AAA bond rating

AAA bond rating is the highest rating assigned by S&P to a debt obligation and indicates an extremely strong capacity to pay principal and interest. Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay principal and interest is very strong, and in the majority of instances they differ from AAA issues only in small degree. Bonds rated A have a strong capacity to pay principal and interest, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.

Active Management

 Active Management refers to the attempt by a fund manager to deliberately pick and choose specific investments that will perform better or be less risky than other investments. Most mutual funds, other than index funds, use active management, though different managers use different methods to pick their investments. Active management is the opposite of passive management, or indexing. Investing in a mutual fund that tracks a market index, such as the S&P 500 Index, and therefore, requires less active management of a portfolio. Because passive funds mirror the performance of a particular index, the performance numbers are very similar, no better or worse. Management fees are usually lower for index-based mutual funds.


Alpha is typically used to represent the value added or subtracted by active investment management strategies. It shows how an actively managed investment portfolio performed compared with the expected portfolio returns produced simply by benchmark volatility (beta) and market changes. A positive alpha shows that an investment manager has been able to capture more of the upside movement in the benchmark while softening the downswings. A negative alpha means that the manager's strategies have caught more benchmark downside than upside.


Basis Point (bp)

Basis Point (bp) equals 1/100 of a percentage point. 1 bp = 0.01%, 100 bps = 1%.


Beta measures the volatility of a security or portfolio relative to an index. Less than one means lower volatility than the index; more than one means greater volatility.

Bloomberg Barclays US Intermediate Government/Credit Bond Index

Bloomberg Barclays US Intermediate Government/Credit Bond Index measures the performance of U.S. Dollar denominated U.S. Treasuries, government-related and investment grade U.S. corporate securities that have a remaining maturity of greater than one year and less than ten years.

Book Value

Book Value is the net asset value of a company, calculated by total assets minus intangible assets and liabilities.


Cash Flow

Cash Flow measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest expense to pretax income.

CBOE Volatility Index (VIX)

CBOE Volatility Index (VIX) is a calculation designed to produce a measure of constant, 30-day expected volatility of the U.S. stock market, derived from real-time, mid-quote prices of S&P 500® Index (SPXSM) call and put options. On a global basis, it is one of the most recognized measures of volatility—widely reported by financial media and closely followed by a variety of market participants as a daily market indicator. Dow Jones Industrial Average ("Dow") is an unmanaged index of common stocks comprised of major industrial companies and assumes reinvestment of dividends.

Consumer Price Index (CPI)

Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.


 Correlation measures the degree to which two variables move in relation to each other. A value of 1.0 implies movement in parallel, -1.0 implies movement in opposite directions, and 0.0 implies no relationship.

Credit Spread

Credit Spread is the difference in yield between securities with similar maturity but different credit quality.


Default Rate

Default Rate, a credit quality measurement used in bond or other debt analysis, a default rate measures how often a particular type of bond (categorized by issuer, sector, credit rating, etc.) or other borrower has defaulted (missed or delayed scheduled payments) over a given period of time.

Distribution Rate

Distribution Rate reflects the investment income per share during the last 12 months divided by the share price at the end of the period, expressed as an annual percentage rate. 

Dividend Yield

Dividend Yield is a financial ratio that indicates how much a company pays out in dividends each year relative to its share price.

Dow Jones Industrial Average Index

Dow Jones Industrial Average Index is an unmanaged index comprised of 30 large, publicly owned companies based in the United States commonly used to measure the performance of U.S. stocks.


Duration measures a bond price’s sensitivity to changes in interest rates. The longer a bond’s duration, the higher its sensitivity to changes in interest rates and vice versa. Average Duration is a commonly used measure of the potential volatility of the price of a debt security, or the aggregate market value of a portfolio of debt securities, prior to maturity. Securities with a longer duration generally have more volatile prices than securities of comparable quality with a shorter duration.


Earnings Per Share (EPS)

Earnings Per Share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. It serves as an indicator of a company's profitability.

Enhanced Beta or Smart Beta

Enhanced Beta or Smart Beta refers to a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization-based indices.

EPS Growth

EPS Growth illustrates the growth of earnings per share over time.

Excess Return

Excess Return indicates the extent to which an investment out- or underperformed an index.

Exchange-traded fund (ETF)

Exchange-traded fund (ETF) – Similar to a mutual fund, an exchange-traded fund (ETF) represents a group of securities, but the ETF trades on an exchange like an individual stock. An ETF generally follows the performance of an index, such as the S&P 500 Index.


Free cash

Free cash flow is a measure of financial performance calculated as operating cash flow minus capital expenditures.


High-yield bonds

High-yield bonds are fixed income securities with lower credit quality and lower credit ratings. High-yield securities are those rated below BBB- by Standard & Poor’s.


Investment-grade bonds

Investment-grade bonds are typically used in reference to fixed income securities that possess relatively high credit quality and have credit ratings in the upper ranges of those provided by credit rating services. Using Standard & Poor's ratings as the benchmark, investment-grade securities are those rated from AAA at the highest end to BBB- at the lowest. To earn these ratings, securities, in the judgment of the rating agency, are projected to have relatively low default risk.



Leverage – The use of financial instruments and/or borrowed capital to increase potential returns or to increase purchasing power.

Lipper Balanced Index

Lipper Balanced Index is an equally weighted performance index of the largest qualifying funds in the Lipper Category. The indices are unmanaged and returns include reinvested dividends.

Lipper Mid-Cap Growth Funds

The Lipper Mid-Cap Growth Funds Index is an unmanaged, equally weighted performance index of the 30 largest qualifying mutual funds (based on net assets) in the Lipper Mid-Cap classification.


Market Cap

Market Cap is the market price of an entire company, calculated by multiplying the number of shares outstanding by the price per share.



NASDAQ 100 is an index composed of the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange.

NASDAQ Composite Index

NASDAQ Composite Index, a market value-weighted index of all domestic and international common stocks listed on the NASDAQ stock market.

Net Asset Value (NAV)

Net Asset Value (NAV) represents the net value of a fund's assets on a per-share basis.


PEG ratio

PEG ratio is the price earnings ratio divided by the growth rate.


Premium/Discount indicates whether a security is currently trading above (at a premium to) or below (at a discount to) its net asset value.

Price-to-Book (P/B) Ratio

Price-to-Book (P/B) Ratio measures share price compared to book value per share for a stock or stocks in a portfolio.

Price-to-Earnings (P/E) Ratio

Price-to-Earnings (P/E) Ratio measures share price compared to earnings per share for a stock or stocks in a portfolio.


The Price/Earnings to Growth (PEG ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the company's expected growth.


Return on Invested Capital (ROIC)

Return on Invested Capital (ROIC) is a measure of how effectively a company used the money invested in its operations.

Russell 1000

Russell 1000 is an index of approximately 1,000 of the largest companies in the U.S. equity markets that comprises over 90% of the total market capitalization of all listed U.S. stocks, and is considered an indicator for large cap investing.

Russell 2000 Index

Russell 2000 Index consists of the smallest 2,000 companies in a group of 3,000 U.S. companies in the Russell 3000 Index, as ranked by market capitalization and serves as a benchmark for small-cap stocks in the United States.

Russell 3000 Index

Russell 3000 Index, as ranked by market capitalization and serves as a benchmark for small-cap stocks in the United States. Russell 3000 Index is a market capitalization weighted equity index that encompasses the 3,000 largest U.S.-traded stocks, in which the underlying companies are all incorporated in the U.S.


S&P 500

S&P 500 is an unmanaged index which is widely regarded as the standard for measuring large-cap U.S. stock market performance.

S&P SmallCap 600 Index

The S&P SmallCap 600 Index, a capitalization-weighted index consisting of 600 domestic stocks, measures the small company segment of the U.S. market.

Sharpe Ratio

Sharpe Ratio measures risk-adjusted performance using excess returns versus the "risk-free" rate and the volatility of those returns. A higher ratio means better return per unit of risk.

Standard Deviation

Standard Deviation measures historical volatility. Higher standard deviation implies greater volatility.

Systematic Risk

Systematic Risk is the risk inherent to the entire market or entire market segment.


Tracking Error

Tracking Error is the divergence between the price behavior of an investment and an index.

Turnover Ratio

Turnover Ratio is a measure of the fund’s trading activity that is computed by taking the lesser of purchases or sales (excluding all securities with maturities of less than one year) and dividing by average monthly assets. Turnover is a measure of portfolio trading activity. Higher turnover may indicate higher transaction costs and vice versa.


U.S. Dollar Index (USDX)

U.S. Dollar Index (USDX) is a measure of the value of the U.S. dollar relative to majority of its most significant trading partners.



Volatility measures risk using the dispersion of returns for a given investment.



Yield is the income return on an investment and refers to the interest or dividends received from a security; is usually expressed annually as a percentage based on the investment's cost, its current market value or its face value.