GLOSSARY
60/40 PORTFOLIO
A portfolio composed of 60% Equities / 40% Bonds.
Accommodative monetary policy
Strategy used by a Central Bank to stimulate economic growth by lowering interest rates. It aims to facilitate borrowing and to increase the money supply.
Active investment strategy
A strategy where the portfolio manager makes proactive investments with the goal of outperforming a passive benchmark index.
Active share
Measures the percentage of holdings in a portfolio that are different from the benchmark it tracks.
Active weight
The difference in size of an allocation to a security between a portfolio and benchmark.
Activist investing
Group or individual that buys a large number of public company’s shares in order to try to acquist a number of seats on the company’s board with the aim of making change in the company.
Adjusted funds from operations (AFFO)
Adjusted funds from operations (AFFO) is a financial measure used to estimate the value of a real estate investment trust (REIT).
Agency mortgage backed security (AMBS)
An Agency Mortgage-Backed Security (AMBS) issued by one of three quasi-governmental agencies: Government National Mortgage Association (GNMA or Ginnie Mae), Federal National Mortgage Association (FNMA or Fannie Mae), and Federal Home Loan Mortgage Corporation (Freddie Mac).
Aggregate demand
Total demand for a good/service within a market.
AGTECH
Acronym used for ‘agricultural technology’.
Alerian MLP index TR USD
The Alerian MLP Index TR (AMZX) is the leading gauge of large- and mid-cap energy Master Limited Partnerships (MLPs). The float-adjusted, capitalization-weighted index is calculated on a total-return basis, includes 50 prominent companies and captures approximately 75% of available market capitalization.
All cap
Often referred to when an investment fund invests in a broad universe of equity securities with no market capitalisation restraints.
Alpha
A measure of investment performance relative to a risk-adjusted benchmark performance.
Alternative asset
Assets that are not stocks, bonds and cash such as private equity or real estate.
Alternative credit
Non-bank lending such as direct lending from investment funds or individuals
American Depositary Receipt (ADR)
A certificate issued by a U.S. Bank representing shares in a foreign company that trades on a U.S exchange.
Alternative Investments
A financial asset that does not categorise as a conventional investment such as stocks, bonds etc. Instead they are often complex in nature with a high degree of risk. For example, private equity, venture capital and hedge funds.
Annual percentage rate (APR)
The annual rate that is charged for borrowing, or earned on an investment.
Annual report
A comprehensive report intended to provide information about a company’s activities and financial performance throughout the preceding year.
Annualized return
A rate or return that is recalculated to show it as an annual rate.
Arbitrage
A process of exploiting price differences between two or more assets by simultaneously buying and selling it.
Article 6 fund
Within the Sustainable Finance Disclosure Regulation (“SFDR”), an Article 6 fund, also referred to as “grey fund”, refers to a fund that either considers ESG risks as part of the investment process or that is explicitly declared as non-sustainable.
Article 8 fund
Within the Sustainable Finance Disclosure Regulation (“SFDR”), an Article 8 fund, also referred to as “light green fund”, refers to a fund that promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.
Asset allocation
The process of dividing investments among different kinds of assets, such as stocks, bonds, real estate and cash, to optimize the risk/reward tradeoff based on the investors specific situation and goals.
Asset backed lending
Lending of money where the payback of the loan is guaranteed solely by the assets pledged as collateral for the specific loan.
Asset class
A group of securities with similar characteristics that tend to behave similarly in the marketspace, such as equities, bonds and cash equivalents.
Asset-intensive business
A company that operates in an industry that requires high levels of capital in order to operate, such as airports or mining.
Asset light strategy
A company that has relatively few capital assets compared to its operations.
Assets under management (AUM)
The total market value of all assets a financial institution or fund manages on behalf of its clients.
Asymmetric payoff profile
A set of investment outcomes where the potential for profit is higher than the potential for loss.
Asymmetric risk/reward
A situation where the risk of an investment is proportionality greater or less than the potential gain.
Average selling price
The price at which a certain product or service is typically sold for.
Balance sheet
A document that provides information on the financial position of a company at a particular point in time. It includes what it owns (assets), what it owes (liabilities) and the value of business to equity holders (shareholders’ equity).
Bank of England (BOE)
The central bank of the United Kingdom.
Bank of Japan (BOJ)
The central bank of Japan.
Barriers to entry
Refers to obstacles that potential entrants in a market might experience, such as strong customer loyalty or patents.
Basis point (BPS)
A common unit of measure in finance. One basis point is equal to one hundredth of 1%, e.g. 0.01%.
Bear market
A market environment in which the general prices of securities are falling.
Behavioral ANalysis
A field of finance that utilizes psychological theory to explain market anomalies and irrationalities.
Benchmark
A point of reference against which investment performances can be measured.
Benchmark agnostic
No benchmark was used to construct the portfolio. A benchmark is only used to measure the relative performance of the portfolio over time.
Berkshire Hathaway
A multinational conglomerate with total assets of $621 billion.
Best Execution
The duty of an investment company to fulfil orders in the most advantageous way on behalf of their clients.
Best-in-class
The best-in-class approach for sustainable investing consists of identifying the companies that are ESG leaders within their sector, industry or region.
Beta
A measure of a security’s or portfolio’s sensitivity to movements in the market as a whole. Bull Beta is a measure of the volatility to positive changes in the market. Bear Beta is a measure of the volatility to negative changes in the market.
Bifurcation
Dividing a main body into two smaller separate units. For example, a company splits into two separate companies that can sell or issue shares to shareholders.
Bloomberg
A company that provides business and market news, data and analysis.
Bloomberg Barclays Global aggregate total return index value hedged
An index comprised of global investment grade debt from 24 markets in both developing and emerging regions.
Bloomberg new energy finance (BNEF)
A research organisation focused on aiding energy professionals network and generate ideas within the energy sector.
Blue chip
The name given to companies that are considered to be a reliable investment.
Bond
A security issued by a corporation or public body that pays the holder a fixed (or variable) rate of interest and matures at a set date.
Book building
A process to determine at what price a share should be offered during an initial public offering.
Book value
The value of an asset as per a balance sheet, which is calculated by subtracting its liabilities from its assets.
Bottom-up investing
Focuses on the analysis of individual companies first before looking at market cycles and the economy as a whole.
Break-even
When the expenses and the revenue of a business are equal.
Brexit
British exit. A term used to refer to the decision by the United Kingdom to exit the European Union.
Broker
A individual person or firm that charges commission or a fee for executing buy and sell orders.
Broker-dealer
A company or a person that both buys and sells securities.
Budget deficit
When expenses exceed the level of revenue which indicates the financial wellbeing of a country.
Bull market
A market environment in which the general prices of securities are rising.
Business Cycle
The fluctuation of economic activity around its long-term trend over a period of time.
Business to business (B2B)
When a business makes a transaction with another business.
Buy & Hold
A passive investment strategy that involves buying securities and holding them for a long time period, disregarding short-term movements.
Buy rating
A recommendation from a research analyst to buy a certain security.
Buyout
An investment transaction through which the ownership equity in a company is acquired.
Capital appreciation
An increase in the value of an asset.
Capital deployment
The usage of money by a company to invest.
Capital Expenditure (CAPEX)
The money used by a company to buy, improve or maintain its physical assets.
Capital flow
Money movement for the purpose of investment, trade or business production.
Capital Markets Day (CMD)
An event dedicated to updating investors on important company strategies and developments.
Capital preservation
A strategy that seeks to protect the value of an investment by investing in assets that have a lower than average probability of losing value in various market conditions.
Capitalisation
The provision of capital for a company, or the conversion of income or assets into capital.
Cash conversion
Measures the time it takes a firm to convert its assets (for example inventory and receivables) into cash.
Cash flow
The money generated by a business before it needs to repay debt and/or other obligations.
Cash flow growth
Measure of how the stock’s cash flow per share (CFPS) has grown over the last three to five years.
Catalyst
An event that cause a change or event to happen. Catalyst that effect companies can significantly increase or decrease the price of a security.
Catastrophe re-insurance
Insurance purchased by insurance companies to protect them from large financial losses in the case of catastrophic events, such as hurricanes or a flood.
Central bank
A national bank that provides financial and banking services for a country’s government by implementing the government’s monetary policy and issuing currency.
Certified Public Accountant (CPA)
An accreditation awarded by the American Institute of Certified Public Accountants.
Consumer Price Index (CPI)
This measures that changes in the price level of a weighted average market basket of consumer goods and services purchased by households.
Certified Supply Chain Professional (CSCP)
An accreditation awarded by the Association for Supply Chain Management.
Chartered Financial Analyst (CFA)
A professional designation given by the CFA Institute.
Chicago Fed National Activity Index (CFNAI)
A monthly index designed to gauge overall economic activity and related inflationary pressure
Chief Exectuive Officer (CEO)
The highest ranking person in an organisation who is ultimately responsible for making all managerial decisions.
China A-Shares
Securities of companies based in mainland China that are traded on the Chinese Stock Exchanges (Shanghai and Shenzhen) in local currency (Renminbi).
China B-Shares
Securities of companies based in mainland China that are traded on the Chinese Stock Exchanges (Shanghai and Shenzhen) in foreign currency.
China H-Shares
Shares of companies based in mainland China that are traded on the Hong Kong Stock Exchanges.
Circular Economy
An economic system that aims to eliminate all waste through the continual use of existing resources.
Clean sweep
Describes a trade when a buyer purchases all of the securities that a seller is offering.
Climate change
A change in regional, national or global weather patterns through increased atmospheric carbon dioxide levels.
Climate transition
Plan of action with set timeframes that clearly describes how a company or organisation will adjust or pivot its existing operations, assets and the whole business model towards a trajectory that aligns with the most ambitious and latest climate science recommendations.
Closed-end fund
A fund that issues a fixed number of shares that are not redeemable.
Cognitive Bias
A deviation from rational judgement based on one’s own beliefs.
Coincident Economic Indicator (CEI)
A measurable economic factor used to assess the current overall health of the economy.
Commodity
A raw material that can be bought and sold in the marketplace.
Composite
A composite is an aggregation of one or more portfolios managed by the same Portfolio Manager and Investment Team that follow the same investment objective, philosophy and strategy.
CompounD Annual Growth Rate (CAGR)
The rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each year of the investment’s lifespan.
Compound Interest
The interest that is calculated on both the initial investment and the accumulated interest over the time of the investment.
Compound returns
Rate of return, expressed as a percentage, that represents the cumulative effect that a series of gains or losses has on an original amount of capital over a period of time.
Consensus Earnings
A figure based on the combined estimate of analysts who are covering a particular public company.
Conservative Party
Also known as the ‘Tories’, is a centre-right political party in the United Kingdom.
Constant Currency Growth
Financial performance numbers calculated by eliminating the effects of foreign currency fluctuations.
Consumer Price Index (CPI)
A measure of inflation that calculates the change in price level of a basket of consumer goods and services.
Contrarian
Taking an opposing view, or rejecting, majority opinion.
Controversy score
Scores assigned to firms associated with serious controversies involving the environmental, social or governance impact of their operations, products and services.
Convertible security
A security that can be converted to another security.
Core equity
Core equities are the main holdings in the portfolio.
Core investment style
The investment style encompasses both growth and value style stocks which is representative of the overall market with no style bias.
Corporate governance
The system by which companies are controlled and directed. This system ensures that a brand’s business practices are ethical, transparent, and accountable.
Corporate Social Responsibility (CSR)
Type of business model that aims to be socially accountable.
Correction
A 10% or greater decline in a company’s stock or a market index from its recent highs. Usually to fix the overvaluation of stock, bond or index.
Correlation
A measurement of the degree to which two securities values change in relation to each other. The value will range between -1 and 1. A value of 1 indicates a perfect positive correlation and -1 indicates a perfect negative correlation. A value of 0 means that the variables are completely independent from one another.
Correlation Matrix
A table that shows to what degree a set of variables is correlated.
Cost of capital
The cost of financing a business and is dependent on the amounts of equity and debt used in raising capital.
Credit
An agreement where a borrower, in exchange for receiving something of value agrees to repay the lender at a specified date in future, along with interest.
Credit Crisis
A situation when financing is difficult to obtain.
Credit Default Swap (CDS)
A financial swap agreement where the seller of the CDS agrees to compensate the buyer in the event of a loan default. It is in effect insurance against non-payment and allows the investor to limit the risk of their investment.
Credit facility
A business or corporate finance type of loan. It allows the borrowing business to take out money over an extended period of time rather than reapplying for a loan each time it needs money. In effect, a credit facility lets a company take out an umbrella loan for generating capital over an extended period of time.
Credit rating
An evaluation of the credit risk of a prospective debtor/ company, predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.
Credit spread
The difference in yield of two bonds with similar maturities but of different credit quality.
Cross-sell
Selling a service or product to an existing customer.
CSI300
A capitalization-weighted stock market index designed to replicate the performance of the top 300 stocks traded in the Shanghai and Shenzhen stock exchanges.
CSI100
A capitalization-weighted stock market index designed to replicate the performance of the top 100 stocks traded in the Shanghai and Shenzhen stock exchanges.
Cumulative
Aggregate amount over a period of time.
Cumulative Return
Aggregate return over a period of time.
Current Account Deficit
A country’s current account is a component of the balance of payments. The current account represents all foreign transactions. A deficit represents when imports exceeds the level of exports.
Currency Denominated Bond
A bond issued by a company in a country other than its own which is denominated in the local country’s currency
Currency hedging
Entering into a financial contract in order to protect against large and unexpected changes in currency exchange rates.
Cyber week
A marketing term used to entice consumers to buy ‘online’. Originating from the United States after the Thanksgiving holiday.
Cyclical Industry
A type of industry where profitability is affected by the business cycle.
Cyclical Stock
Stock whose price is affected by macroeconomic and systematic changes in the economy.
Days sales outstanding (DSO)
Measures the average number of days a company needs to receive payment after a sale.
Debt rating
A rating attached to a bond that indicates the quality of the entity seeking to borrow money.
Defensive investment strategy
Strategy whereby investment decisions are made with the aim of minimizing risk.
Deflation
A reduction of the general level of prices in an economy.
Delta
A ratio that compares the change in the price of an asset (an equity or debt instrument that can be converted to cash), to a corresponding change in the price of its derivatives. For example, if a stock option has a delta value of 0.33 and the underlying asset increases in price by $1 per share, its option contract will increase by $0.33 per, ceteris paribus.
Demerger
The process of dividing a company into one or more smaller parts.
Demographic
The structural characteristics of populations.
Demonetization
When a currency loses its legal status for tender.
Depositary
An organization that has the role of safekeeping securities on behalf of companies or persons.
Differentiation
The process of making a product or service stand out from the competition.
Direct lending
Loans made directly from the lender to the borrower.
Discount to nav
When a closed-end fund trades at a lower price than the value of its net assets.
Discounted Cash Flow (DCF)
A valuation method that discounts future cash flow projections so as to arrive at an estimate of the present value of an investment opportunity.
Discounted Free Cash Flow
A valuation method that calculates the value of a company based on the current value of its expected cash flows after payment of all expenses (free cash flow).
Discretionary Portfolio Management
Where the portfolio manager has the authority to make investment decisions without the consent of the portfolio’s owner.
Disruptive Business Model
An new way of providing a service that drastically changes the existing methods.
Distressed Debt
Debt of companies that are experiencing financial difficulty or that have filed for bankruptcy.
Diversification
A technique to reduce risk by investing in a variety of assets.
Divestment
The decision to reduce an investment in assets, it can be due to reasons such as, but not limited to, financial, ethical or political.
Dividend
A share of a company’s profit paid to its shareholders.
Dividend Discount Model (DDM)
A valuation method for the price of a stock that uses projected dividends that are discounted back to their present value.
Dividend Yield
A percentage that shows how much dividends are paid out by a company in any given year relative to the company’s share price.
Dot com Bubble
Also referred to as the Internet Bubble, was a rapid rise in U.S. technology stock equity valuations fuelled by investments in internet-based companies during the bull market in the late 1990s.
Dow Jones Sustainability Index
Launched in 1999, a family of indices that evaluates the sustainability performance of a vast rage of companies that are traded publicly. The index is operated through a strategic partnership between S&P Dow Jones Indices and RobecoSAM of the S&P Dow Jones Indices.
Downgrade
When the rating of a security deteriorates due to analysts’ opinions on it.
Down Percent Period
Number of months performance is below 0 divided by the total number of months in the period.
Downside Capture
A measure of a portfolios correlation to a benchmark when the market is in decline. A ratio of less than 100 indicates that the portfolio has less negative returns than the benchmark during a specific period.
Downstream
Companies that refine oil and gas.
Drawdown
The amount an investment or fund declines from peak-to-trough during a period of time, usually shown as a percentage.
Dry Powder
An informal term for liquid assets available to investors for investment purposes such as strategic acquisitions.
Dual share class structure
A company can issue different types of shares with varying features e.g. dividend payments, specific voting rights where one share class can have more powerful rights than the other.
Due Diligence
The process of reviewing a new investment or company before signing an agreement or conducting a financial transaction.
Duopoly
A situation when two companies dominate a particular market.
Duration
Measures the sensitivity of the price of a fixed-income asset to changes in the interest rate.
Earnings before interest and tax (EBIT)
An indicator of a company’s earnings and shows how much profit a company generates from operations before paying interest rate charges and tax.
Earnings before interest, tax, depreciation and amortization (EBITDA)
Measurement of the operating performance of a company without factoring in effects of financing and accounting decisions.
Earnings Growth
A measure of a company’s rate of growth in net income.
Earnings Momentum
When rising revenues are caused by an increase in sales, large improvements in cost or due to market expansion.
Earnings Per Share (EPS)
An indicator of a company’s profitability and shows the portion of profit allocated to each share of common stock outstanding.
Earnings Revision
When an equity analyst revises a growth or profit projection for a particular company.
E-commerce
Activity of electronically buying or selling products on online services or over the Internet.
Economic Surprise Index
This was created by Citi Bank to track various locales, which shows how economic data are progressing relative to the consensus forecasts of market economists.
EGM
Extraordinary General Meeting – members of an organisation who organise a meeting, those of which include shareholders of a company or employees happening at an irregular time.
Emerging Market
An economy of a developing nation that is engaging with global markets as it grows.
End-Market
The ultimate person or company that will be purchasing or using the product/service.
Endowment
An investment fund created by donations with the purpose of supporting specific goals, such as a University endowment.
Engagement
Engagement is having constructive dialogue with public companies one is invested in on different matters including ESG issues.
Enterprise Value
A company’s total value in regards to the market value of its equity as well as its debt.
Environmental Factors
The CFA institute defines environmental factor as those factors pertaining to the natural world. These include, but are not limited to, the use of, and interaction with, renewable and non-renewable resources (e.g. water, minerals, ecosystems and biodiversity).
EPRA Cost Ratio
European Public Real Estate Association Cost Ratio. A proportionally consolidated measure of the ratio of net overheads and operating expenses against gross rental income (with both amounts excluding ground rents payable).
Equity Basket
A portfolio consisting of underlying equity securities.
Equity Curve
A graph showing the change in value of an investment account over time.
Equity Security
A security that represents ownership in an entity and that may pay income as dividends.
ESG
Environmental, social and governance (ESG) are three main factors used to measure the sustainability and ethical standards of a company or business.
ESG Controversy
An ESG controversy case is usually defined as an instance, or ongoing situation, in which company operations or products allegedly have a negative environmental, social or governance impact.
ESG Integration
ESG integration analyses all material factors in investment analysis and investment decisions, including environmental, social, and governance factors, considers how ESG issues impact a security’s risk and return profile.
ESG Provider
A third-party vendor that evaluates the risks, opportunities and impacts of a firm’s activities, particularly those associated with environmental, social and governance factors.
ESG Risk Ratings
An ESG rating measures a company’s exposure to long-term environmental, social, and governance risks.
Euro Stoxx 50 Index
An index that captures Europe’s leading blue-chip companies. It covers 50 of the largest and most liquid stocks.
European Central Bank
The central bank of the Eurozone, responsible for administering the European Union’s monetary policy.
European Central Bank (ECB)
An entity that formulates the monetary policy of the European Union and helps to maintain price stability within the union.
Euronext
Largest stock exchange in Europe.
European Public Real Estate Association (EPRA)
Non-profit organisation that represents European publicly listed property companies.
Eurozone
A monetary union of 19 European Union member states, who share the Euro as their common currency.
Event Driven Investment Strategy
A strategy where the portfolio manager attempts to capture value by exploiting price inefficiencies that occur during specific corporate events such as restructures, bankruptcy or mergers and acquisitions.
Exchange Listed
When a financial instrument is available for trading on an exchange, such as the London Stock Exchange.
Exchange Traded Fund (ETF)
A fund that tracks the return of an asset (such equity indices, commodities, stocks) and is traded on a stock exchange.
Ex-date
The date an investor must buy a share by so as to receive a dividend.
Exit
The process of realizing a return on an investment, typically through a trade sale, an Initial Public Offering or a secondary sale.
Exit multiples
Financial tool used for valuations.
Exponential growth
The rate of change of the value of time porportional to the current value.
Externality
Externality is an outcome, positive or negative, of a given economic affair that has an effect on a third party that is not directly related to that affair.
Extrapolation
Estimating or concluding something by assuming that existing trend will continue in the future.
Factor Analysis
An analysis used to determine what drives a funds/assets performance as a function of one or more attributes, such as growth and valuation.
Fallen Angel
A company whose value has fallen significantly and is no longer viewed positively by investors.
FAANG
FAANG is an acronym referring to the stocks of the five most popular and best-performing American technology companies: Facebook, Amazon, Apple, Netflix, and Alphabet (formerly know as Google).
FED
The Federal Reserve System is the Central Bank of the United States.
Federal Open Market Committee
A committee within the Federal Reserve System that under United States Law is charged with the oversight of the nation’s open market operations.
Federal Reserve
The central bank of the United States of America.
Fiat Money
Currency that is not backed by the value of a physical commodity.
Fiduciary Duty
Legal responsibility to act in the best interest of another party rather than serving their own interest.
Financial Guidance
A company’s official forecast of its estimated future earnings.
Financial Modeling
A model built as an abstract representation of the real world financial situation.
Financial Year (FY)
The financial period of the company used for accounting purposes or taxing.
Fiscal Policy
A government policy that makes use of government spending and taxation to influence an economy.
Fixed Income Security
A security that pays the investor regular or periodic income at a rate that is known by the investor in advance.
Fixed-Coupon
A type of bond that pays interest at a fixed rate rather than a floating rate.
Focus List
A list of preferred securities for investment.
Foreign direct investment (FDI)
Investments made by a firm or individual into a company located in another country.
Foreign Exchange (FX)
The trading of one currency for another, commonly abbreviated by FX.
Forward
A contract between two parties to buy or sell an asset at a specific time in the future for a price agreed upon today.
Forward Estimate
Estimates for the next three years’ revenue, expenses and financial position.
Franchise
A type of license that allows a person or entity to use the trademark, processes and proprietary knowledge of another business.
Free Cash Flow (FCF)
A measure of the cash that a firm produces after the cost of expenditures to maintain or expand its asset base.
Free Cash Flow Yield
Compares the free cash flow of a company to its market capitalization in percentage terms. A yield of 1% means the company produces 1% of its market capitalization value in free cash flow in a given time period.
Free float
The proportion of shares of a publicly traded company that are available to be traded on the stock market.
FTSE 100 Index
An index representing the 100 highest market capitalisation companies traded on the London Stock Exchange.
FTSE 250 Index
An index representing the 250 highest market capitalisation companies traded on the London Stock Exchange
FTSE All-share Index
The FTSE All-Share Index, originally known as the FTSE Actuaries All Share Index, is a capitalisation-weighted index, comprising around 600 of more than 2,000 companies traded on the London Stock Exchange.
FTSEuro First 300
An index that comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index.
FTSE Small Cap Index
An index representing small capitalization companies traded on the London Stock Exchange.
Fund
A structure where money is pooled from various investors to collectively invest while each investor keeps ownership of his or her capital.
Fundamental Analysis
The evaluation of a company by investigating its intrinsic value, where intrinsic value is measured without reference to the security’s market value.
G7
A group of some of the largest nations (by economic measure) in the world that meet annually to discuss issues such as global economic governance, international security and energy policy. It includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Gearing
The level of a company’s debt to equity in its capital structure.
GEM
Acronym for Global Emerging Markets.
Generally Accepted Accounting Principles (United States)
A US regulatory body which sets accounting standards fpr companies to follow when compiling financial statements.
Geopolitics
Analyses the relationship of politics and geography, demography, as well as economics, with particular attention to foreign policies of a nation.
GHG Emission
Greenhouse gases (GHG) are gases that trap heat in the atmosphere. The major GHG are carbon dioxide, methane, nitrous oxide, and the fluorinated gases.
GICS
Global Industry Classification Standard. A standard developed to classify equities.
GIPS®
Global Investment Performance Standards. Industry-wide, ethical principles that outline how investment managers should present their investment results to clients and prospective clients.
Global Depositary Receipt (GDR)
Bank certificate for shares in a foreign company issued in multiple countries.
Global Equity Fund
A fund that has the ability to buy shares of a company in any country.
Global Flex-Cap Equity
Funds that invest in global equities across the market capitalization spectrum.
Graph intra-day price
A graph that shows daily price movements.
Goldman Sachs Financial Conditions Index
Macroeconomic indicator for tightening/ easing of financial conditions, this is done through weighting the sum of a short-term bond yield, exchange rate and stock market variable.
Governance Factors
The CFA institute defines governance factors that involve issues tied to countries and/or jurisdictions, or are common practice in an industry; as well as the interest of broader stakeholder groups.
Green Patent Database
These are patents filed that will positively impact the environment and society. Patent data is sourced directly from offices of various patenting authorities, and relevant patents to the environmental themes are identified and mapped.
Gross Asset Value (GAV)
Total market value of a fund’s assets.
Gross Domestic Product (GDP)
The value of all goods and services produced in a given country during a specific time period.
Gross Exposure
The aggregate of the long and short exposure of a portfolio, expressed in percentage terms.
Growth Rates
Percentage change of a specific variable within a specific time period. For investors, growth rates represent the compounded annualized rate of growth of a company’s revenues, earnings, dividends or even macro concepts, such as gross domestic product (GDP) and retail sales.
Gross Return
The rate of return before deducting any fees.
Growth at a Reasonable Price (GARP)
A strategy that combines both value and growth investing principles with the aim to identify undervalued companies with solid sustainable growth potential.
Growth Style
Investment strategy focusing on capital appreciation. Companies sought are those whose earnings are predicted to grow at an above-average rate.
Hang Seng Index
An index of the largest companies listed on the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong.
Hard Currency
An index of the largest companies listed on the Hong Kong stock market and is the main indicator of the overall market performance in Hong Kong.
Headwind
A situation that makes growth more difficult.
Hedge Fund
An alternative investment vehicle that typically utilizes sophisticated investment strategies.
Hedging
An investment strategy where the portfolio manager uses financial instruments to attempt to offset the potential of future losses or lock in gains on existing positions due to future price movements.
HFRI Equity Hedge Index
An index composed of funds that primarily invests in both long and short equity and equity derivative securities.
HFRX Index
Hedge Fund Research HFRX Equity Hedge (“HFRX”) Index. Represents the hedge fund universe.
High Conviction Portfolio
A portfolio that is distinguished by large investments in a limited number of companies.
High yield
A bond with a below investment grade credit rating that usually pays a higher yield than investment grade bonds.
Idiosyncratic risk
Investment risk associated with an individual asset or group of assets.
Inflation
The rate in which the cost of goods and services is rising.
Inflation Hedge
An investment that aims to protect a portfolio against a fall in the value due to changes in inflation.
Inflection Point
An event or point in time that causes a significant change in the progress of a firm, with either positive or negative results.
Information Ratio
A mathematical comparison of portfolio returns against that of its benchmark. It measures the ability and constituency of a portfolio manger to generate excess returns relative to a benchmark.
Initial Public Offering (IPO)
When the stock of a private company is offered to the public for sale for the first time.
Insider Buying
The purchase of shares in a company by someone who is employed by that company.
Institutional Shareholder Services (ISS)
A proxy advisory firm that the investment community uses to advise regarding shareholder votes.
Institute for Supply Management (ISM)
This is a non-profit organization serving supply chain and procurement professionals in the supply management profession.
Internal Rate of Return (IRR)
A measurement of the profitability of an investment.
International Financial Reporting Standards (IFRS)
A regulatory body which sets high quality, understandable, enforceable and globally accepted accounting standards.
International Monetary Fund (IMF)
An international organization consisting of 189 countries working to foster global monetary cooperation, promote sustainable economic growth and international trade, and reduce poverty around the world.
Intrinsic Value
The value of an asset based on fundamental analysis of the business without regard to its current market value.
Inverted Yield Curve
When long-term fixed income securities have a lower yield than short-term fixed income securities.
Investment Committee
A group of people within a firm that oversee and review investment decisions.
Investment Fund
An investment vehicle that allows individuals to reap benefits of collective investing whilst retaining ownership of their investment.
Investment Grade
A credit rating that indicates a fixed income security has a low risk of default.
Investment Trust
A form of investment fund that is publicly listed on the London Stock Exchange and so are traded like shares.
Investment Universe
Securities that share similar characteristics such as industry or size of market capitalization and meet a specific investment criteria.
Investor Sentiment
Refers to the overall attitude of investors towards a particular market or asset.
iShare Core S&P 500 ETF
Seeks to track the results of a large cap US equities index.
ISIN
International Securities Identification Number. A type of security identifier.
ISM Manufacturing Purchasing Managers Index
An index based on surveys of manufacturing firms that monitors levels of employment and inventories, amongst others.
J-Curve
Typical return profile of a private equity investment where there are negative returns in the early years followed by investment gains.
Junk Bonds
Bonds that carry a higher risk of default then most bonds which are issued by corporations and governments.
Labour Party
A centre-left political party in the United Kingdom.
Lagging Indicator
An indicator that happens after an event and/or follows trends.
Large Cap
A company with market capitalization of typically more than $10 billion.
Leading Economic Indicator (LEI)
A measurable economic factor used to predict future economic trends; such as the unemployment rate or currency strength.
Leverage
The amount of debt that is utilized to increase the potential return on an investment.
Libor USD 3m
The London Inter-bank Offered Rate is a benchmark rate used by banks to charge each other for short term loans. The USD 3m is denominated in US Dollars for a maturity of 3 months.
Limited Partnership (LP)
A legal company structure in which one or more of the partners are only liable for the amount of money that the partner has invested.
Line of Best Fit
A line drawn through the center of a scatter plot that best represents the aggregate data. It can be used to determine whether the variables are correlated.
Linear Economy
An economic system that was built on a ‘take-make-waste’ ideology. Resources are taken, used for products and disposed of in landfill.
Lion Share
A major part of something.
Liquidation Value
The amount an asset would be worth if it had to be quickly sold in the market.
Liquidity
The degree to which an asset can purchased or sold in the market without affecting the asset’s price.
Listed Investment trust
A publicly listed company that is designed to generate profits for its shareholders by investing in financial assets.
Like for like growth
A measurement of growth, adapted for a divested business, often use as an indicator for performance
Loan-to-Value (LTV)
A ratio used to show the size of a loan against the value of the asset that secures the loan.
Lock-Up Period
A specific amount of time during which investors may not buy or sell a specific security.
Log Scale
A scale of measurement that uses the logarithm of a quantity instead of the quantity itself. A log scale can aid the representation of data that may have been skewed towards larger values or to show percentage changes on a graph.
Long Positions
The buying of securities that are anticipated to increase in price.
Low Carbon Economy
An Economy based on sustainable actions and energy sources that produce low levels of GHG emissions and support the long-term viability of the earth’s economic systems.
L-shares
Chinese companies listed on the London Stock exchange.
Macro Analysis
The analysis of economy wide factors, such as employment, inflation or monetary and fiscal policies.
Macro Hedge Funds
The fundamental thesis for these funds is the analysis of the impact of macroeconomic variables on security prices.
Management Fee
A fee charged by the investment manager for managing a fund regardless of performance. It is usually a percentage of assets under management.
Market Capitalization
The market value of the outstanding shares of a publicly traded company.
Market Cycle
A trend or pattern that emerges during different markets or business environments.
Market Inefficiency
A situation when the market prices of securities seem to be inaccurate.
Market Neutral Strategy
An investment strategy that aims to avoid systemic risk whilst profiting from both higher and lower prices in markets.
Market Peak
The highest point in a business cycle.
Market Rally
A period of sustained increases in the prices of stocks, bonds or indices.
Market Share
The proportion of the market controlled by a company.
Mark to Market
Mark to Market (MTM) is a method of measuring the fair value of accounts that can fluctuate over time, such as assets and liabilities. Mark to market aims to provide a realistic appraisal of an institution’s or company’s current financial situation based on current market conditions.
Master Limited Partnership (MLP)
A limited partnership that is publicly traded. Many firms in the oil and gas sector will issue an MLP instead of issuing stock.
Materiality
Materiality estimates the relative financial importance of a factor among a company’s ESG considerations.
Mega Cap
A company with a market capitalization of larger than $300 billion.
Mergers & Acquisitions (M&A)
The practice of consolidating companies where mergers combine companies and acquisitions occur when one firm buys another.
Micro Cap
A company with a market capitalization typically ranging between $50 million and $300 million.
Mid Cap
A company with market capitalization typically ranging between $2 billion to $10 billion.
Midstream
Companies that link the upstream and downstream entities of the gas and industry sector in the form of transportation, storage and marketing.
Moat
A business’ ability to maintain competitive advantages over its competitors in order to protect its profits and market share.
Mock portfolio
A simulation of a portfolio.
Momentum
When rising asset prices continue to rise, and falling asset price continue to fall.
Momentum Investing
An investment strategy that aims to capitalize on continuing rising, or falling, asset prices in the market.
Monetary Policy
A policy set by a Central Bank or a regulatory committee that alters an economy’s money supply in an attempt to affect, for example, inflation and liquidity.
Monetary Stimulus
When monetary or fiscal policy is utilized to stimulate the economy through an increase in the money supply
Monetary Tightening
A monetary policy undertaken to curb spending in an economy through, for example, increasing interest rates.
Money markets
Low-risk and highly liquid debt instruments that have a maturity of less than a year.
Monopoly
A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute.
Mortgage Back Securities (MBS)
An investment similar to a bond that is made up of a bundle of home loans bought from the banks that issued them.
MOVE index
The index calculates future volatility of the U.S. Treasury yields which is implied by current prices of option on Treasuries with various maturities.
MSCI All China Small Cap
The MSCI All China Small Cap Index captures small cap representation across all China securities listed in China and Hong Kong as well as in the US and Singapore. The index includes: A shares, H shares, B shares, Red chips, and P chips along with China securities (including ADRs) that are listed on the NYSE Euronext (New York), the NASDAQ, the New York AMEX and the Singapore exchanges.
MSCI All Country Asia ex Japan Index
Captures large and mid cap representation across 2 of 3 Developed Markets (Hong Kong and Singapore) countries (excluding Japan) and 9 Emerging Markets (China, India, Indonesia, Korea, Malaysia, Pakistan, the Philippines, Taiwan and Thailand) countries in Asia. With 1,181 constituents, the index covers approximately 85% of the free float adjusted market capitalization in each country.
MSCI All Country World Index
A market cap weighted benchmark index that captures large and mid caps across 23 Developed Markets and 26 Emerging Markets countries (Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK, the US, Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, Qatar, Soudi Arabia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates).
MSCI China A NR (USD)
An index that captures large and mid cap representation across Chinese securities listed on the Shanghai and Shenzhen exchanges.
MSCI EAFE Index
Captures the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada.
MSCI Emerging Markets Growth Index
A market cap weighted benchmark index that represents large and mid caps with growth characteristics across 26 emerging markets (Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates).
MSCI Emerging Markets Index
A market cap weighted benchmark index that represents large and mid caps across 26 emerging markets (Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, Qatar, Soudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates).
MSCI Emerging Markets Value Index
Captures large and mid cap securities exhibiting overall value style characteristics across 26 Emerging Markets countries (Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russia, Qatar, Soudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates). 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.
MSCI Emering Markets Latin America Index
Captures large and mid cap representation across 6 Emerging Markets (Argentina, Brazil, Chile, Colombia, Mexico, and Peru). With 107 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
MSCI Europe Index
A market cap weighted benchmark index that represents the performance of large and mid-cap equities across 15 developed countries (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK).
MSCI Pan-Euro Index (MSPE)
A subset of the broader MSCI Europe Index, capturing large cap representation across 15 developed markets in Europe.
MSCI World ex USA Index
Captures the performance of large and mid-cap securities across 22 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S.
MSCI World Growth Index
Captures large and mid cap securities exhibiting overall growth style characteristics across 23 Developed Markets countries (Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US.). 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.
MSCI World Index
A market cap weighted benchmark index that represents large and mid caps across 23 Developed Markets countries (Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US.).
MSCI World Value Index
Captures large and mid cap securities exhibiting overall value style characteristics across 23 Developed Markets countries (Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US). 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.
M-Squared (M2)
A measure of risk-adjusted returns of a investment portfolio.
Multi-Asset
A combination of asset classes used for investment.
Mutual Fund
An investment vehicle made up of a collective pool of money which is then invested into financial instruments.
NASDAQ US Benchmark Index
A market cap weighted benchmark index created to track the performance of US securities.
NASDAQ Biotech Index (NBI)
The NASDAQ Biotechnology Index contains securities of NASDAQ-listed companies classified according to the Industry Classification Benchmark as either Biotechnology or Pharmaceuticals which also meet other eligibility criteria.
NASDAQ Nordic
A common name for the subsidiaries of Nasdaq, Inc. that provide financial services and operate marketplaces for securities in the Nordic, Baltic, and Caucasian regions of Europe.
Nasdaq Composite Index
A market cap weighted index of over 3,300 common equities listed on the Nasdaq stock exchange.
Net Asset Value (NAV)
The value per share at any one moment in time for a fund.
Net Cash
Net Cash shows a company’s overall financial situation by subtracting its interest-bearing debt (short and long-term) including any pension liabilities from its cash.
Net Debt
A metric that shows a company’ s total debt less its available liquid assets.
Net Exposure
The difference between the long and short exposure of a portfolio, expressed in percentage terms.
Net Operating Loss (NOL)
A loss taken when a company’s taxable income is less than its allowable tax deductions.
Net Present Value
The difference between the current value of future cash flows from an investment and the amount of the investment.
Net Return
The return to an investor after deducting all fees, expenses and taxes from the gross return generated by an investment.
Net Zero
Net zero concept refers to the difference between the amount of greenhouse gas generated and the amount removed from the atmosphere. Net zero is reached when the amount generated is lower than the amount withdrawn.
New Issue
A security that is being sold to the market for the first time.
No-Load Fund
A fund in which shares can be bought and redeemed without additional costs.
Nominal Interest Rate
Refers to the interest rate before taking inflation into account.
Non-Performing Loan
A sum of borrowed money upon which the debtor is either in default or close to default and may have not made any scheduled payments for 90 to 180 days depending on the loan type.
Norm-Based Screening
This is the process of screening investments versus minimum standards of business practices as per internationally recognised norms.
Norms-Based Exclusions
Norms-based exclusions consist of excluding companies that were flagged because of violations of international conventions on social or environmental issues.
NYSE FANG+ Index
FANG (Facebook, Amazon, Netflix and Alphabet) is an acronym for high-growth technology stocks. NYSE FANG+ is a new index providing exposure to a select group of highly-traded growth stocks of next generation technology and tech-enabled companies. The futures contract on the index is designed to offer the ability to gain or reduce exposure to this key group of growth stocks in a capital efficient manner.
N-shares
Chinese companies listed on the NYSE, NASDAQ or NYSE MKT.
OECD Guidelines for Multinational Enterprises
These guidelines are government-backed recommendations on responsible business conduct that encourage the positive contributions that multinational enterprises can make to progress on ESG issues.
Off-Benchmark Security
A security that is not held in the benchmark.
Offshore Structure
A structure where money is kept in a jurisdiction that is different from the investors country of residence.
OPEC
An intergovernmental organization that looks to coordinate and unify the policies of its 14 member countries to ensure stabilization of oil markets.
Open-ended Fund
A collective investment scheme that is able to issue or redeem shares at any point in time.
Operating Cash Flow (OPCF)
A measure of the cash that is generated by a company’s normal business operations.
Operating Leverage
Shows the percentage of a company’s fixed costs compared to total costs. It is used to show the sensitivity of earnings to changes in operating expenses.
Operating Margin
A measure of profitability that shows how much of each dollar of revenue is left over after variable costs are covered.
Operating Profit
The profit earned by a company from its core operations.
Opportunity cost
The cost of passing up the next best choice when making a decision.
Organic Revenue Growth
Growth in a company’s sales that did not occur because of an acquisition of another company.
Organisation for Economic Co-operation and Development (OECD)
An intergovernmental organisation that promotes policies that aim to improve the economic and social well-being of people across the world.
Overlay Strategy
Investment strategies used to complement the primary investment objective such as currency and risk hedging.
Overweight
An excess amount of a certain stock/sector/country relative to the benchmark or market.
Overweight to Benchmark
An excess amount of a certain stock/sector/country relative to the benchmark or market.
Passive Investment Strategy
An investment strategy that aims to maximize returns over the long run by keeping the amount of buying and selling to a minimum.
Payback period
The time it takes for an investor to recover his initial investment.
Payment Protection Insurance (PPI)
A form of insurance that ensures repayment of loans.
P-chips
A term used to describe companies incorporated outside China but which are listed on the Hong Kong stock Exchange, have operations in mainland China and are private owned.
Peer Group
A group of securities, companies or funds with similar investment criteria.
Penny Stock
Shares of small firms that trade at low prices.
Performance Attribution
An analysis used to explain a portfolio’s performance by looking at the performance of each of its investments.
Performance Fee
An incentive fee that may be charged by an investment manager based on the return of the fund over a given period of time.
Pooled Account
An account where multiple investors’ assets are aggregated to allow all the assets to be managed as a single unit.
Portfolio Construction
A break down of a portfolio by its individual parts, such as sector and security exposures and their weights.
Portfolio Optimization
The process of allocating weights to assets in a portfolio in the most desirable way.
Portfolio Turnover
Measures how many securities were purchased or sold in a portfolio over a given period of time.
Portfolio Weight
The percentage amount of a holding in a portfolio.
Preference Share (Preferred Stock)
A share of a company which entitles the holder to a fixed dividend, whose payment takes priority over that of ordinary share dividends. Holders of preferred stock may not have voting privileges.
Premium to NAV
When a closed-end fund trades at a higher price than the fund’s NAV.
Premiumization
The act of making a product appeal to potential buyers by stressing the product’s superior quality.
Pre-tax profit
Profits gained before tax deductions.
Price to Earnings (P/E) ratio
Values a firm by measuring the firm’s current share price relative to the firms earnings per share.
Price to Free Cash Flow (P/FCF)
Ratio used to value a company’s market price as per its free cash flow value. This is done by dividing the company’s share price (P) by its free cash flow (FCF) per share.
Price to prospective earnings
A ratio that provides an indication of a firm’s value calculated by measuring the firm’s prospective share price relative to the firms earnings per share.
Price/Book Ratio
A ratio that compares the share price of a firm to the book value of its equity, which in turn is the value of the assets of that firm.
Price/Earnings to Growth (PEG) Ratio
Values a firm by looking at the price of a stock, its price to earnings to price and the expected growth of the company. A higher PEG ratio will represent a company that has a higher growth rate.
Pricing Power
Refers to the effect that the change of the price of a product has on the demand for that product.
Primary Issue
The first issuance of stock to the public from a private company.
Primary Market
The market in which new, as opposed to existing, securities are issued.
Principle Adverse Impacts (PAIs)
Sustainability indicators with the goal of showing financial market participants how investment may adversely impact sustainability factors.
Private Equity / Private Debt
Investments made in companies that are not publicly traded.
Private funding
These are essentially, non-bank lending sources who are willing to lend money.
Probability Distribution
The mathematical function that gives the probabilities of occurrence of different possible outcomes.
Profit and Loss (P&L)
A financial statement commonly known as the income statement, which summarises the revenues, expenses and costs incurred over a set time period.
Profit Before Tax (PBT)
Profit before tax is a measure that looks at a company’s profits before the company has to pay corporate income tax. It essentially is all of a company’s profits without the consideration of any taxes.
Profit margin
A profitability ratio calculated as net income divided by revenue.
Profit Taking
The act of selling a security in order to realise the profit after an increase in price.
Profit Warning
Issued by a publicly listed company warning the stock market that profits will be lower than anticipated.
Proprietary Research
Research produced and owned by the company using it for investment decisions.
Prospectus
A legal document that provides details about a fund.
Proxy Voting
The process of delegating the voting to a representative to enable to vote in the voting right holder’s absence.
Purchasing Managers Index (PMI)
An indicator of economic health in the manufacturing sector.
Purchasing Power Parity
A theory whereby foreign exchange rates are accurately priced when the amount paid for a good in one country is identical to what the good would cost in a different currency, accounting for the exchange rate.
Pure Play
A company that aims to become a market leader or get a large share of a market by focusing only on one particular product or service.
Pure play Business
A company that only focuses on one specific line of business.
Put Option
A contract that gives the buyer of the option the right to sell a specified asset in the future for a price agreed upon today.
Qualitative Analysis
Analysis based on unquantifiable information such as strength of research and development, or management expertise.
Quantitative Analysis
Analysis based on quantifiable information through, for example, calculations and statistical modelling.
Quantitative Easing (QE)
A monetary policy used by central banks with the aim of increasing the money supply.
Quantitative Tightening (QT)
A monetary policy used by central banks with the aim of decreasing the money supply.
Rate Hike
The decision by a Central Bank or regulatory committee to increase the interest rate.
Rating
Assessment guideline/ tool given to stocks/bonds by a rating agency.
Real Asset
Assets in physical form that are valuable because of their substance and properties.
Real Estate
Property in the form of buildings, as well as land, air rights and natural resources.
Real Estate Investment Trust (REIT)
A company or fund that owns and operates income-producing real estate.
Real interest rate
Interest rate after allowing for inflation.
Real Rate of Return
Expressed in percentage terms, it shows the annual return adjusted for price changes due to, for example, inflation.
Real Return
Shows return adjusted for price changes due to, for example, inflation.
Rebalancing
The process of reweighting assets in a portfolio.
Recession
A period of economic decline.
Record Date
The date an investor must be on a company’s records to receive a declared dividend.
Red Chips
A term used to describe companies incorporated outside China but which are listed on the Hong Kong stock Exchange and directly or indirectly owned by the Chinese Government.
Reflation Trade
Fiscal or monetary action taken by central governments to expand a country’s output. These can include lowering interest rates and changing the money supply.
Renewables
Sources of alternative energy that are not depleted by use, such as wind and sunlight.
Research and Development (R&D)
The work directed at innovation and improvements to an organisations goods/services or processes.
Reserve requirements
Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers.
Responsible Investment
Consists of considering environmental, social and governance factors when valuing companies and making investment decisions.
Return on Investment (ROI)
An indicator to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
Return on Equity (ROE)
An indicator of a company’s profitability and shows the amount of net income as a percentage of shareholders equity.
Return on Invested Capital (ROIC)
An indicator of a company’s profitability and shows the return an investment generates for an investor who has provided capital.
Revenue
Income that a business generates from its business activities.
Revenue Growth
Increase in a company’s sales from one period to the next.
Risk-adjusted return
A risk measure used to show how much risk is taken to produce the return, usually shown as a number or rating.
Risk Appetite
The level of risk an organization or individual is willing to take on in order to achieve their objectives.
Risk Management
A process to identify and analyze risks with the aim of developing procedures to avoid them.
Risk-free rate
The rate of return on an investment with zero risk. Typically the US Treasury yield is used to represent this rate.
Risk-On Sentiment
A period during which investors are more likely to invest in higher risk products.
Rolling Period
A rolling year (12 month period) is a period of 12 consecutive months where a new 12-month period begins on the first day of each calendar month.
Rollover
The reinvestment of cash received from a security that has matured into a new issue of the same security.
Royalty
A payment made to the legal owner of a patent or copyrighted work for the use of the work.
RQFII Programme
A policy initiative of the Mainland authorities which allows RQFII license holders to channel RMB funds raised in Hong Kong, into the onshore Mainland securities markets.
R-Squared
Measures the correlation of the performance of a portfolio with that of a benchmark to show how much of the portfolio’s performance can be explained by that benchmark. A value of 0 means zero correlation, a value of 100 means perfect correlation.
Russell 1000 Growth Index
The Russell 1000 Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Index is represented by the 1,000 largest U.S. companies in the equity market.
Russell 1000 Index
An index representing the 1,000 largest U.S. companies in the equity market.
Russell 1000 Value Index
The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower expected growth rates.
Russell 2000 Growth Index
The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is represented by the 2,000 smallest companies in the Russell 3000 index.
Russell 2000 Index
An index representing the 2,000 small cap companies in the Russell 3000 index.
Russell 2000 Value Index
The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower expected growth rates.
Russell 3000 Index
An index representing the 3,000 largest U.S. companies in the U.S. equity market, which represents around 98% of all U.S. equity securities.
Russell 3000 Value Index
The Russell 3000 Value Index measures the performance of those Russell 3000 companies with lower price-to-book ratios and lower expected growth rates.
Russell Microcap Growth Index
The Russell Microcap Growth Index measures the performance of those Russell Microcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell Microcap Index is represented by the smallest 1,000 securities in the small cap Russell 2000 Index plus the next 1,000 securities.
Russell Microcap Index
An index representing the 1,000 smallest U.S. companies in the equity market with a weighted average market capitalization of $535 million.
S&P500 Index
Standard & Poor’s 500. An American stock market index that includes the 500 largest companies by market capitalization.
Same-Store-Sales (SSS)
Compares generated revenue over a specific period to the same period in the past.
Scale
A series of marks in a line with regular spaces between them used for measuring.
Scarce Asset
An asset that has limited supply but may have limitless demand.
Scenario Analysis
An analysis that estimates the expected future value of a portfolio or a security based on the assumption that specific changes in key factors take place.
S-Chips
Chinese companies listed on the Singapore exchange.
Science-Based Targets
Carbon emission target is defined as science-based target if it is aligned with the pace of reductions required to keep global temperature increase below 2°C above pre-industrial temperatures. Science-based targets deliver an indubitable path for firms to reduce greenhouse gas (GHG) emissions, which helps in preventing the worst influence of climate change.
Scope Emissions: Scope I emission
This is direct greenhouse emissions that occur from sources controlled or owned by an organization.
Scope Emissions: Scope II Emission
These are emissions that a company causes indirectly when the energy it purchases and uses are produced.
Scope Emissions: Scope III Emission
Includes all indirect emissions, the outcome of actions from assets not owned or controlled by the reporting company but that the company indirectly affects in its value chain.
Sector Rotation
The shifting investment assets from one sector of the economy to another.
Secondary Issue
The sale of new stock which has already had its initial public offering.
Secondary Market
The market in which securities are bought and sold after they have initially been offered in the primary market.
Secular
Market activities that occur over a long time frame and are not driven by seasonal or cyclical activities.
Securities and Exchange Commission (SEC)
An independent agency of the United States federal government. Its aim is to protect investors by ensuring a fair and orderly financial market.
Segregated account
An account which holds a client’s funds separately from other funds.
Sell-off
A rapid selling of securities such as stocks or bonds. It can occur for different reasons such as in a declining market, spurred by the fear that prices will decline further or due to political events.
Sell-side
A term that refers to investment firms who sell securities and assets to money managers, investors and corporate entities.
Sensitivity Analysis
A technique that shows how different variables can affect an outcome.
Separately managed account (SMA)
A discretionary investment portfolio managed by investment professionals for a specific account owner.
Services Purchasing Managers Index
An index based on surveys of the services sector.
SFDR
Sustainable Finance Disclosure Regulation
Share
A unit of ownership that gives the holder the right to a proportion of the capital of the company.
Share Buyback
When a company purchases its outstanding shares back from investors.
Share Price
The price of a unit of ownership that gives the holder the right to a proportion of the capital of the company.
Shareholder Value Orientation
Focusing on creating value for the investors in a company, usually by increasing the value of the stock.
Sharpe Ratio
A ratio that measures the performance of an investment through risk-adjusted returns.
Shiller P/E
Also known as CAPE Ratio, the Cyclically Adjusted Price to Earnings ratio, aims to smooth for fluctuations in the business cycle by looking at valuations over a 10-year period.
Short Positions
When an investor sells a security that has been borrowed with the expectation that the price of the security will fall over time.
Short-selling
An investment strategy that involves selling securities which are not owned. The securities are borrowed by the seller and returned at a later point in time.
Single issuer
One legal entity that develops, registers and sells a stock.
Small Cap
A company with a relatively small market capitalisation, typically ranging between $300 million and $2 billion.
Social Infrastructure
Assets that are used for social services, such as schools, hospitals and prisons.
Social Factors
The CFA institute defines social Factors as those that affect the lives of humans. The category includes the management of human capital, non-human animals, local communities and clients.
Sortino Ratio
A risk-adjusted return method for an asset or portfolio. It is a modification of the Sharpe Ratio as it only accounts for downside deviation.
Special Purpose Acquisition Company (SPAC)
A special purpose acquisition company, is a “blank check” shell corporation designed to take companies public without going through the traditional IPO process.
Spin-Off
The process of creating an independent firm by selling new shares of an existing firm or division of a firm.
Spot markets
The market for financial instruments that can be bought or sold for immediate delivery.
Spot price
The current market price of an asset that can be bought or sold for immediate delivery.
Spread
Commonly referred to by the gap between the bid and the ask prices of a security or asset.
Standard Deviation
A measure to quantify how varied or dispersed a data point of a sample is to the mean value for the sample.
Stock Screening
A tool used by investors to filter equities based on predetermined criteria.
Stop Loss
A type of trade order that specifies the selling of a security when it reaches a certain price.
STOXX Europe 600
An index tracking 600 publicly-traded companies based in one of 18 EU countries. The index includes small cap, medium cap, and large cap companies. The countries represented in the index are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Holland, Iceland, Ireland, Italy, Luxembourg, Norway, Portugal, Spain, Sweden, Switzerland, and the UK.
Street EPS
An indicator of a company’s profitability and shows the portion of profit allocated to each share of common stock outstanding. The ‘Street’ refers to the general consensus of what Wall Street firms consider to be correct.
Stress testing
An analysis performed to determine how a financial instrument or portfolio will perform under various scenarios.
Subsidiary
A firm that is controlled by another firm which is referred to as the parent company.
Sum-of-Parts Valuation (SOTP)
A method of valuation for a multi-divisional company or conglomerate that determines the firm’s value by aggregating the value of each division.
Support Level
A price level below which the price of a security usually doesn’t fall.
Supranational
An international organization where member states share the decision making for the wider group. Examples include the European Union and the World Trade Organzation.
Sustainability Factors
Within the Sustainable Finance Disclosure Regulation (“SFDR”), Sustainability Factors are defined as; environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
Sustainability Financial Disclosure Regulation (SFDR)
This regulation has been introduced in Europe with the aim of enhancing transparency and disclosure in the market for sustainable investment products, preventing misleading or unsubstantiated claims of sustainability by financial market participants, and promoting greater transparency regarding their sustainability credentials.
Sustainability Investment
Within the Sustainable Finance Disclosure Regulation (“SFDR”), a Sustainable Investment is defined as; an investment in an economic activity which contributes either to an environmental objective or a social objective, does not significantly harm any environmental or social objectives and the investee company follows good governance practices.
Sustainability Risks
Within the Sustainable Finance Disclosure Regulation (“SFDR”), Sustainability Risks are defined as; an environmental, social or governance event or condition which, if it occurs, could cause a material negative impact on the value of an investment.
Sustainalytics
An organisation that rates the sustainability of publicly listed companies based on environmental, social and governance factors.
Swap
A derivative contract where two parties agree to exchange financial instruments at a predetermined date in the future. They generally involve cash flows where one is fixed, and the other is variable.
Systematic Investment plan (SIP)
An investment vehicle where investors make regular payments into a mutual fund, retirement account or trading account.
Systemic risk
Risk of a market or financial system as a whole to collapse, as opposed to a specific industry sector or financial instrument.
Tailwind
A situation that helps growth to move higher.
Tangible Assets
An asset in physical form such as machinery or land.
Tariff
A tax or duty to be paid on exports/imports.
Taxonomy Aligned
The assessment that an eligible activity meets the applicable taxonomy requirements to substantially contributing to at least one of the Taxonomy’s six objectives, does no significant harm to any other objective, and meets the minimum safeguard.
Taxonomy Regulation
The Taxonomy Regulation establishes a reporting and classification system (taxonomy) which provides organisations with a common language to identify if a given economic activity should be considered “environmentally sustainable”.
Term Loan Agreement
A loan that is paid back regularly over a certain time period.
The Natural Language Processing (NLP)
This is the branch of artificial intelligence (AI) concerned with providing computers the ability to understand the text and spoken words in a similar way that human being can. This could enable investors to efficiently access and examine data and increase the scope of analysis to assess environmental, social and governance.
The Paris Agreement – 2015
An agreement within the United Nations Framework Convention on Climate Change (UNFCC) setting internationally recognised targets in order to reduce greenhouse-gas-emissions through the reduction of use of fossil fuel technology.
Thematic Investing
An investment style that tends to make investment decisions based on macro-level trends or themes rather than firm specific fundamentals.
Ticker Symbol
A unique combination of letters and/or numbers that identifies a security or fund that is exchange listed or publicly traded.
TMT
The technology, media and telecom (TMT) sector is an industry grouping that includes the majority of companies focused on new technologies.
Top-Down Investing
Focuses on the overall economy and market cycles first before looking at individual companies and analyzing various components in more detail.
Top-line growth
Measures the gross sales/ revenues of a firm over a specified period.
Total Return
The actual rate of return for an investment that includes all capital gains, dividends and distributions over the investment time period.
Total Return Index
An equity index that measures the performance of a group of stocks whilst assuming that all cash distributions are reinvested.
Tracking Error
A measure to show the difference between the returns of a portfolio and the returns of its benchmark.
Trailing Ratios
Financial metrics that use information from previous time periods.
Tranche
An amount of related securities offered within the same transaction.
Treasuries
Debt obligations backed the full faith and credit of national governments.
UCITS
Undertakings for Collective Investment in Transferable Securities. It is a regulatory framework in the European Union.
UN Global Compact
UN Global Compact is a principles-based framework established by the United Nations to support the UN goals through a set of universal sustainability principles.
UN Principles For Responsible Investments (PRI)
A worldwide organization that aims to encourage the alliance of ESG factors in investment decision-making.
UN SDG Alignment
United Nations General Assembly back in 2017 had set 17 goals to create a better, more sustainable world by 2030. The Sustainable Development Goals (SDG) alignment is both a means to deploy recourses for implementation and a valuable concept for the private sector to safeguard the long-term value of assets.
Underweight
A recommendation given by a research analyst to hold a smaller position in a security relative to other securities in a portfolio.
Underweight to Benchmark
A smaller amount of a certain stock/sector/country relative to the benchmark or market.
United Nations Global Compact
The United Nations Global Compact is a non-binding United Nations pact to encourage businesses worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.
United Nations Principles of Responsible Investing (UNPRI)
An organisation that sets to promote the incorporation of ESG factors into investment processes around the world within the investment community. For an organisation to become a signatory they must adhere to the PRI’s six key principles and file regular reports on their progress.
United Nations Sustainable Development Goals
A collection of 17 global goals set out by the United Nations whereby there is a universal call to end poverty, prolong the planet’s resources and bring about peace and prosperity.
Unleveraged
When an entity operates without the use of borrowed money/debt.
Up Capture
A measure of a portfolios correlation to a benchmark when the market is rising. A ratio of more than 100 indicates that the portfolio captures more of the positive returns than the benchmark during a specific period.
Up Period Percent
Number of months performance is above 0 divided by the total number of months in the period.
Upside Capture
A measure of a portfolios correlation to a benchmark when the market is rising. A ratio of more than 100 indicates that the portfolio captures more of the positive returns than the benchmark during a specific period.
Upstream
Companies that find and produce oil and gas.
V2X
An index used to measure volatility in the Eurozone.
Valuation
The process of determining how much a company or an asset is currently worth at a particular point in time.
Value at Risk (VaR)
The potential loss on an investment during a set time period.
Value Investment Strategy
When the portfolio manager selects stocks that he/she believes are undervalued by the market and hence are trading for less than their intrinsic value.
Value Rotation
The trend of investors to increasingly shift investments from non-value to value strategies.
Venture Capital
A type of private equity, it is a form of financing provided to start up companies whom are believed to have long term growth potential.
VIX
Volatility Index. A ticker symbol for the Chicago Board Options Exchange. It is a measure of volatility that calculates expected price fluctuations in the S&P 500 Index options.
V-shaped recovery
Graph showing a recession where the economy suffered from a sharp and brief economic decline.
Volatility
A statistical measure to show the degree of movement of asset prices over a set period of time.
Voting Right
The right of a firm’s shareholder to vote on matters of corporate policy.
Weighted Average Market Capitalization
Usually used for indexes. Measures the influence that companies would have on the market based on their market capitalization. A larger company by market capitalization would have a larger impact on the market than a smaller capitalization company.
Wilderhill Clean Energy Index® (ECO)
Established in 2004, an index that tracks the Clean Energy sector which includes businesses that would be best placed to benefit from a societal transition towards cleaner energy.
Working Capital
Amount of a company’s current assets minus its current liabilities. Used as a measurement of a company’s financial health.
World Bank
An international financial institution that aims to provide solutions to developing countries in reducing poverty and increasing prosperity.
World Health Organization (WHO)
An agency within the United Nations that is concerned with international public health.
World Trade Organization (WTO)
A global organization dealing with the rules of trade between nations.
Yield
The income that is generated from an investment.
Yield Curve
A line plotting fixed income securities with different maturity dates and their respective interest rates. Flattening of the yield curve means that long-term interest rates are decreasing more than short-term interest rates, or short term interest rates are increasing more than long term interest rates. A steepening of the yield curve means that long-term bond prices are falling relative to short-term bond prices.
Yield Spread
The difference between the rates of return on different investments.