An annualised net yield for the day listed. It is calculated by multiplying the daily dividend factor by 36,500 and dividing by the NAV.
30-DAY DISTRIBUTION RATE
Calculated by taking the annualised accrued net income (income less expenses, also known as the declared dividend) of the last 30 days, and dividing by the period-end NAV. The net income is annualised by taking the 30 days of declared dividends, dividing by 30, and multiplying by 365.
7-DAY CURRENT YIELD
The average income return over the previous seven days. It is the Fund's total income net of expenses, divided by the total number of outstanding shares. The yield may differ slightly from the actual distribution rate of a given portfolio because of the exclusion of distributed capital gains or losses which are non-recurring. The SEC Yield is a required yield to quote to clients. This yield does not allow for the inclusion of capital gains or losses.
7-DAY EFFECTIVE YIELD
The average income return over the previous seven days, assuming the rate stays the same for one year and that dividends are reinvested. It is the Fund's total income net of expenses, divided by the total number of outstanding shares. The yield may differ slightly from the actual distribution rate of a given portfolio because of the exclusion of distributed capital gains or losses which are non-recurring. This yield does not allow for the inclusion of capital gains or losses.
MMFs rated AAA are judged to be of an investment quality similar to AAA-rated fixed income obligations, meaning they are considered to be of the highest quality. The highest MMF ratings by the top three ratings agencies are: AAAm with Standard & Poor’s, Aaa-mf with Moody’s, and AAAmmf with Fitch.
The rate of return an asset actually achieves, rather than the return it achieves relative to a benchmark index.
Where managers use extensive research before human judgement to identify companies that they believe will create long-term value.
Measures the difference between a portfolio’s actual returns and its expected returns given its risk level as measured by its beta. A higher alpha is better, but a high alpha is only reliable in the presence of a high R-squared value. It can be viewed as a risk-adjusted measure of return. Some advisers see alpha as a measurement of the value added or subtracted by a fund’s manager. A positive alpha figure indicates the portfolio has performed better than its beta would predict. A negative alpha figure indicates a portfolio has underperformed, given the expectations established by the fund’s beta.
Broadly defined, an investment that is not one of the three traditional asset types (stocks, bonds and cash). Alternative investment strategies typically have the ability to use leverage, shorting, and active risk management in pursuit of returns that are lowly correlated with traditional asset types.
An investment strategy that seeks to balance risk and reward by dividing investments among different kinds of asset classes, such as stocks, bonds and cash.
A group of securities that share similar characteristics and behave similarly in the marketplace. Asset classes are generally governed by the same rules and regulations.
A bond based on the value of underlying assets such as bank loans or credit card loans.
A type of debt security that is based on pools of assets, or collateralised by the cash flows from a specified pool of underlying assets. Assets are pooled to make otherwise minor and uneconomical investments worthwhile, while also reducing risk by diversifying the underlying assets. An example of an asset-backed security is a mortgage-backed security, whose cash flows are backed by the principal and interest payments of a set of mortgage loans.
ASSETS UNDER SUPERVISION (AUS)
Includes assets supervised by GSAM and its investment advisory affiliates. AUS includes client accounts for which Goldman Sachs does not have full discretion.
AVERAGE MONTHLY YIELD
Represents a simple average of the one-day yield for all of the days within the month shown, net of management fees and expenses. These figures may contain capital gains and losses and therefore do not conform to the same formula as the 7-day yield calculations.
BARRIERS TO ENTRY
The existence of high start-up costs and other obstacles that make it difficult for new firms to enter an industry and compete for revenue.
Risk of a mismatch in price between the hedging instrument and the underlying asset.
A benchmark is a basket of bonds representing the market, e.g. a specific sector or a geographical region. Comparing a fund to the returns achieved by the benchmark is a way of evaluating its performance.
Indices are often used to evaluate a fund’s performance. For example, a UK gilt fund might be compared to the FTSE UK Gilts All Stocks Index.
Measures the historical market risk of a portfolio or the volatility of a portfolio relative to an underlying index over a defined historical period of time. If a portfolio has a beta of >1, it is more volatile than the benchmark. Conversely, if a portfolio has a beta <1, it is less volatile than the benchmark.
A debt investment whereby investors loan money to entities (i.e. a corporation or government) to help them finance a variety of projects and activities. The entity borrows funds for a defined period of time at a particular interest rate. Types of bonds include corporate, municipal and U.S Treasury notes, bills and bonds, known as Treasuries.
Brazil, Russia, India and China.
BUSINESS DEVELOPMENT COMPANY (BDC)
US company that invest in small- and mid-sized businesses.
Up and down capture is a measure of how well a manager was able to participate in phases of positive benchmark returns, and how badly the manager was affected by phases of negative benchmark returns. A manager seeks to have a larger up-capture ratio and a smaller down-capture ratio.
Making use of low rates of interest on one currency to borrow that currency for investment in another currency offering a higher rate of return.
CERTIFICATES OF DEPOSIT
A debt instrument issued by a bank that will pay interest— periodically or at maturity—and principal when it reaches maturity. A bank’s creditworthiness is rated by impartial agencies such as Moody’s and Standard & Poor’s. Unlike time deposits, certificates of deposit trade actively on the secondary market.
The measurement and statistics of securities held by each portfolio and its benchmark.
An asset (cash or securities) posted from one counterparty to another, and held as a guarantee against the value of a specified portfolio of trades. Commonly referred to as margin, the collateral also acts to mitigate credit risk.
A demand by a derivatives counterparty for an investor to transfer cash or securities to collateralise movements in the value of derivatives contracts.
COLLATERALISED MORTGAGE OBLIGATIONS (CMO)
A type of mortgage backed security. Investors in a CMO buy bonds issued by the entity, and receive payments according to a defined set of rules. The mortgages themselves are called the collateral, the bonds are called tranches (also called classes), and the set of rules that dictates how money received from the collateral will be distributed is called the structure.
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS)
A mortgage-backed security secured via a loan on a commercial property.
Short-term notes issued by a wide variety of corporations such as domestic and foreign firms and financial institutions. These short term obligations have maturity dates of up to one year.
Investments in commodities provides investors with access to “real assets” such as oil, agriculture goods, and precious metals. The returns on commodity investments are generally tied to different economic factors and, therefore, can by less correlated to the returns of traditional stocks and bonds.
A type of bond that allows the holder to exchange it for a number of shares of the issuer’s common stock.
CORPORATE CREDIT BONDS
Bonds issued by a company.
Correlation measures the strength of the relationship between two variables, such as the relationship between the performances of two assets. It is a relative measure that indicates how one variable moves in relation to another one. Correlation values can be anywhere between -1 (perfectly negatively related), 0 (not related) and 1 (perfectly positively related).
Legal and financial term used to identify a party in a derivatives contract.
Legal and financial term used to identify a party in a derivatives contract.
Regular payments (usually every six months) paid throughout the bond’s life. For example, a £1,000 bond with a coupon of 5% will pay £50 a year.
Covered bonds are debt instruments with dual recourse to both the issuer and a segregated pool of collateral, usually mortgages.
CREDIT DEFAULT SWAPS (CDS)
A financial instrument designed to transfer the credit exposure of fixed income securities between parties. It is essentially an insurance contract that enables a seller to protect against the risk of default on debt obligations for a specific issuer.
In the context of a credit default swap, a credit event can include company restructuring, insolvency or default.
Credit risk is the possibility that the country will default on its debt.
CREDIT-ADJUSTED DURATION (YRS)
A bond's option adjusted duration, adjusted for the bond's spread and the impact this may have on the bond's sensitivity to changes in interest rates.
CURRENCY FORWARD CONTRACT
A contract designed to lock in the price at which an investor can buy or sell a currency at a future date. Usually, no cash exchanges hands until the expiration date, when the contract is settled on a net basis based on its notional amount.
The annual return on the amount paid for a bond. Derived by dividing the bond’s interest payment by its purchase price.
The Committee on Uniform Securities Identification Procedures (CUSIP) assigns a number identifying stocks, registered bonds and mutual funds. Brokers and dealers will use a security's CUSIP number to get further information about that security. The CUSIP number will also be listed on any trading confirmation tickets. The CUSIP system makes it easier to settle and clear trades
This occurs when the returns from a particular asset class become uncorrelated with another asset class where there has traditionally been a strong relationship, e.g. the developing economies have recently shown signs of decoupling from the developed world.
A security whose price is dependent upon or derived from one or more underlying assets. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Futures contracts, forward contracts, options and swaps are the most common types of derivatives.
DISCOUNTED FREE CASH FLOW
Future cash flows multiplied by discount factors to obtain present value of a company.
A risk management technique involving the spreading of an investment portfolio among multiple vehicles with varied levels of risk, industry and geographic exposure.
DIVIDEND DISCOUNT MODEL
A formula to estimate the intrinsic value of a company by figuring the present value of all expected future dividends.
The annual interest rate of a specific money market instrument divided by 365. When multiplied by the account balance of each client, will show the daily dividend accrued for each client.
The weighted-average term-to-maturity of the bond’s cash flows, the weights being the present value of each cash flow as a percentage of the bond’s full prices. The greater the duration of a bond, the greater its price sensitivity. In general, duration rises with maturity, falls with the frequency of coupon payments, and falls as the yield rises (the higher yield reduces the present values of the cash flows). Duration also provides an indication of a bond portfolio’s price sensitivity to changes in interest rates.
A hedging technique which seeks to limit an investment’s exposure by adjusting the hedge according to changes in the underlying security. As the value of the underlying moves, new positions can be taken in options or futures to offset the movement.
ESMA (formerly Committee of European Securities Regulators-CESR) is an independent EU Authority that contributes to safeguarding the stability of the European Union’s financial system by ensuring the integrity, transparency, efficiency and orderly functioning of securities markets, as well as enhancing investor protection. In particular, ESMA fosters supervisory convergence both amongst securities regulators, European Supervisory Authorities competent in the field of banking (EBA), and insurance and occupational pensions (EIOPA). In 2010, ESMA released guidelines for a common definition of European MMFs.
EARNINGS PER SHARE (EPS)
This is the company’s profit divided by the number of shares. A company with £2m in earnings and ten million shares would have an EPS of 20 pence.
EBITDA (EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION)
A measure of cash flow calculated by: Revenue minus Expenses (excluding tax, interest, depreciation and amortization). EBITDA looks at the cash flow of a company. By not including interest, taxes, depreciation and amortization, we can clearly see the amount of money a company brings in.
EMERGING MARKETS DEBT EXTERNAL
Emerging markets debt issued in another country’s currency.
EMERGING MARKETS DEBT LOCAL
Emerging markets debt issued in local currency.
The market capitalisation of a company’s equity plus the market value of the company’s debt. Often, the value of assets that are non-core are excluded from the final calculation. Often referred to as a company’s total market capitalisation.
An investment type focused on stocks or other securities representing an ownership interest in a company. Investors typically invest in equities or equity portfolios for dividend income and/or capital appreciation.
EQUITY RISK PREMIUM
The extra return that the stock markets must provide over gilts to compensate for the additional investment risk.
EXCHANGE-TRADED DERIVATIVES CONTRACTS
Standardised derivatives contracts (e.g. futures contracts and options) that are transacted on an organised exchange.
EXCHANGE-TRADED FUND (ETF)
An investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day.
The operating costs of a MMF expressed as a percentage of the fund’s average net assets for a given time period.
EXPENSE RATIO - GROSS
The total of a mutual fund's annual fund operating expenses (assuming no expense reductions), expressed as a percentage of the fund's average net assets.
EXPENSE RATIO - NET
Represents a mutual fund's annual fund operating expenses (excluding fee waivers and reimbursements), expressed as a percentage of the fund's average net assets.
FINANCIAL DERIVATIVE / DERIVATIVE INSTRUMENT
A financial product whose price is determined by the performance of another asset.
The use of debt to increase the expected return on equity. Financial leverage is measured by the ratio of debt-to-debt plus equity. A company with high financial leverage is more dependent on debt rather than revenue to drive return on equity.
FIXED INCOME INVESTMENTS
An investment that provides regular (or fixed) returns in the form of periodic coupon payments and a return of principal upon maturity of the security. Investors typically invest in fixed income portfolios for regular streams of income, diversification from equity risk, and/or the potential for some capital appreciation.
FLOATING RATE NOTES (FRNS)
Debt instruments with variable interest rates. The coupon rate of these notes is pegged to a benchmark floating rate, typically LIBOR, and refixed quarterly to three-month LIBOR or semiannually to six-month LIBOR rates.
FOREIGN EXCHANGE PRIME BROKERAGE AGREEMENT (FXPB)
A contractual agreement that enables a party to trade with multiple foreign-exchange forward counterparties under an ISDA Master Agreement or an IFEMA, while having all positions held and maintained by one broker/dealer.
The expected rate of a currency at an agreed time in the future based on interest rates relative to other currencies.
An agreement between two parties to buy or sell an asset at a specified point of time in the future. The price of the underlying instrument, in whatever form, is paid before control of the instrument changes.
FREE CASH FLOW
The amount of cash generated by the business after meeting all its obligations for interest, tax and dividends and after all capital investment, excluding share sales or purchases by the business.
The frontier, or pre-emerging, markets are investable but have lower market capitalisation and liquidity than more established emerging markets. Investors are attracted to these markets by the prospect of higher potential returns, although they need to be aware of the increased risks. Frontier markets include Mauritius, Romania and Vietnam.
An investment approach that involves studying the economic and financial factors that influence the price of an asset.
A strategy employing fundamental analysis, whereby research using economic, financial, qualitative and quantitative factors is employed to select investments. Fundamental analysis seeks to take a holistic view of factors that may impact the value of a security (i.e. economic and sector conditions) and individually specific factors (i.e. company management).
A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price.
A group of seven of the largest developed nations, whose representatives meet periodically to discuss economic issues. It was formed in 1976 and consists of Canada, France, Germany, Italy, Japan, United Kingdom, and United States.
Bonds issued by the UK government.
Debt instruments issued by government and supra-national agencies, offering investors an additional degree of safety.
Those economies that represent at least 1% of global GDP are named by GSAM “Growth Markets”. Eight countries currently satisfy this criterion: each of the BRIC countries (Brazil, Russia, India and China), as well as the four largest “Next 11” (N-11) countries: Mexico, Korea, Turkey and Indonesia. These are the economies that are most likely to experience rising productivity coupled with favourable demographics and, therefore, a faster growth rate than the world average going forward. Additional characteristics that we implicitly use to distinguish Growth Markets from Emerging Markets include their growth environment, as well as the level of financial development and accessibility to investors.
The specific amount of overcollateralisation that might be required when a particular asset is taken as collateral.
Insuring against future currency movements that could prove costly. A popular method of hedging is to enter into a forward contract so as to guarantee that a foreign currency sale or purchase will be concluded at the agreed rate.
HIGH YIELD BOND
Bond rated below Investment Grade.
The commencement date of a Fund’s performance.
A bond where income payments are related to a specific price index.
A measure of the excess return a manager has delivered divided by the risk taken relative to the benchmark. The higher the information ratio the better the level of return relative to the risk.
Upfront collateral requirement that is set aside as a guarantee to the underlying futures contract; generally a percentage of the notional amount of a futures contract.
INTEREST RATE RISK
Interest rate risk is the risk that a rise in rates will decrease the value of the bonds the investor holds.
INTEREST RATE SWAP
An agreement between two counterparties to exchange future cash flows for a set period of time. Typically, one counterparty agrees to pay a fixed interest rate in exchange for receiving a floating interest rate in the same currency. The cash exchanged at each payment date is based on the notional amount agreed upon at the beginning of the contract.
INTEREST RATE SWAPTION
This gives the buyer the option to enter into an interest rate swap. In exchange for a premium, the buyer has the right, but not the obligation, to enter into a specified swap with the issuer on a specified future date.
Commentaries designed to track recent market events and product performance. Usually provided on a monthly, quarterly or annual basis.
INVESTMENT GRADE BOND
A relatively safe bond with a credit rating of BBB or above from an independent rating service such as Standard and Poor’s.
INVESTMENT GRADE CORPORATE BONDS
Bonds issued by companies with high credit ratings.
The company, government or other entity issuing a bond.
KIID (KEY INVESTOR INFORMATION DOCUMENT)
A document, required by law, to help investors understand the nature and the risks of investing in a fund.
Using borrowed funds, or debt, in an effort to increase the returns to equity. The reversal of the leveraging process is known as deleveraging.
LIBID (LONDON INTERBANK BID RATE)
The average interest rate at which major London banks borrow Eurocurrency deposits from other banks. LIBID is calculated through a survey of London banks to determine the interest rate at which they are willing to borrow large Eurocurrency deposits.
LIBOR (LONDON INTERBANK OFFERED RATE)
The London Interbank Offered Rate is an interest rate at which banks can borrow funds from other banks in the London interbank market.
LIPPER TOTAL RETURN RANKINGS
Lipper Analytical Services, Inc. is an independent publisher of mutual fund rankings, records rankings for these and other Goldman Sachs Funds for one-year, three-year, five-year, and ten-year total returns. Lipper compares mutual funds within a universe of funds with similar investment objectives, including dividend reinvestment. Lipper rankings are based on total return at net asset value and do not reflect sales charges. Lipper rankings do not imply that the fund had a high total return.
An asset’s ability to be easily converted through an act of buying or selling without causing a significant movement in the price and with minimum loss of value.
Risk of loss stemming from being unable to unwind a position due to the unavailability of a willing counterparty to offset the trade.
LOCAL CORPORATE DEBT
Debt denominated in the local currency of the issuing company, rather than an external currency such as the US dollar or euro.
LOCAL SOVEREIGN DEBT
Emerging market government debt denominated in the currency of the issuing country rather than an external currency such as the US dollar or euro.
A bond whose revenue stream is generated over a long period of time, 20 years for example.
Physically owning the stock. The goal is to profit if the stock price rises.
A view of around 18 months or more.
Is the amount of collateral required to enter into a derivative transaction, usually in the context of futures and primebrokerage accounts.
A measurement of the size of a business enterprise (corporation) equal to the share price times the number of shares outstanding of a public company – the total market value of the equity in a publicly traded entity.
A financial term which measures the proportion of money invested in the same industry sector. For example, a stock portfolio with a total worth of £500,000, with £100,000 in semiconductor industry stocks, would have a 20% exposure in "chip" stocks.
MASTER LIMITED PARTNERSHIP (MLP)
A type of limited partnership company that is publicly traded on a securities exchange.
The date on which the issuer will repay the par value of the bond. This can range from a short period measured in months to the very long term, over 40 years.
A view over the next three to 18 months.
Money market funds trade in short-term debt and monetary instruments. Money markets are viewed as lower risk (but not risk free) investments that historically have provided a better return to investors than cash.
Performance metrics reflecting the immediate 30-day period of the Fund.
MORNINGSTAR RISK-ADJUSTED RATINGS
The Overall Rating is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating Metrics. Morningstar, Inc. is an independent publisher of mutual fund research and ratings. Ratings reflect a fund’s risk-adjusted 3-, 5, and 10-year total returns, including any sales charge. A Fund is rated against all other funds in its category. 5 stars are assigned to the top 10%; 4 stars to the next 22.5%; 3 stars to the next 35%; 2 stars to the next 22.5%; and 1 star to the bottom 10%. Morningstar only rates funds with at least a 3-year history.
A security based on an underlying pool of mortgages.
A debt security issued by a state, municipality or county to finance its capital expenditure.
NAV % CHANGE
The difference between today's closing net asset value (NAV) and the previous day closing net asset value (NAV)
NAV (NET ASSET VALUE)
The market value of one share of the Fund. This amount is derived by dividing the total value of all the securities in the fund’s portfolio, less any liabilities, by the number of fund shares outstanding.
Strategy used by a portfolio manager with a high conviction outlook that interest rates will rise. By adjusting the holdings in the portfolio, a manager can amend the average duration to make it negative. A portfolio with a ‘negative duration’ may increase in value when interest rates rise.
NET DEBT FREE
When a company’s cash position exceeds the amount of debt it has that requires cash interest payments, that company is said to be “net debt free.”
NON-INVESTMENT GRADE BOND
Also known as a junk bond or a high yield bond, it will have a credit rating below BBB/Baa and is judged less likely to pay interest or repay capital reliably. It usually pays a high interest rate to compensate and attract investors.
Bonds issued by the US Treasury with a life between one year and 10 years.
The nominal or face amount that is used to calculate payments made on swaps and other derivatives instruments. This amount generally does not change hands and is thus referred to as notional.
NUMBER OF HOLDINGS
Composition of a fund’s portfolio at the specified period.
Fixed operating costs divided by total (fixed plus variable) operating costs. A company with strong operating leverage has fixed costs which do not increase as more business is done. This generally means that increases in revenue will increase net income.
Risk of loss stemming from potential operational flaws (e.g. poor due diligence, system malfunctions) on the part of a counterparty in a derivatives contract.
OPTION-ADJUSTED DURATION (YRS)
A measure of the sensitivity of a bond's price to interest-rate changes, assuming that the expected cash flows of the bond may change with interest rates.
A privilege, sold by one party to another, that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed-upon price within a certain period or on a specific date.
OVER-THE-COUNTER (OTC) DERIVATIVES CONTRACTS
Privately negotiated derivatives contracts that are not transacted in organised exchanges.
The amount paid to the bond holder at maturity, based on the value of the bond at the issue date. Also known as face value.
Index or passive managers construct a portfolio so the returns and the stocks held mirror as closely as possible those of a chosen index, such as the FTSE 100 or MSCI World Index.
Stocks with properties of both and equity and debt instruments and with priority over common stock in the payment of dividends.
PRICE/BOOK P/B RATIO
Current price divided by the book value per share, which is the value of the assets on the corporation’s balance sheet.
PRICE/EARNINGS (P/E) RATIO
A gauge of how expensive a stock is. To calculate the P/E ratio, divide the stock’s share price by the after-tax earnings per share. For example, the P/E ratio of company A with a share price of £10 and earnings per share of £2 is five. The higher the P/E ratio, the more the market is willing to pay for each pound of annual earnings.
The amount of money invested in the bond. The principal does not equate to the face value of the bond as they are bought and sold on the secondary market at prevailing prices.
The traditional, long-form prospectus with which most mutual fund investors are familiar. The prospectus contains the important information included in the KIID, and also includes more detailed information, including information relating to the fund’s investment adviser and portfolio managers and details on how to purchase and redeem shares.
A supplementary document to the Prospectus, the purpose of which is to describe in more detail one or more Portfolio.
PURCHASING POWER PARITY
An economic theory that adjusts the exchange rate between countries to make it equivalent to each currency’s purchasing power. This adjustment means that an identical good in two different countries will be given the same price when expressed in the same currency.
QUANTITATIVE EQUITY STRATEGY
Quantitative strategies seek to exploit current investment opportunities; aiming to produce consistent, uncorrelated returns utilising top-down and bottom-up approaches, which employ fundamental characteristics and quantitative tools. Strong quantitative managers do not rely solely on historical analysis but, rather, blend data with sound economic and behavioural analysis.
QUARTERLY DIVIDEND PER SHARE
An amount paid quarterly by the Fund to its shareholders which encompasses net income or gains earned by the Fund during the period.
QUARTERLY FACT CARD
A fact sheet that provides quarterly updates on Fund performance.
JP Morgan defines quasi-sovereign as debt issued or guaranteed by an entity that is 100% owned or controlled by a government. However, some investors also include debt that is substantially guaranteed debt.
R SQUARED - 3 YEAR
R-squared of a manager vs. a benchmark is a correlation measure of how much a manager’s return can be explained by the benchmark. More specifically, R-squared is a measure of how well the variance of the benchmark explains the variance of the manager. Also known as “correlation-squared.”
Independent assessment of an issuer’s credit worthiness and ability to meet required interest and principal repayments.
REAL ESTATE INVESTMENT TRUST (REIT)
Company that owns income-producing real estate, e.g. office buildings, shopping centres, hotels, etc.
Investors can gain exposure to residential, commercial, and industrial properties and land through strategies investing in public traded securities such as Real Estate Investment Trusts (REITs) or privately issued securities. Similarly, investments in infrastructure-related strategies can provide access to the physical systems of a business or country, including transportation, electric, and telecommunication systems.
RETURN ON EQUITY (ROE)
A measure of how good a firm is at delivering profit and generating earnings growth. ROE is calculated by dividing the year’s fiscal net income by total marketing capitalisation and expressed as a percentage. A high ROE does not automatically equate to a good investment.
A financial product created by combining several types of different assets, splitting them up and bringing them to market.
Bond whose interest and principal payments are backed by the cash flows from a portfolio or pool of other assets.
SEMI ANNUAL FINANCIAL STATEMENT
An audited, FCA-required document that is sent to fund shareholders twice a year. It discloses the financial results for the previous half year and provides information about certain aspects of a fund’s operations.
A designation applied to mutual fund units indicating the way that sales charges, or loads, are levied.
A risk-adjusted measure of return which uses standard deviation to represent risk. Specifically, it is the annualised excess return of the manager over the 3 month Treasury (risk free rate of return) divided by the standard deviation of returns. A larger sharpe ratio implies more return for less risk.
The practice of selling a financial instrument that the seller borrows first (does not own), and then purchasing it later to “cover the short." Short-sellers attempt to profit from an expected decline in the price of a security, such as a stock or a bond, in contrast to the ordinary investment practice, where an investor “goes long” by purchasing a security in the hope the price will rise.
A period of up to three months.
Debt issued or guaranteed by a government. In an emerging market, it is denominated in a major external currency, such as US dollars, or in local currency. The JP Morgan EMBI Global Diversified Index is the oldest of the emerging market debt benchmarks.
The rates of currencies and others assets now.
SPREAD DURATION (YRS)
A measure of the sensitivity of a bond’s price to spread changes.
STANDARD DEVIATION- 3 YEAR
Measures the historical total risk of a portfolio by assessing the probable range within which a portfolio’s return could deviate from its average return over a defined historical period of time.
An equity investment, or ownership securities, that represent ownership in a corporation.
An agreement between two parties to exchange future cash flows according to a prearranged formula.
A "short-hand" abbreviation established for each fund that is used universally when referring to the fund. These symbols can be found in the prospectus.
THE NEXT 11 (N-11)
The N-11 refers to a group of next-generation emerging markets that have the potential to rival the G7, although further down the road than BRIC countries. These countries include Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.
Amount by which collateral calls are reduced; the amount of exposure parties are willing to accept.
TOTAL FUND ASSETS
The market value of securities in a mutual fund portfolio.
TOTAL RETURN SWAP
An agreement between two counterparties to exchange future cash flows for a set period of time. Typically, one counterparty agrees to pay the total rate of return of an index in exchange for receiving a floating interest rate plus a premium. The cash exchanged at each payment date is based on the notional amount agreed upon the beginning of the contract, the performance of the underlying benchmark and the floating rate.
TOTAL RETURNS AT NAV
Represents the change in value of an investment on the purchase of shares of the Fund over a specific period. It is the rate that an investor would have earned or lost on an investment in a Fund (assuming reinvestment of all distributions).
Measures the standard deviation of excess returns from a benchmark, and is used as a measure of risk. A large tracking error implies that there are large swings in the excess return series of a manager from their benchmark.
Bonds issued by the US government.
TREASURY INFLATION-PROTECTED SECURITIES (TIPS)
Treasury bonds whose value rises with inflation.
The market value of the lesser of purchases or sales divided by the average asset value of the account over a given time period.
Allowing a fund manager greater freedom to take positions and hold stocks.
UNDERTAKINGS FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES (UCITS)
set of European Union Directives that aim to allow collective investment schemes to operate freely throughout the EU on the basis of a single authorisation from one member state but also set a series of constraints in how they invest.
US AGENCY MORTGAGE-BACKED SECURITIES (US AGENCIES)
The purchase of mortgage-backed securities issued by US government-sponsored agencies.
US government bonds with a duration of less than one year.
VALUE AT RISK (VAR)
A measure of how the market value of a portfolio can potentially decrease over a certain period of time. The technique estimates the probability of losses based on statistical analysis of historical price trends and volatilities.
This type of volatility swap gives a payout that is linear to variance rather than volatility.
A top up of the cash collateral requirement that may be required due to adverse movements in the value of the futures contract.
The manner in which the price of an investment moves up and down. If prices fluctuate dramatically over a short period of time, a market is said to be highly volatile.
A forward contract where the underlying is the volatility of a specified product. This allows investors to speculate on how volatile a stock will be.
WEIGHTED AVERAGE MARKET CAP
Represents the average value of the companies in the index or portfolio. The Weighted Median Market Cap provides the middle market capitalisation level in the index or portfolio. Companies with a larger market capitalisation have a greater impact on both calculations.
WEIGHTED AVERAGE MATURITY
The weighted-average time to the return of a dollar of principal. It is arrived at by multiplying each portion of principal received by the time at which it is received, and then summing and dividing by the total amount of principal. Thus, if a four-year bond with a face value of £100 and principal payments of £40 the first year, £30 the second year, £20 the third year, and £10 the fourth year, WAM = .4X1 yr + .3 X 2yr. +.2 X 3y r+.1 X 4yr. =2 yr.
WEIGHTED MEDIAN MARKET CAP
The midpoint of market capitalisation (market price multiplied by the number of shares outstanding) of the stocks in a portfolio. Half the stocks in the portfolio will have higher market capitalisations, half will have lower.
Yield is the return that is actually earned on a bond, based on the price paid and the interest payments received. There are two types of bond yields: current yield and yield to maturity.
A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year and 30-year U.S. Treasury debt. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates. The curve is also used to predict changes in economic output and growth.
YIELD CURVE RISK
Risk of loss stemming from shifts in movements in the yield curve.
YIELD TO MATURITY
This is the total return an investor will receive by holding a bond until it matures, including all the interest received from the time of purchase until maturity, plus any gain or loss if the bond was purchased at variance to its par value.