Glossary of Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

Alphabetical Listing of Definitions & Index Information

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30-Day SEC Yield is a standardized yield computed by dividing the net investment income per share earned during the past 30-day period by the share price at the end of the period, expressed as an annual percentage rate.

50/50 Blended DJIA/Treasury Index consists of 50% common stocks represented by the Dow Jones Industrial Average and 50% short-duration Treasury securities represented by the BofA Merrill Lynch 1-Year U.S. Treasury Note Index. One cannot invest directly in an index.

75/25 Blended DJIA/Treasury Index consists of 75% common stocks represented by the Dow Jones Industrial Average and 25% short-duration Treasury securities represented by the BofA Merrill Lynch 90-day U.S. Treasury Bill Index. One cannot invest directly in an index.

A

Active Share is a measure of the percentage of stock holdings in a manager's portfolio that differ from the benchmark index. 

Adjusted Funds From Operations (AFFO) is a financial performance measure primarily used in the analysis of real-estate income trusts which is generally equal to the trust's funds from operations (FFO) with adjustments made for recurring capital expenditures used to maintain the quality of the REIT's underlying assets.

Alerian MLP Index is an index of prominent energy Master Limited Partnerships (MLPs) and is commonly used to measure the performance of the MLP asset class. One cannot invest directly in an index.

Alpha is an annualized return measure of how much better or worse a fund’s performance is relative to an index of funds in the same category, after allowing for differences in risk.

American Gas Association Index / AGA is a market capitalization-weighted index, adjusted monthly, consisting of member companies of the American Gas Association. One cannot invest directly in an index. 

B

Basis Point is a unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument. 

Bank of America / BofA Merrill Lynch 90-day U.S. Treasury Bill Index is an unmanaged index comprised of U.S. Treasury securities maturing in 90 days. One cannot invest directly in an index.

Bank of America / BofA Merrill Lynch 1-Year U.S. Treasury Note Index is an unmanaged index comprised of U.S. Treasury securities maturing in approximately one year. One cannot invest directly in an index.

Bloomberg Barclays Capital Intermediate U.S. Government/Credit Index is an unmanaged index commonly used to measure the performance of intermediate-term U.S. bonds. One cannot invest directly in an index.

Beta measures the volatility of the fund, as compared to that of the overall market. The Market’s beta is set at 1.00; a beta higher than 1.00 is considered to be more volatile than the market, while a beta lower than 1.00 is considered to be less volatile.

Blended Balanced Index consists of 60% common stocks represented by the S&P 500® Index and 40% bonds represented by the Barclays Capital Intermediate U.S. Government/Credit Index. One cannot invest directly in an index.

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

C

Capital Expenditure (CapEx) is the funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. 

Cash Flow can be used as an indication of a company’s financial strength and represents earnings before depreciation, amortization, and non-cash charges. It is the net amount of cash and cash-equivalents moving into and out of business. 

Compound Annual Growth Rate (CAGR) is a useful measure of growth over multiple time periods.

Comprehensive Capital Analysis and Review (CCAR) is a United States regulatory framework introduced by the Federal Reserve in order to assess, regulate, and supervise large banks and financial institutions.

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 is a statistical measure that indicates the extent to which two or more variables move in relation to each other.

D

Debt to GDP Ratio is the ratio of a country's national debt to its gross domestic product. 

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

DOE is the abbreviation for Department of Energy

Dow Jones Industrial Average Index (DJIA) is an unmanaged index commonly used to measure the performance of U.S. stocks. One cannot invest directly in an index. 

Down-Market Capture Ratio is a statistical measure of an investment manager's overall performance in down-markets.

Duration is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years.

E

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.

EBITDA is the acronym for earnings before interest, taxes, depreciation, amortization, and it is a measure of a company's operating performance.

EBITDA/EV (EBITDA to Enterprise Value)is a ratio that measures a company's return on investment, and it provides a normalized ratio for comparing the operations of different companies.

EV/EBITDA (Enterprise Value to EBITDA), also known as the enterprise multiple, is the ratio of a company's enterprise value to its earnings before non-cash items.

Effective duration is a calculation used to approximate the actual, modified duration of a callable bond. It takes into account that future interest rate changes will affect the expected cash flows for a callable bond.

 Effective Maturity of a bond refers to the effective yield or effective rate of interest of the bond at the culmination of its tenure. ("Tenure" is the length of time until the bond matures.)

F

Forward Earnings are an estimate of a next period's earnings of a company, usually to completion of the current fiscal year and sometimes of the following fiscal year.  

Forward Price/Earnings is a measure of the price-to-earnings ratio using forecasted earnings rather than historical data.

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

G

H

I

IBD’s SmartSelect composite rating combines all five IBD ratings (Technical Rating, Fundamental Rating, Attractiveness Rating, Group's Technical Rating and Group's Fundamental Rating) into 1-99 rating scale. Those stocks that earn a 99 score are deemed to have the best overall strength for investment and thus the most potential for a fair return on investment in the immediate future. IBD Best Mutual Funds Criteria: Funds considered have at least $100 million in assets and at least 10 years old, beaten its benchmark for the past one, three, five and ten years. 

IBD’s Best Mutual Funds 2018 Awards criteria: Stock mutual funds qualify for this exclusive recognition only if they have beaten the broad market over all four of the following time periods: past one, three, five and 10 years. Awards were earned in 12 mutual fund categories. The top five ranked by 10- year performance is highlighted as the best of the best. The winning international stock mutual funds were compared to the MSCI EAFE Index in each of the four periods through December 31, 2017.

J

JPX-Nikkei Index 400 is composed of 400 companies with high appeal for investors, which meet requirements of global investment standards, such as efficient use of capital and investor-focused management perspectives. One cannot invest directly in an index.

K

KBW Bank Index is an index consisting of the stocks of banking companies and serves as a benchmark of the banking sector. 

L

M

M&A is the abbreviation for mergers and acquisitions.

Market Capitalization refers to the total dollar market value of a company's outstanding shares. Commonly referred to as "market cap," it is calculated by multiplying a company's shares outstanding by the current market price of one share. 

MLP refers to Master Limited Partnership

N

NASDAQ Composite Index is a broad-based capitalization-weighted index of all the NASDAQ National Market and Small Cap stocks. One cannot invest directly in an index.

Nikkei is short for Japan's Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-weighted index comprised of Japan's top 225 blue-chip companies traded on the Tokyo Stock Exchange. One cannot invest directly in an index. 

Nikkei 225 Futures Index introduced at the Singapore Exchange in 1986 is an internationally recognized futures index. One cannot invest directly in an index.

O

OPEC is the abbreviation for Organization of Petroleum Exporting Countries.

P

Pending Home Sales Index tracks home sales in which a contract is signed but the sale has not yet closed, commonly used as an indicator of future existing home sales. One cannot invest directly in an index. 

Price to Book Ratio is used to compare a stock's market value to its book value. 

Price to Cash Flow is the ratio of a stock’s price to its cash flow per share.

Price to Earnings Ratio (P/E) is the market price per share divided by earnings per share.

Price to Sales Ratio is a tool for calculating a stock's valuation relative to other companies. It is calculated by dividing a stock's current price by its revenue per share. 

Price to Tangible Book Value (PTBV) is a valuation ratio expressing the price of a security compared to its hard, or tangible, book value as reported in the company's balance sheet. The tangible book value number is equal to the company's total book value less the value of any intangible assets. Intangible assets can be such items as patents, intellectual property, goodwill etc. 

Q

R

R&D refers to Research and Development.

Return on Assets is a profitability ratio that provides how much profit a company is able to generate from its assets.

Return on Capital is a ratio measuring the profitability of a firm expressed as a percentage of funds acquired from investors and lenders. 

Return on Equity (ROE) is a measure of a company’s profitability and represents the average return on equity on the securities in the portfolio, not the actual return on equity on the portfolio.

Russell Midcap® Index is an unmanaged index commonly used to measure the performance of U.S. medium-capitalization stocks. One cannot invest directly in an index.

Russell Midcap® Growth Index is an unmanaged index commonly used to measure the performance of U.S. medium-capitalization growth stocks. One cannot invest directly in an index.

Russell/Nomura Total Market Index is a market capitalization-weighted index of Japanese equities. One cannot invest directly in an index.

Russell/Nomura Small Cap Index represents the universe of small capitalization companies in the Japanese equity markets. One cannot invest directly in an index.

Russell 1000® Index is an unmanaged index commonly used to measure the performance of U.S. large-cap stocks. One cannot invest directly in an index.

Russell 1000® Financial Services Index is an unmanaged index commonly used to measure the performance of U.S. large-capitalization financial sector stocks. One cannot invest directly in an index.

Russell 1000® Value Index is an unmanaged index commonly used to measure the performance of U.S. value-oriented, large-cap stocks. One cannot invest directly in an index.

Russell 2000® Index is an unmanaged index commonly used to measure the performance of U.S. small-capitalization stocks. One cannot invest directly in an index.

Russell 2000® Financial Services Index is an unmanaged index commonly used to measure the performance of U.S. small-capitalization financial sector stocks. One cannot invest directly in an index.

Russell 3000® Index is an unmanaged index commonly used to measure the performance of U.S. stocks. One cannot invest directly in an index.

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes or Russell ratings or underlying data, and no party may rely on any Russell Indexes or Russell ratings or underlying data contained in this communication. No further distribution of Russell data is permitted without Russell’s express written consent. Russell does not promote, sponsor, or endorse the content of this communication.

S

S&P Capital IQ is a highly reputable rating and data analytics provider.

Seasonally Adjusted Annual Rate (SAAR) is a rate adjustment used for economic or business data, such as sales numbers or employment figures, that attempts to remove seasonal variations in the data. Sharpe Ratio is a measure of risk-adjusted return, reflecting the average return earned in excess of the risk-free rate per unit of volatility.

Standard Deviation is a statistical measure of the historical volatility of a mutual fund or portfolio.

Standard and Poor's / S&P 500® Index is an unmanaged index and is commonly used as a measure of the performance of the U.S. stock market as a whole. One cannot invest directly in an index. 

Standard and Poor's / S&P 500® Consumer Discretionary Index is an index that comprises those companies included in the S&P 500 that are classified as members of the GICS consumer discretionary sector. One cannot invest directly in an index.

Standard and Poor's / S&P 500® Consumer Staples Index is an index that comprises those companies included in the S&P 500 that are classified as members of the GICS consumer staples sector. One cannot invest directly in an index.

Standard and Poor's / S&P 500® Energy Index is an index that comprises those companies included in the S&P 500 that are classified as members of the GICS energy sector. One cannot invest directly in an index.

Standard and Poor's / S&P® 600 Index is an unmanaged index of 600 stocks chosen for their relatively small market cap and is commonly used as a measure of the performance of small-cap stocks as a whole. One cannot invest directly in an index. 

Standard and Poor's / S&P Financial® Index is an index that comprises those companies included in the S&P 1500 that are classified as members of the GICS Financials sector. One cannot invest directly in an index.

Standard and Poor's / S&P Small Cap® Index is an unmanaged index commonly used to measure the performance of the small-cap segment of the U.S. equity market.

T

Tokyo Stock Price Index (TOPIX) is a market capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. One cannot invest directly in an index.

Tokyo Stock Price Index (TOPIX) Small Index is a market capitalization-weighted index designed to measure the performance of the of the stocks listed on the First Section of the Tokyo Stock Exchange, excluding the TOPIX 500 stocks and non-eligible stocks. One cannot invest directly in an index.

Trailing Price to Earnings Ratio is calculated by taking the current stock price and dividing it by the trailing earnings per share for the past 12 months.

Turnover is a measure of how frequently assets within a fund are bought and sold by the managers.

U

Up-Market Capture Ratio is the statistical measure of an investment manager's overall performance in up-markets.

V

VIX is the Chicago Board Options Exchange (CBOE) Volatility Index, which is a widely used measure of market risk.

W

X

Y

Yield Curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates.

Z