in opposite directions by equal amounts.
Cov-lite (Covenant Light) - Loan agreements which do not contain the usual protective covenants for the benefit of the lending party.
Coverage Ratio - Cash available to pay debt divided by interest and principal.
Covered Call Options Strategy - An investment strategy that involves writing (selling) covered call options on long positions in an asset that the option writer holds.
Credit Curve - The spread over treasuries of various maturities for a single bond issuer.
A bond credit rating assesses the financial ability of a debt issuer to make timely payments of principal and interest. Ratings of AAA (the highest), AA, A, and BBB are investment-grade quality. Ratings of BB, B, CCC, CC, C and D (the lowest) are considered below investment grade, speculative grade, or junk bonds.
Credit Risk - The risk of loss due to a debtor's non-payment of a loan or other line of credit (either the principal or interest (coupon) or both).
Credit Spectrum - Refers to the range of credit quality ratings, from below investment grade to the highest quality.
Credit Spread/Quality Spread - The difference between the yields of securities with different credit qualities.
Current Account - The sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers.
D
Daily Floater - A variable rate demand note (VRDN) or other floating-rate security with a coupon rate that adjusts daily.
Derivative - A security whose price is dependent upon or derived from one or more underlying assets.
Distribution Rate - The distribution rate of a fund is calculated as the most recent distribution annualized and divided by either (i) the market price on the date specified for a closed-end fund; or (ii) the NAV for mutual funds (and non-listed CEFs).
Dividend Payout Ratio - The percentage of earnings paid to shareholders in dividends calculated as yearly dividend per share over earnings per share.
Dividend Yield - A ratio that shows 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 measures the stock performance of 30 large companies listed on stock exchanges in the United States.
Dubai Financial Market General Index is a capitalization weighted price index comprising stocks of listed companies, whose primary listings debuted on DFM on or after January 1, 2004.
Duration - A bond's sensitivity to interest rates. Bonds with longer durations experience greater price volatility than bonds with shorter durations.
E
Earnings per Share (EPS) - The total earnings divided by the number of shares outstanding.
EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization. An approximate measure of a company's operating cash flow based on data from the company's income statement.
Effective Duration - A bond's sensitivity to interest rates, incorporating the embedded option features, such as call provisions. Bonds with longer durations experience greater price volatility than bonds with shorter durations.
Emerging Franchises: Companies with the potential to grow at an above average rate because of a product or service that is establishing a new market and/or taking share from existing participants.
Emerging Growth Companies: are often addressing a new market or carving out a niche in an existing market. Companies in this basket tend to be smaller, earlier-stage companies. Successful emerging growth companies are often reclassified as their businesses mature.
Emerging Markets (EM) - Nations whose economy is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets and the existence of some form of market exchange and regulatory body. Emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation to be on par with advanced economies (such as the United States, Europe and Japan), but emerging markets will typically have a physical financial infrastructure including banks, a stock exchange and a unified currency.
Enterprise Value (EV) - A measure of a company's total value, including market capitalization, total debt, minority interest, and preferred shares, minus cash and cash equivalents.
Environmental, social and governance (ESG) criteria are a set of standards for a company's operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company's leadership, executive pay, audits, internal controls, and shareholder rights.
The EURO STOXX 50 Index provides a Blue-chip representation of supersector leaders in the Eurozone. The index covers 50 stocks from 11 countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
Eurozone Manufacturing Purchasing Managers Index (PMI) - Measures the activity level of purchasing managers in the eurozone manufacturing sector. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
Exchange Traded Fund (ETF) - A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.
Expense Ratios - Expressed as a percentage of total fund assets and include management fees and operating costs. Expense ratios fluctuate over time and the expense ratio in the prospectus may differ from the actual expense ratio. The fund's total return includes the deduction of expenses.
F
Fed Funds Rate - The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight.
The FlNRA-Bloomberg Active Investment Grade U.S. Corporate Bond Index is comprised of the "active" (most frequently traded) fixed-coupon, investment-grade bonds represented by FINRA TRACE, FINRA's transaction reporting facility that disseminates all over-the-counter secondary market transactions in these public bonds.
The FlNRA-Bloomberg Active High Yield U.S. Corporate Bond Index is comprised of the "active" (most frequently traded) fixed-coupon, high-yield bonds represented by FINRA TRACE, FINRA's transaction reporting facility that disseminates all over-the-counter secondary market transactions in these public bonds.
The FINRA/Bloomberg Active U.S. Corporate Bond Indexes are comprised of the "active" (most frequently traded) fixed-coupon bonds represented by FINRA's transaction reporting facility that disseminates all over-the-counter secondary market transactions in these public bonds.
Floating-Rate Securities (Floater) - Debt instrument whose coupon rate adjusts with short-term interest rate changes.
Free-Cash-Flow Yield - An overall return evaluation ratio of a stock, which standardizes the free cash flow per share a company is expected to earn against its market price per share. The ratio is calculated by taking the free cash flow per share divided by the share price.
The FTSE 100 Index tracks the 100 publicly-traded companies listed on the London Stock Exchange with the highest market capitalization.
The FTSE MIB Index consists of the 40 most liquid and capitalized stocks listed on the Borsa Italiana and seeks to replicate the broad sector weights of the Italian stock market.
G, H
General Obligation Bond (GO) - A municipal bond backed by the credit and "taxing power" of the issuing jurisdiction rather than the revenue from a given project.
Gilts - Bonds that are issued by the British government. Generally considered low-risk investments, Gilts are the U.K. equivalent of U.S. Treasury securities.
Gross Domestic Product (GDP) - A country's income minus foreign investments: the total value of all goods and services produced within a country in a year, minus net income from investments in other countries.
Gross merchandise volume (GMV) - A term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame.
Growth Industry Leaders: often have leadership positions in growing markets. These firms tend to be larger, more established, and have dominant market share.
The Hang Seng Index is a free-float adjusted, market-capitalization weighted stock market index in Hong Kong. It tracks the performance of the largest companies of the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong.
Hedge Fund Research HFRI Equity Hedge Total Index is an equal-weighted performance index composed of strategies that maintain positions both long and short in primarily equity and equity derivative securities. A wide variety of investment processes can be employed to arrive at an investment decision, including both quantitative and fundamental techniques; strategies can be broadly diversified or narrowly focused on specific sectors and can range broadly in terms of levels of net exposure, leverage employed, holding period, concentrations of market capitalizations and valuation ranges of typical portfolios. Equity Hedge managers would typically maintain at least 50% exposure to, and may in some cases be entirely invested in, equities - both long and short. The HFR Indices are being used under license from Hedge Fund Research, Inc., which does not approve of or endorse any of the products or the contents discussed in these materials. SOURCE: Hedge Fund Research, Inc. www.hedgefundresearch.com.
I, J, K
The ICE BofA 1-3 Year U.S. Municipal Securities Index (ICE BofA 1-3 Yr US Muni) is a subset of the ICE BofA U.S. Municipal Securities Index including all securities with a remaining term to final maturity less than 3 years.
The ICE BofA 1-10 Year U.S. Municipal Securities Index (ICE BofA 1-10 Yr US Muni) is a subset of the ICE BofA U.S. Municipal Securities Index including all securities with a remaining term to final maturity less than 10 years.
The ICE BofA 1-12 Year Municipal Securities Index is a subset of the ICE BofA U.S. Municipal Securities Index including all securities with a remaining term to final maturity less than 12 years.
The ICE BofA 3-15 Year U.S. Municipal Securities Index (ICE BofA 3-15 Yr US Muni) is a subset of the ICE BofA U.S. Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to three years and less than 15 years.
The ICE BofA 12-22 Year U.S. Municipal Securities Index is a subset of the ICE BofA U.S. Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to 12 years and less than 22 years.
The ICE BofA 22+ Year US Municipal Securities Index is a subset of The ICE BofA US Municipal Securities Index including all securities with a remaining term to final maturity greater than or equal to 22 years.
ICE BofA High Yield Index tracks the performance of below investment grade, but not in default, US dollar denominated corporate bonds publicly issued in the US domestic market, and includes issues with a credit rating of BBB or below, as rated by Moody's and S&P.
The ICE BofA U.S. Municipal Securities Index (ICE BOFA US MUNI) tracks the performance of the investment-grade U.S. tax-exempt bond market. Qualifying bonds must have at least one year remaining term to maturity, a fixed coupon schedule, and an investment grade rating (based on average of Moody's, S&P, and Fitch).
The ICE BofA U.S. Municipal Securities Index (ICE BofA US Muni) tracks the performance of U.S. dollar-denominated investment grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market.
The ICE U.S. Dollar Index is a geometrically averaged calculation of six currencies (the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc) weighted against the U.S. dollar.
International Monetary Fund (IMF) - An organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
Insured Bonds - Individual bonds are sometimes insured by private companies. The insurance guarantees the payment of principal and interest on a bond issue if the issuer defaults. Mutual funds are not insured, even if the underlying bonds are insured.
Intrinsic value - Reflects Thornburg's estimate of a company's value, encompassing our collective investment judgment.
The ISM Manufacturing Index is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management.
Investment Company Act of 1940 (1940 Act) - A U.S. federal law that regulates the organization and oversight of U.S. investment funds, including mutual funds and closed-end funds, that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public.
U.S. ISM Purchasing Managers Index - The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. Indicators measured include: new orders, backlog of orders, new export orders, imports, production, supplier deliveries, inventories, customers inventories, employment, and prices.
Japan's Nikkei 225 Stock Average is the leading index of Japanese stocks. It is a price-weighted index comprised of Japan's top 225 blue-chip companies on the Tokyo Stock Exchange.
Japanese Government Bond (JGP) - A bond issued by the government of Japan.
Jumbo mortgage - A mortgage loan that may have high credit quality, but is in an amount above conventional conforming loan limits.
L
Laddering involves building a portfolio of bonds with staggered maturities so that a portion matures each year. Money that comes in from maturing bonds is typically invested in bonds with longer maturities at the far end of the portfolio.
Level Distribution - A type of distribution policy which states that a closed-end fund intends to provide regular monthly distributions at a level rate. In order to maintain a level distribution, the fund may pay out more or less than its investment income during the period, including returns of capital and realized gains. Distributions may include a mix of income, gain and return of capital.
Leverage is the investment strategy of using borrowed money: specifically, the use of various financial instruments or borrowed capital to increase the potential return of an investment. Leverage can also refer to the amount of debt used to finance assets. When one refers to something (a company, a property or an investment) as "highly leveraged," it means that item has more debt than equity.
Libor (London Inter-Bank Offer Rate) - The benchmark rate that some of the world's leading banks charge each other for short-term loans.
Lipper Multi-Cap Core Funds - Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time.
The Li Keqiang Index is an alternative measure of China's economic growth based on electricity consumption, railway freight and lending.
Loan Participation Note - A fixed-income security that permits investors to buy portions of an outstanding loan or package of loans.
M
Managed Assets - The total assets of a closed-end fund, including assets attributable to leverage, minus liabilities (other than debt representing leverage and any preferred stock that may be outstanding).
Master Limited Partnership (MLP) - A type of limited partnership that is publicly traded.
Maturity – The percent of portfolio maturing in each year.
MBIA, Inc. is a financial services company founded in 1973 as the Municipal Bond Insurance Association. MBIA Insurance Corp.'s primary business was to provide financial guarantee insurance to the United States' public finance markets.
Morningstar Foreign Large Blend Category is made up of foreign large-blend portfolios that invest in a variety of big international stocks. Most of these portfolios divide their assets among a dozen or more developed markets, including Japan, Britain, France, and Germany. These portfolios primarily invest in stocks that have market caps in the top 70% of each economically integrated market (such as Europe or Asia ex-Japan). The blend style is assigned to portfolios where neither growth nor value characteristics predominate. These portfolios typically will have less than 20% of assets invested in U.S. stocks.
The Morningstar Global Allocation Index represents world allocation portfolios that seek to provide both capital appreciation and income by investing in three major areas: stocks, bonds and cash.
The Morningstar World Large Stock Category is made up of funds with typically 20%-60% of the portfolio invested in U.S. stocks and invest in a variety of international stocks that are larger. It is common for these portfolios to invest the majority of their assets in developed markets, with the remainder divided among the globe's smaller markets.
Mortgage-backed Security - A type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must be grouped in one of the top two ratings as determined by a accredited credit rating agency and usually pay periodic payments that are similar to coupon payments. The mortgage must have originated from a regulated and authorized financial institution.
Mortgage Pass-Through - A security consisting of a pool of residential mortgage loans. Payments of principal, interest and prepayments are "passed through" to investors each month.
The MSCI ACWI Index (MSCI ACWI NTR) is a market capitalization weighted index that is representative of the market structure of 47 developed and emerging market countries in North and South America, Europe, Africa, the Middle East, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars.
The MSCI ACWI ex-U.S. Index (MSCI ACWI ex US (GR/NR)) is a market capitalization weighted index representative of the market structure of 46 developed and emerging market countries in North and South America, Europe, Africa, the Middle East, and the Pacific Rim, excluding securities of United States issuers. Beginning in January 2001, the index is calculated with net dividends reinvested in U.S. dollars. Prior data is calculated with gross dividends.
The MSCI ACWI Financials Index captures large- and mid-cap representation across 23 developed markets and 24 emerging markets countries. All securities in the index are classified in the Financials as per the Global Industry Classification Standard (GICS®).
The MSCI ACWI Net Total Return USD Index is a market capitalization weighted index that is representative of the market structure of 47 developed and emerging market countries.
The MSCI BRIC Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the following four emerging market country indices: Brazil, Russia, India and China.
The MSCI China H Shares Index reflects the performance of China's H shares, which are securities of companies incorporated in the People's Republic of China (PRC) and nominated by the Chinese Government for listing and trading on the Hong Kong Stock Exchange.
The MSCI country indices are free float-adjusted market capitalization indices that are designed to measure equity market performance in that specific country in U.S. dollars.
The MSCI China Index captures large- and mid-cap representation across China H shares, B shares, Red chips, P chips, and foreign listings (e.g. ADRs). With 461 constituents, the index covers about 85% of this China equity universe.
The MSCI EAFE Index (MSCI EAFE NTR) is an unmanaged index. It is a generally accepted benchmark for major overseas markets. Index weightings represent the relative capitalizations of the major overseas developed markets on a U.S. dollar adjusted basis. The index is calculated with net dividends reinvested in U.S. dollars.
The MSCI Emerging Markets Value Index captures large- and mid-cap securities exhibiting overall value style characteristics across 26 Emerging Markets (EM) countries. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield.
The MSCI Emerging Markets Growth Index captures large- and mid-cap securities exhibiting overall growth style characteristics across 26 Emerging Markets (EM) countries. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate and long-term historical EPS growth trend and long-term historical sales per share growth trend.
The MSCI Emerging Markets Index (MSCI Emerging Markets NTR) is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
The MSCI Emerging Markets (EM) Currency Index tracks the performance of 25 emerging-market currencies relative to the U.S. Dollar.
The MSCI Europe ex-U.K. Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe. The MSCI Europe ex-U.K. Index consists of the following 15 developed market country indices: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Israel, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, and Switzerland.
The MSCI Nordic Countries Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the Nordic region. The index consists of the following 4 developed market country indices: Denmark, Finland, Norway, Sweden.
The MSCI USA Index is designed to measure the performance of the large- and mid-cap segments of the U.S. market.
The MSCI World Index (MSCI World NTR) is an unmanaged market-weighted index that consists of securities traded in 23 of the world's most developed countries. Securities are listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand, and the Far East. The index is calculated with net dividends reinvested in U.S. dollars.
Multiple - A valuation multiple reflects an investment's market value relative to some key metric. Price to earnings ratio (P/E) is a commonly used multiple. It's calculated by dividing a stock's price by the company's earnings per share.
Mutual Funds - Mutual funds are open-ended funds that are registered with the SEC under 1940 Act. Shares of a mutual fund are continuously offered and bought directly from the fund and may be redeemed daily from the fund at their NAV.
N
The NASDAQ Composite Index is a market value-weighted, technology-oriented index composed of approximately 5,000 domestic and non-U.S.-based securities.
Negative Convexity - When the shape of a bond's yield curve is concave. A bond's convexity is the rate of change of its duration, and is measured as the second derivative of price with respect to yield. One property of a non-callable bond is that as interest rates fall, its price will increase. However, with a callable bond, as interest rates fall, the incentive for the issuer to call the bond at par increases; therefore, its price will not rise as quickly as the price of a non-callable bond. The price of a callable bond might actually drop as the likelihood that the bond will be called increases. This is why the shape of a callable bond's curve of price with respect to yield is concave or "negatively convex."
Net Asset Value (NAV) - "Net asset value," or "NAV," of a fund is the fund’s total assets minus its total liabilities. Mutual fund and closed-end funds calculate the NAV of a single share (or the "per share NAV") by dividing the fund’s NAV by the number of shares that are outstanding.
Data quoted at Net Asset Value (NAV) does not reflect the deduction of the Fund's maximum sales charge.
The NFIB Small Business Optimism Index is a composite of 10 seasonally adjusted components calculated from answers to a survey conducted each month by the National Federation of Independent Business of its members.
The NYSE Arca Biotechnology Index (BTK) is an equal-dollar-weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services.
The NYSE FANG+ is an equal-weighted index of 10 highly liquid stocks that represent the top innovators across today's tech and internet/media companies.
O
Operation Twist - A monetary process where, in an attempt to lower long-term interest rates, the Fed sold short-term Treasury bonds and bought long-term Treasury bonds, which pressured the long-term bond yields downward.
Option Overwrite - An investment strategy that involves writing (selling) covered call and put options on a portion of the individual securities in an investment portfolio and writing (selling) call and put options on indices of securities and sectors of securities.
OAS (Option Adjusted Spread) - The flat spread over the treasury yield curve required to discount a security payment to match its market price.
Original Equipment Manufacturer (OEM) - A company that manufactures a product that is sold to another company, which resells the product under its own brand name.
P
The Personal Consumption Expenditure (PCE) Price Index is one measure of U.S. inflation that assesses the percentage change in prices of goods and services purchased by consumers throughout the economy. Of all the measures of consumer price inflation, the PCE price index covers the broadest set of goods and services.
Producer Price Index (PPI) - Measures the average change over time in selling price received by domestic producers for their goods and services. The prices included in the PPI are from the first commercial transaction for many products and some services.
PRASA - Puerto Rico Aqueduct and Sewer Authority
PREPA - Puerto Rico Electric Power Authority
Price/Book ratio (P/B ratio) - A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.
Price/Cash Flow - The measure of the market's expectations regarding a firm's future financial health. It is calculated by dividing price per share by cash flow per share.
P/E - Price/Earnings ratio (P/E ratio) is a valuation ratio of a company's current share price compared to its per-share earnings. P/E equals a company's market value per share divided by earnings per share. Forecasted P/E is not intended to be a forecast of the fund's future performance.
The price to tangible book value ratio measures a company's market price in relation to its tangible book value. The ratio denotes how much investors are paying for each dollar of physical assets.
PMI (Purchasing Managers' Index) - An indicator of the economic health of the manufacturing sector and for the economy as a whole. The PMI Index is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment. A PMI of 50 or higher generally indicates that the industry is expanding.
Put - A contract giving the owner the right to sell a specified asset at a set price within a specified time.
Q
Quantitative Easing (QE) - An unconventional monetary policy in which a central bank purchases financial assets from the market in order to lower interest rates and increase the money supply.
QE2 or Quantitative Easing 2 - The second round of the Federal Reserve's monetary policy used to stimulate the U.S. economy following the recession that began in 2007/08. QE2 was initiated in the fourth quarter of 2010 in order to jump-start the sluggish economic recovery.
R
R Squared - A statistical measure that represents the percentage of a fund's or security's movements that are explained by movements in a benchmark index. For fixed-income securities the benchmark is the T-bill, and for equities the benchmark is the S&P 500.
Real Yield - Yield from an investment adjusted for the effects of inflation.
REITs - Securities that sell like a stock on the major exchanges and invest in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields as well as a highly liquid method of investing in real estate.
RMBS (Residential Mortgage Backed Securities) - A type of mortgage-backed debt securities where the cash flows are derived from residential mortgages.
Return of Capital - A distribution of an amount in excess of a fund’s current and accumulated earnings and profits, if any, will be treated by a shareholder as a tax-free return of capital, which is applied against and reduces the shareholder’s basis in the fund’s shares.
Return On Equity - A measure of a corporation's profitability. The ROE is useful in comparing the profitability of a company to other firms in the same industry.
Return on invested capital (ROIC) is a profitability ratio that measures the return an investment generates for those who have provided capital; i.e., bondholders and stockholders.
Revenue Bond - A bond on which the debt service is payable solely from the revenue generated from the operation of the project being financed or a category of facilities, or from other non-tax sources.
Riskless (or risk-free) Interest Rate - The theoretical rate of return of an investment with zero risk. The risk-free rate represents the interest that an investor would expect from an absolutely risk-free investment over a given period of time. Though a truly risk-free asset exists only in theory, in practice most professionals and academics use short-dated government bonds, such as a three-month U.S. Treasury bill.
Rolling Returns - Rolling returns display returns in overlapping cycles. For example, three-year rolling returns may look at the returns from February 1, 2019 to January 31, 2022, March 1, 2019 to February 28, 2022, April 1, 2019 to March 31, 2022, etc. Rolling returns are useful for examining the behavior of returns for holding periods similar to those actually experienced by investors.
The Russell 1000 Index (Russell 1000 TR) measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market cap and current index membership. Source: Frank Russell Company.
The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe, using I/B/E/S forecast medium-term growth and sales per share historical growth. Source: Frank Russell Company.
The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index including approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. Source: Frank Russell Company.
The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 companies with higher price-to-value ratios and higher forecasted growth values. The Russell 2000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the small-cap growth segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth characteristics.
The Russell 3000 Growth Index is 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. Source: Frank Russell Company.
The Russell 3000 Value Index measures the performance of the broad value segment of U.S. equity value universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values.
S
The S&P 500 Dividend Aristocrats Index is equally weighted and measures the performance of large cap, blue chip companies within the S&P 500 Index that have followed a policy of increasing dividends every year for at least 25 consecutive years.
The S&P 500 Health Care Index is composed of those companies included in the S&P 500 Index that are classified as members of the health care sector as per the Global Industry Classification Standard.
The S&P 500 Index (S&P 500 TR) is an unmanaged broad measure of the U.S. stock market.
The S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index, as per the Global Industry Classification Standard.
The S&P 500/LSTA Leveraged Loan Index is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market based upon market weightings, spreads and interest payments.
S&P MidCap 400 Index is designed to measure the performance of 400 mid-sized companies in the U.S., reflecting this market segment's distinctive risk and return characteristics. To be included in the index, a stock must have an unadjusted market capitalization that ranges from $1.4 billion to $5.9 billion.
The S&P National AMT-Free Municipal Bond Index is a broad, comprehensive, market value-weighted index designed to measure the performance of the investment-grade tax-exempt U.S. municipal bond market. Bonds issued by U.S. territories, including Puerto Rico, are excluded from this index.
The S&P Pharmaceuticals Select Industry Index represents the pharmaceuticals sub-industry portion of the S&P Total Markets Index, as per the Global Industry Classification Standard.
S&P BSE Sensex Index - India's most tracked bellwether index. It is designed to measure the performance of the 30 largest, most liquid and financially sound companies across key sectors of the Indian economy that are listed on the Bombay Stock Exchange (BSE).
S&P SmallCap 600 Index is designed to measure the performance of 600 small-size companies in the U.S., reflecting this market segment's distinctive risk and return characteristics. To be included in the index, a stock must have an unadjusted market capitalization that ranges from $400 million to $1.8 billion.
SEC Yield - A yield computed in accordance with SEC standards measuring the net investment income per share over a specified 30-day period expressed as a percentage of the maximum offering price of the Fund's shares at the end of the period.
The Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index is a seven-day high-grade market index comprised of tax-exempt Variable Rate Demand Obligations (VRDOs) with certain characteristics.
Securitized Products - Pools of financial assets that are brought together to create a new security, which is then divided and sold to investors.
The Li Keqiang Index is an alternative measure of China's economic growth based on electricity consumption, railway freight and lending.
The Shanghai Composite Index is a capitalization-weighted index that tracks the daily price performance of all A shares and B shares listed on the Shanghai Stock Exchange.
Sharpe Ratio - A risk-adjusted measure developed by Nobel Laureate William Sharpe. It is calculated by using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe Ratio, the better the fund's historical risk-adjusted performance. The Geometric Sharpe ratio is calculated for the past three-year period by dividing a fund's annualized excess returns by its annualized standard deviation.
The Shenzhen Composite Index is a market-cap weighted index that tracks the stock performance of all the A-share and B-share lists on the Shenzhen Stock Exchange.
Solvency II - An EU legislative program introducing a harmonized EU-wide insurance regulatory regime. It is based on the risk profile of each individual insurance company in order to promote comparability, transparency, and competitiveness.
Sovereign Debt - Government debt that has been issued in a foreign currency.
Spread Product - A term for taxable bonds that are not Treasury securities. Agency securities, asset-backed securities, corporate bonds, high-yield bonds, and mortgage-backed securities are various types of spread product.
Spot Price - The current price in the marketplace at which a given asset can be bought or sold for immediate delivery.
Standard Deviation - A measurement of dispersion around an average which, for a mutual fund, depicts how widely the returns varied over a certain time period. Higher standard deviation of returns indicates greater volatility.
Strike Price - The price at which an option can be bought or sold when it is exercised.
Swap Product - A derivative contract between parties to swap one risk exposure for another.
T
Take Rate - In online retailing, take rate refers to the number of people who have accepted an offer of a product or service over the number of contacts that have been made for that product or service: number of accepted offers/number of contacts.
Taylor Rule - A monetary-policy formula that provides an indication of how much the central bank would or should change the nominal interest rate in response to divergences of actual inflation rates from target inflation rates and of actual Gross Domestic Product (GDP) from potential GDP. It was first proposed by the U.S. economist John B. Taylor in 1993. The Federal Reserve Board may not use the Taylor Rule in setting monetary policy.
Tier 1 Capital - The core measure of a bank's financial strength. It is composed of core capital, which consists primarily of common stock and disclosed reserves (or retained earnings), but may also include non-redeemable non-cumulative preferred stock.
TIPS (Treasury Inflation Protected Securities) - A U.S. Treasury note or bond that offers protection from the effects of inflation. Using the Consumer Price Index as a guide, the value of the principal is adjusted to reflect the effects of inflation. A fixed interest rate is paid semi-annually on the adjusted amount. At maturity, if inflation has increased the value of the principal, the investor receives the higher value. If deflation has decreased the value, the investor receives the original face amount of the security.
Tracking Error - A measure of how closely a portfolio follows its benchmark. Typically, it's the standard deviation of the difference in returns between a portfolio and the benchmark. Actively managed portfolios tend to have a higher tracking error compared to passively managed investments.
The trade-weighted U.S. dollar index, also known as the broad index, is a measure of the value of the United States dollar relative to other world currencies. Its numerical value is determined as a weighted average of the price of various currencies relative to the dollar.
Tranche - A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities.
U, V
The University of Michigan Consumer Sentiment Index rates the relative level of current and future economic conditions, based on a survey of about 500 consumers published monthly.
The U.S. Dollar Index (USDX, DXY, DX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies.
U.S. Person includes any "U.S. Person" as set forth in Regulation S promulgated under the Securities Act of 1933, as amended. Regulation S currently provides that: "U.S. person" means: (1) any natural person resident in the United States; (2) any partnership or corporation organized or incorporated under the laws of the United States; (3) any estate of which any executor or administrator is a U.S. person; (4) any trust of which any trustee is a U.S. person; (5) any agency or branch of a non-U.S. entity located in the United States; (6) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (7) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and (8) any partnership or corporation if (i) organized or incorporated under the laws of any non-U.S. jurisdiction and (ii) formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.
U.S. Treasury securities, such as bills, notes and bonds, are negotiable debt obligations of the U.S. government. These debt obligations are backed by the "full faith and credit" of the government and issued at various schedules and maturities. Income from Treasury securities is exempt from state and local, but not federal, taxes.
Variable Rate Demand Note (VRDN) - VRDNs are long-term, floating-rate municipal securities. These highly liquid securities are payable on demand, typically either daily or weekly, meaning the investor can request repayment of the entire debt amount. The coupon rate will adjust on a periodic basis, either daily or weekly.
The CBOE/CBOT 10-year U.S. Treasury Note Volatility Index (ticker symbol: VXTYN) measures the expected volatility of the price of 10-year Treasury Note futures.
Velocity of Money - A ratio of nominal GDP to the money supply. It can be thought of as the rate of turnover in the money supply - that is, the number of times one dollar is used to purchase final goods and services included in GDP.
CBOE Volatility Index (VIX Index) shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 Index options. This volatility is meant to be forward looking and is calculated from both calls and puts.
W, X, Y, Z
Weighted Average Days to Expiration - The average days to expiration for all call options in a fund’s portfolio, weighted by notional values.
West Texas Intermediate (WTI) - A grade of crude oil used as a benchmark in oil pricing.
Yield Curve - A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates.
Yield-on-cost - The yield earned on the original cost of an investment and is defined as the yield earned in the period divided by the original cost of the investment. This measure differs from the traditional yield measure, which divides the yield by the current price. In a market where a security has risen in price and the dividend yield has remained consistent or increased, the yield-on-cost will tend to be higher than the current yield.
Yield Spread - The difference between yields on differing debt instruments, calculated by deducting the yield of one instrument from another.
Yield to Maturity - The rate of return anticipated on a bond if it is held until maturity date.
Yield to Worst (YTW) - The lowest potential yield that can be received on a bond without the issuer actually defaulting.