There are currently 136 names in this directory
The percent of a mutual fund's assets used to defray marketing and distribution expenses. The amount of the fee is stated in the fund's prospectus. A true no load fund has neither a sales charge nor a 12b-1 fee.
An employer-sponsored, salary reduction and defined contribution retirement plan that allows employees to defer paying current federal income taxes on a portion of their annual compensation. Contributions and earnings will compound tax deferred. Withdrawals are taxed at the employee's income tax rate at the time of withdrawal and may be subject to an additional 10 percent federal tax penalty if withdrawn prior to age 59½.
Interest that accumulates on the principal balance or the previous coupon payment of a loan.
The percentage gain or loss of an investment relative to the investment's benchmark. It is the difference between the actual return and the benchmark. It can be positive or negative and is typically used to assess performance.
A measure of the difference between a fund’s actual returns and its expected performance, given its level of risk as measured by beta. A positive alpha figure indicates the fund has performed better than expected given its beta. Conversely, a negative alpha indicates the fund’s underperformance, given its beta.
The process of gradual payment of debt over an extended period of time through periodic installments of principal and interest.
A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
A combination of stocks, bonds, and cash used by investment mangers to achieve investment goals.
The task of managing funds to accomplish two goals: (1) to earn an adequate return on funds invested and (2) to maintain a comfortable surplus of assets beyond liabilities.
Average Credit Quality
An average of all the credit quality positions for a fund’s bond holdings as rated by the major credit ratings agencies (i.e. Moody's and S&P). U.S. Government bonds carry the highest credit rating, while bonds issued by speculative or bankrupt companies usually carry the lowest credit ratings. Anything at or below BB is considered a high-yield or "junk" bond.
A fund that seeks both income and capital appreciation by investing in a generally fixed combination of stocks and bonds. These funds generally hold a minimum of 25% of their assets in fixed-income securities at all times.
A way to structure a bond portfolio using equal proportions of long and short bonds to create a portfolio with the price volatility of an intermediate bond.
BarCap Aggregate Bond Index
A market capitalization-weighted index maintained by Barclays Capital, which is made up of Treasury securities, Government agency bonds, Mortgage-backed bonds, Corporate bonds, and a small amount of foreign bonds traded in the U.S.
One-hundredth of a percentage point. For example, 50 basis points equals 0.50%.
A measure to evaluate the consistency of a fund’s performance. It is computed as the ratio of number of positive daily (or monthly, quarterly, etc.) returns and the total number of days, (or months, quarters, etc.) the fund has existed.
An event or indicator that shows the possible presence of a trend.
In the secondary market, the bellwether issue is the most recently auctioned Treasury issues for each maturity. Also called on-the-run issue.
An index or combination of indices used to characterize a manager.
The organization, company or an individual named by the owner of a life insurance policy, trust, will, or investment account to receive the proceeds in the event of the owner's death.
Beta represents the systematic risk of a portfolio and measures its sensitivity to a benchmark. The beta of the market is 1.00. A beta greater than 1.00 indicates the fund will be more sensitive to market movements both upwards and downwards. Likewise, a beta less than 1.00 indicates the fund will be less sensitive to upward and downward market movements.
Bonds are debt and are issued for a period of more than one year. The US government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically.
A bond that can be repaid early, at the issuer’s discretion. A callable bond allows an issuer to refinance debt at a lower rate, should interest rates drop below the coupon rate on the bond. If interest rates have dropped significantly since the date of issue, a callable bond will trade as though its maturity were shortened to the call date or the earliest time at which the bond can be redeemed.
The taxable income generated when a security is sold. The amount of appreciation is measured by subtracting the purchase price from the sale price.
Taxable income generated only when a security is sold. This figure is calculated by subtracting the purchase price from the sale price. Under IRS regulations, funds must distribute 98% of their capital gains each year to avoid paying taxes on them. Shareholders pay taxes on these distributions, even if the gains are reinvested. Further capital gains can be generated by selling shares in a fund for more than the original purchase price.
Cash Balance Pension Plan
A defined-benefit plan under which an employer credits a participant's account with a set percentage of his or her yearly compensation plus interest.
An investment company that sells shares like any other corporation and usually does not redeem its shares. A publicly traded fund sold on stock exchanges or over the counter that may trade above or below its net asset value.
Collective Investment Trust (CIT)
A pooled investment vehicle created or administered by a bank or trust company and offered to institutional investors. Like a mutual fund, it collects assets from multiple investors and invests with a specific strategy. CITs provide the overall benefits of a mutual fund (e.g., professional investment management, broadly diversified portfolio of holdings, etc.) but at a lower cost.
Earning interest on accumulated prior interest along with the original principal amount.
A statistical measure of how two entities move in relation to each other.
Consumer Price Index. An economic statistic that measures the price of a representative basket of goods and services. The change in CPI over time measures the rate of price inflation in the economy.
Credit Default Swap
A financial swap agreement designed to transfer credit exposure in which the seller compensates the buyer in the event of a loan default or other credit event. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, receives a payoff if the underlying debt security defaults.
For fixed-income investments, credit quality is an estimate of the likelihood of the bond issuer to default either on interest or principal payments. Independent rating agencies, most notably Standard & Poor’s or Moody’s, issue quality ratings as a service to investors. Morningstar classifies bond mutual funds by their quality based on the average S&P rating for all holdings in the portfolio as follows: high quality (AA or higher), medium quality (A to BBB), and low quality (BB or lower). Investors demand a higher yield on bonds with lower credit quality as compensation for the greater risk of default. The difference in yield compared to U.S. Treasury securities is referred to as “credit spread”.
A weighted index maintained by the Center for Research in Security Prices (CRSP) at the University of Chicago Booth School of Business which includes US capitalization indices, US value and growth style indices, and US industry sector indices that capture broad US equity market coverage.
The ratio of the coupon rate on a bond to the dollar purchase price expressed as a percentage.
Stock that tends to rise quickly when the economy turns up and fall quickly when the economy turns down. Examples are housing, automobiles, and paper.
A back-end sales charge imposed when investors redeem shares. The percentage charged generally declines the longer shares are held. This charge, often coupled with 12b-1 fees as an alternative to a traditional front-end load, diminishes over time.
Defined Benefit Plan
A pension plan obliging the sponsor to make specified dollar payments to qualifying employees.
Defined Contribution Plan
A pension plan whose sponsor makes specified contributions into the plan on behalf of qualifying participants.
Liability-matching models that assume that the liability payments and the asset cash flows are known with certainty.
Countries that are thought to be the most advanced in terms of economy and capital markets and therefore less risky from an investment perspective.
The interest rate that the Federal Reserve charges a bank to borrow funds when a bank is temporarily short of funds. Also, the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, used by pension plans and insurance companies for discounting liabilities.
The distribution of earnings to stockholders by a company. Dividends are usually paid out from current earnings.
Dollar Cost Average
Method of purchasing securities by investing a fixed amount of money at set intervals. The investor buys more shares when the price is low and fewer shares when the price is high, thus reducing the overall cost.
Dow Jones Composite
Also known as the 65 Stock Average, consists of DJ Industrial Average, the DJ Transportation Average, and the Dow Jones Utility Average. The composite, like the other Dow Jones Indices, is a price-weighted index. Price-weighted indices are derived by adding up the prices of the components and dividing this sum by a stock split-adjusted divisor. Dividends are reinvested to reflect the actual performance of the underlying securities.
A statistical measure to evaluate the performance of a fund compared to an index during the periods when that index has fallen.
This statistic is commonly used as a risk measure for fixed income instruments (e.g., bonds). It measures the amount of time required for the average dollar to be returned to the investor, through principal, coupon, or other payments. More importantly, it indicates the percentage change in the price of a bond or other fixed income instrument in response to a one percentage point change in market interest rates. Bonds are commonly categorized into risk categories as follows: short term (less than 3.5 years), intermediate term (3.5 - 6.0 years), and long term (over 6 years). A bond’s duration will almost always be shorter than its maturity, with the exception of zero-coupon bonds, for which maturity and duration are equal.
An increase in the earnings per share growth rate from one reporting period to the next.
Earnings Per Share (EPS)
A company's profit divided by its number of outstanding shares. In calculating EPS, the company often uses a weighted average of shares outstanding over the reporting term. The one-year (historical) EPS growth rate is calculated as the percentage change in earnings per share. The prospective EPS growth rate is calculated as the percentage change in this year's earnings and the consensus forecast earnings for next year.
The duration calculated using the approximate duration formula for a bond with an embedded option, reflecting the expected change in the cash flow caused by the option. Measures the responsiveness of a bond's price-taking into account that expected cash flows will change as interest rates change due to the embedded option.
A collection of assets which offer the best possible expected level of return for a given level of risk.
Countries that are thought to have less advanced economies and capital markets and therefore more risky from an investment perspective.
Employee Retirement Income Security Act (ERISA)
The 1974 federal law that regulates the operation of private pensions and benefit plans.
Employee Stock Ownership Plan (ESOP)
A defined contribution retirement plan in which company contributions must be invested primarily in qualifying employer securities.
Gift of money or property to a specified institution for a specified purpose.
A fund that attempts to match an index’s performance. Unlike an index fund, however, enhanced-Index funds attempt to better the index by either adding value or reducing volatility through selective stock-picking.
The difference between the returns of two portfolios. Usually excess return is the difference between a manager's return and the return of a benchmark for that manager.
The percentage of fund assets paid for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund’s NAV. Sales charges are not included in the expense ratio.
Federal Funds Rate
The interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. The Fed funds rate, often points to the direction of US interest rates. The most sensitive indicator of the direction of interest rates, since it is set daily by the market, unlike the prime rate and the discount rate.
One who must act for the benefit of another party.
The system of trading in and converting the currency of one country into that of another which may be used in settling international transactions.
The initial, or front-end, sales charge is a one-time deduction from an investment made into the fund. The amount is generally relative to the amount of the investment, so that larger investments incur smaller rates of charge. The sales charge serves as a commission for the broker who sold the fund.
Countries that are thought to have the least advanced economies and capital markets and therefore the most risky from an investment perspective.
Fund of Funds
A fund that specializes in buying shares in other mutual funds rather than individual securities. Quite often this type of fund is not discernible from its name alone, but rather through prospectus wording (i.e.: the fund’s charter).
Geometric Mean Return
A compounded and annualized rate of return.
The prescribed change in asset allocation mix (usually of a target date fund) over time, typically to include more fixed-income assets and fewer equities.
Gross Domestic Product (GDP)
An economic statistic that measures the total output of the economy, which is the financial value of all finished goods and services purchased within the economy. The growth or decline of GDP, measured as a percentage change and adjusted for inflation, is used by economists a key indicator of economic health. Falling GDP indicates recessionary conditions, while excessive growth may trigger price inflation.
Investors employing a growth investment style buy stocks of companies the investors anticipate will show strong earnings momentum. Growth stocks are often characterized by high valuation ratios (e.g., price-to-earnings ratios). See also: value stocks.
Guaranteed Investment Contract (GIC)
A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment.
A strategy designed to reduce investment risk using call options, put options, short-selling, or futures contracts. A hedge can help lock in profits. Its purpose is to reduce the volatility of a portfolio by reducing the risk of loss.
A bond with a speculative credit rating of BB (S&P) or Ba (Moody's) or lower. Junk or high-yield bonds offer investors higher yields than bonds of financially sound companies. Two agencies, Standard & Poors and Moody's Investor Services, provide the rating systems for companies' credit.
A bond portfolio strategy whose goal is to eliminate the portfolio's risk, in case of a general change in the rate of interest, through the use of duration.
Statistical composite that measures changes in the economy or in financial markets, often expressed in percentage changes from a base year or from the previous month. Indexes measure the ups and downs of stock, bond, and some commodities markets, in terms of market prices and weighting of companies the index.
The rate at which the general level of prices for goods and services is rising.
A measure of the consistency of excess return. This value is determined by taking the annualized excess return over a benchmark (style benchmark by default) and dividing it by the standard deviation of excess return.
Indicates a particular fund’s investment goals, based on the wording in a fund's prospectus.
See "High-Yield Bond."
Leading Economic Indicators
Economic series that tend to rise or fall in advance of the rest of the economy.
Lehman Brothers Aggregate Bond Index
A benchmark index made up of the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset-Backed Securities Index, including securities that are of investment-grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million.
The use of various financial instruments or borrowing to increase the potential return of an investment. Also, the amount of debt used to finance assets.
A financial obligation.
Liability Funding Strategies
Investment strategies that select assets so that cash flows will equal or exceed the client's obligations.
A balanced fund in which the asset allocation is automatically adjusted during the course of the fund's time horizon, typically from a position of higher risk to one of lower risk as time progresses.
A balanced fund in which the asset allocation is determined by a stated level of risk and return (usually defined as conservative, moderate, or aggressive).
The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. It is the ability to convert an asset to cash quickly.
A means of categorizing funds based on the relative size (stock market capitalization) of the underlying companies they invest in.
The current value of the security. For stocks, the market value = security price x the number of shares held. For bonds, the market value = bond price x the number of bonds held.
Money Purchase Plan
A defined benefit contribution plan in which the participant contributes some part and the firm contributes at the same or a different rate. Also called an individual account plan.
Morgan Stanley Capital International Inc. (MSCI) maintains a set of indices commonly used by institutional investors as benchmarks for international stock markets. The most commonly cited index is the Europe, Australasia, Far East (EAFE) Index, which covers developed markets within the indicated regions. The MSCI EAFE is typically used as a benchmark for broadly diversified “international” or “foreign stock” funds and accounts. The MSCI World Index covers all developed markets in the world including the United States, and is typically used as a benchmark for broadly diversified “global” or “world” stock funds and accounts. MSCI maintains many specialized indices covering other developed regions, emerging markets, and specific countries.
Mutual funds are pools of money that are managed by an investment company. They offer investors a variety of investment objectives, depending on the fund and its investment mandate. Some funds, for example, seek to generate income on a regular basis while others seek capital preservation and still others seek to invest in companies that are growing at a rapid pace. Funds can impose a sales charge, or load, on investors when they buy or sell shares. Many funds are no-load and impose no sales charges. Mutual funds are investment companies regulated by the Investment Company Act of 1940.
NASD - National Association of Securities Dealers
A self-regulatory organization for the securities industry with jurisdiction over certain broker-dealers. The NASD enforces broker-dealers’ compliance with securities regulations, including the requirement that they maintain sufficient levels of net operating capital. It also conducts market surveillance of the over-the-counter (OTC) securities market.
NAV - Net asset value
The share price of an open-end mutual fund. Funds compute this value by dividing the total net assets by the total number of shares.
The month-end net assets of the mutual fund, recorded in millions of dollars. Net-asset figures are useful in gauging a fund’s capitalization size, agility, and popularity.
No-load mutual fund
An open-end investment company whose shares are sold without a sales charge. There can be other distribution charges such as 12B-1 fees. A true no-load fund has neither a sales charge nor a distribution fee.
A retirement plan that does not meet the IRS requirements for favorable tax treatment.
A mutual fund whose headquarters is based outside the United States.
Mutual fund that continually creates new shares on demand. Mutual fund shareholders buy the funds at net asset value and may redeem them at any time at prevailing market prices.
OTC (over the counter)
A name for a security that is not listed on an exchange. The OTC is the major trading market for all US bonds, as well as many small- and large-capitalization stocks. Whereas non-OTC stocks trade on the floor of actual stock exchanges, OTC issues are traded via telephone and computer networks connecting dealers in stocks and bonds. The dealer may or may not be a member of a securities exchange, but he or she must be a member of the NASD.
A strategy that relies on diversification to match the performance of some market index. A passive strategy assumes that the marketplace will reflect all available information in the price paid for securities, and therefore, does not attempt to find mispriced securities.
Pension Benefit Guaranty Corporation (PBGC)
A federal agency that insures the vested benefits of pension plan participants, established through ERISA legislation.
The value of a future payment, receipt, or cash flow expressed in today’s dollars. The present value of an amount is always less than the amount to be received in the future.
The weighted average of the price/book ratios of all the stocks in a fund’s portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value.
This represents the weighted average of the price/cash-flow ratios of the stocks in a fund's portfolio. Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency.
The weighted average of the price/earnings ratios of the stocks in a fund’s portfolio. The P/E ratio of a stock is calculated by dividing the current price of the stock by its trailing 12 months’ earnings per share.
Profit Sharing Plan
An agreement under which employees share in the profits of their employer, usually through an annual contribution by the company, and where funds accumulate on a tax-deferred bases until the employee retires or leaves the company.
A fund's formal written statement, generally issued on an annual basis. In this statement the fund sets forth its proposed purposes and goals, and other facts (e.g.: history and investment objective) that an investor should know in order to make an informed decision.
Authorization, whether written or electronic, that shareholders' votes may be cast by others.
Qualified Retirement Plan
A retirement plan established by employers for their employees that meets the requirements of Internal Revenue Code Section 401 or 403 and is eligible for special tax considerations. Employers can deduct plan contributions made on behalf of eligible employees on the business's tax return as business expenses. Plan earnings are not taxed to the employee until withdrawn.
Reflects the percentage of a fund’s price movements that can be explained by movements in its benchmark index. An R-squared of 100 indicates that all movements of a fund can be explained by movements in the index. A low R-squared indicates that very few of the fund’s movements can be explained by movements in its benchmark index.
REIT (Real Estate Investment Trust)
A real estate company that invests in properties, mortgages, and/ or mortgage securities and is traded on the major exchanges.
Degree of uncertainty of return on an asset. Often defined as the standard deviation of the return on total investment.
The Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. Subsets of this index include the Russell 2000® Index, which measures the performance of the 2,000 smallest companies, and the Russell 1000® Index, which measures the performance of the 1,000 largest companies in the Russell 3000. Each index has a Growth and Value sub-index; stocks are classified by style based on price-to-book ratios and forecasted growth rates.
Securities & Exchange Commission (SEC)
A federal agency that regulates the US financial markets. The SEC also oversees the securities industry and promotes full disclosure in order to protect the investing public against malpractice in the securities markets.
Semi - Standard Deviation
The semi-standard deviation is a characterization of the downside risk of a distribution. Essentially it represents the standard deviation of all returns falling below the mean. The semi-variance of the returns below the mean (to the left of the distribution) is calculated. The semi-standard deviation is the square root of the semi-variance. The semi-variance (standard deviation) is always lower than the total variance (standard deviation) of the distribution.
A risk-adjusted performance measure developed by William Sharpe. It is calculated by taking the annualized return of a mutual fund that is in excess of the risk-free rate and dividing it by the standard deviation of returns. The higher the Sharpe Ratio, the better the fund’s historical risk-adjusted performance.
An investment vehicle designed to preserve principal while providing steady, positive returns and generally composed of high quality, diversified fixed income portfolios that are protected against interest rate volatility by contracts from banks and insurance companies.
Standard & Poor\'s Indices
The Standard & Poor’s 500® is an unmanaged index of 500 stocks generally representative of large companies (as measured by market capitalization). The Standard & Poor’s Midcap 400® and Smallcap 600® are unmanaged indices generally representative of mid-sized and small companies respectively.
A statistical measure of volatility indicating the 'risk' associated with a return series.
A term referring to credit or loan arrangements for borrowers with poor credit history which typically charge a higher interest rate than that offered for traditional loans.
The T-Statistic is related to the information ratio and tells how significant the information ratio is. It takes into account the time over which the information ratio was achieved. Generally, a T-Stat of 2.0 or greater is considered significant.
Tactical Asset Allocation
Portfolio strategy that allows active departures from the normal asset mix according to specified objective measures of value. Often called active management.
Target Date Fund
A balanced fund that automatically resets the asset mix of stocks, bonds, and cash equivalents in its portfolio according to a defined glideslope.
TIPS (Treasury Inflation Protected Security):
A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation.
The total of all earnings from a given investment, including dividends, interest and any capital gain.
The standard deviation of the difference of two return series.
The Treynor Ratio is a measure of performance per unit of market risk. It is the portfolio's excess return over the risk-free rate divided by the portfolio's beta to the selected benchmark. Also known as the Reward to Volatility Ratio.
A measure of the fund’s trading activity. The percentage loosely represents the percentage of the portfolio’s holdings that have changed over the past year.
Also called diversifiable risk or residual risk. Risk that is unique to a company that can be eliminated through diversification.
A statistical measure to evaluate the performance of a fund compared to an index during the periods when that index has risen.
Value added is the risk adjusted return generated by an investment strategy: the return of the investment strategy minus the return of the benchmark.
Investors employing a value investment style buy stocks of companies they believe are under-priced based on their fundamental ability to generate earnings, in anticipation that the price performance of the stock will reverse. Value stocks are often characterized by low valuation ratios (e.g., price-to-earnings ratios). See also: growth stocks.
Investment contracts whose issuer pays a periodic amount linked to the investment performance of an underlying portfolio.
A statistical measure of the dispersion of price/returns for a security or market over time, often used as a measure of risk.
Welfare Benefit Plan
An employee benefit plan that provides benefits like medical, dental, accident, disability, death, or unemployment benefits.
The amount of current income provided by an investment calculated by dividing the total of the annual dividends or annual interest earned on the investment by the current price.
A curve that plots the interest rates across different maturity dates for bonds of an equal credit quality.
Zero Coupon Bond
A debt security that makes no interest payments but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value. Since these bonds do not pay interest until maturity, their prices tend to be more volatile than bonds that pay interest regularly.