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1-Month Currency Forward: A binding one month contract in the foreign exchange market that locks in the exchange rate for the purchase or sale of a currency on the following one month.
1-month LIBID rates: Good indication of the cost of borrowing U.S. dollars for one month’s time in European markets.
1-month rupee forwards: Agreements to either buy or sell rupees in exchange for U.S. dollars at a specified exchange rate one month into the future.
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200-day moving average: Average of the prior 200 days’ worth of price values, with an increasing trend indicating relative strength and a decreasing trend indicating relative weakness.
2-Year Treasury: a debt obligation of the U.S. government with an original maturity of two years.
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50-day moving average: Average of the prior 50 days’ worth of price values, with an increasing trend indicating relative strength and a decreasing trend indicating relative weakness.
50% Hedged Approach: refers to a strategy that implements a static hedge ratio aiming to hedge half of the currency risk.
51% Attack: Refers to an attack on a blockchain—most commonly bitcoins, for which such an attack is still hypothetical—by a group of miners controlling more than 50% of the network's mining hash rate or computing power.
5-Year Treasury: a debt obligation of the U.S. government with an original maturity of five years.
Algos: Trading order management programs that look to execute trades based on a pre-determined metric. One example is: “volume weighted average price”
Alpha: Can be discussed as both risk-adjusted excess return relative to a specific benchmark, or absolute excess return relative to a benchmark. It is sometimes more generally referred to as excess returns in general.
Alternative Investment: An investment that is not one of the three traditional asset types (stocks, bonds and cash). Alternative investments typically include hedge funds, managed futures, real estate, commodities and derivatives contracts.
Annual screening date: The screening date refers to the date upon which characteristics of eligible constituent firms are measured, whereas the rebalance refers to when the results from the screening date are implemented by way of Index weights and constituents.
Arbitrage Mechanism: The ability to compare the price of an ETF and its underlying basket and exchange one for the other utilizing the creation and redemption process.
Arbitrageur: A person who attempts to profit from price inefficiencies in the market by making simultaneous trades that offset each other and seek to capture a risk free profit.
Article 50: States the rules and procedures regarding a member of the EU intending to withdraw from the EU.
ASEAN countries: Association of Southeast Asian Nations. Indonesia, Malaysia, the Philippines, Singapore and Thailand comprise the original members.
A-share: shares traded on the Shanghai and Shenzhen stock exchanges. This is contrast to Renminbi B shares which are owned by foreigners who cannot purchase A-shares due to Chinese government restrictions.
Ask Price: The price that someone will sell an ETF.
Asset-Backed Securities Purchase Program: Program initiated by the European Central Bank aimed at increasing the availability of credit within the euro area by purchasing qualifying asset-backed securities.
Asset-backed security: A fixed income security whose value or cash flows depends on the value of another asset, such as a loan, lease, or receivable.
Asset-Liability Mismatch: refers to a situation when a company’s assets do not earn enough revenue to service their liabilities, especially debt.
Asset purchases: The Fed purchases longer-term securities issued by the U.S. government and longer-term securities issued or guaranteed by government-sponsored agencies such as Fannie Mae or Freddie Mac.
Assets-to-Equity: A measure of how much of a company’s assets are financed with debt and other liabilitie.
Assets-under-management: The total market value of the investments that a person or entity manages on behalf of clients.
“At the money”: option’s strike price is identical to the price of the underlying security.
Attribution analysis: Compares the performance of one index or investment to another, noting particularly the differences in weights or holdings. This analysis quantifies both the positive and the negative impacts to selecting or heavily weighting different stocks or sectors.
Auction: a public offering of newly issued debt securities in which pricing is determined via an investor bidding process.
Austerity: Policies used by governments to reduce budget deficits during adverse economic conditions.
Authorized Participant (AP): An entity, usually an institutional investor, that submits orders to the ETF for the creation and redemption of ETF creation units.
Average Daily Trading Volumes: The average amount of individual securities traded in a day or over a specified amount of time. Trading activity relates to the liquidity of a security; therefore, when average daily trading volume is high, the stock can be easily traded and has high liquidity. As a result, average daily trading volume can have an effect on the price of the security. If trading volume isn’t very high, the security will tend to be less expensive because people are not as willing to buy it.
Average dividend yield: The average relationship of dividend per share divided by share price over a period of time. Higher values indicate greater potential for dividend reinvestment.
Average of All Years: Average of the 1-year forward performance for all 24 years for which data exists. This is an average of the individual calendar years taken separately for the MSCI Emerging Markets Index, not an average annual return.
Average Value: The average value of the “Defensives Relative to Cyclicals” values over this period.
Average yield: Refers to the average interest rate paid by credit card customers on their credit card balances; in effect the charge for loaning the credit card borrowers money.
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Baa: Moody’s credit rating that implies the borrower has capacity to meet financial commitments, but may be more vulnerable to adverse economic conditions. This rating includes the lowest level of credit risk while still being investment-grade.
Backwardation: A scenario when the futures price is below the spot price.
Bail in: an agreement whereby a portion of the debt due to some creditors is waived during a period of financial stress.
Balance sheet: refers to the cash and cash equivalents part of the Current Assets on a firms balance sheet and cash available for purchasing new position.
Bank loan: A private debt arrangement issued by a financial institution which is senior to other creditors.
BarclayHedge U.S. Managed Futures Industry BTOP50 Index: Sseeks to replicate the overall composition of the managed futures industry with regard to trading style and overall market exposure. The BTOP50 employs a top-down approach in selecting its constituents. The largest investable trading advisor programs, as measured by assets under management, are selected for inclusion in the BTOP50. In each calendar year the selected trading advisors represent, in aggregate, no less than 50% of the investable assets of the Barclay CTA Universe.
Barclays Global Aggregate Index: A broad-based measure of the global investment grade fixed-rate debt markets. The index includes the U.S. aggregate, Pan-European Aggregate, and the Asian-Pacific Aggregate Index.
Barclays HY 2% Constrained Index: An issuer-constrained version of the U.S. Corporate High-Yield Index that measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds.
Barclays Multiverse Index: a broad-based measure of the international fixed-income bond market. The index represents the union of the Global Aggregate Index and the Global High Yield Index.
Barclays Rate Hedged U.S. Aggregate Index, Zero Duration: Combines long positions in the Barclays U.S. Aggregate Bond Index with short positions in U.S. Treasury Bonds to provide a duration exposure of 0 years. Market values of long and short positions are rebalanced at month-end.
Bloomberg Barclays Securitized Index: The Index tracks agency mortgage backed pass-through securities (both fixed-rate and hybrid ARM) guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC); investment grade debt asset backed securities; and investment grade commercial mortgage backed securities.
Barclays Trade-Weighted Dollar Bull Index: is part of the Barclays Trade-Weighted index family, which intends to reflect the appreciation or depreciation of a reference currency against a Trade-Weighted basket of other currencies.
Barclays US Agg Corporate Total Return Value Unhedged USD: The Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).
Barclays US Agg Total Return Value Unhedged USD: The Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).
Barclays U.S. Corporate Index: is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate, taxable corporate bond market. It includes USD-denominated securities publicly issued by U.S. and non-U.S. industrial, utility, and financial issuers that meet specified maturity, liquidity, and quality requirements.
Barclays U.S. High Yield Energy Index: Represents the energy sector component of the Barclays U.S. Corporate High-Yield Index which measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt.
Basel II capital adequacy: Measure of a bank’s capital in accordance with generally accepted standards of international bank regulation, with higher values indicating greater potential ability to withstand adverse events.
Basel III: a global, voluntary regulatory framework on bank capital adequacy, stress testing and market liquidity risk. Introduced by the Basel Committee on Banking Supervision in 2010–11, and most recently scheduled to be implemented by 31 March 2019.
Baskets: The composition of an ETF in terms one creation/redemption unit.
BBB-: Standard & Poor’s credit rating that implies the borrower has adequate capacity to meet financial commitments, but may be more vulnerable to adverse economic conditions. This rating represents the lowest level of investment-grade.
BB-Rated: The least speculative bucket of non-investment grade status for S&P. These issuers may be vulnerable to adverse business and economic conditions ultimately impacting their ability to meet financial commitments.
BCB Treasury: A service launched by BCB to help corporate treasury departments looking to get involved with digital assets.
Bear market: A sustained downturn in market prices, increasing the chances of negative portfolio returns.
Behavioral finance: An academic branch of finance devoted to studying the behavior of individuals as it relates to their financial decisions.
best bid: REG NMS requires orders get filled at the highest bid or lowest offer (best bid or offer) listed on all exchanges
Beta: A measure of the volatility of a security or a portfolio in comparison to a benchmark. In general, a beta less than 1 indicates that the investment is less volatile than the benchmark, while a beta more than 1 indicates that the investment is more volatile than the benchmark.
Beta benchmark: Characterized by measuring the performance of a particular universe of equities without attempting to utilize selection and weighting to generate differences in performance relative to this universe.
Bitcoin (the currency): A digital currency (also called a cryptocurrency) created in 2009, which is operated by a decentralized authority as opposed to a traditional central bank or monetary authority.
Bitcoin Futures: A legal agreement to buy or sell bitcoin at a predetermined price at a specified time in the future.
Black box: a portion of an investment process that lacks transparency or clearly defined logic.
Black swan: an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences
Blend: Characterized by exposure spanning across stocks exhibiting both value and growth attributes.
Blockchain: a distributed ledger system in which a record of transactions made in cryptocurrencies are maintained across computers linked in a peer-to-peer network
Block ETF market: The block ETF market is when a broker dealer, market maker, or liquidity provider can give the client one “block” price to buy or sell an ETF.
Block liquidity: The degree to which an asset or security can be bought or sold in large size the market without affecting the asset’s price.
Block order: Typically, a 10,000 share order (excluding penny stocks) or $200,000 worth of fixed-income securities would constitute a block order.
Bloomberg: A computer system that allows investors to access the Bloomberg data service, which provides real-time financial data, news feeds and messages and also facilitates the placement of trades.
Bloomberg Barclays 1-3 Year Credit Index: composed of U.S. dollar-denominated, investment-grade corporate, sovereign, supranational, local authority and non-U.S. agency bonds with remaining maturities between one and three years.
Bloomberg U.S. Aggregate Bond Index: Represents the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, as well as mortgage and asset backed securities.
Bloomberg Barclays US FRN: A subset of the US Floating-Rate Note index, measuring the performance of US denominated, investment grade floating rate notes for both government and corporate-related sectors with a maximum maturity of 4.9999 years.
Bloomberg Barclays US Mortgage Backed Securities (MBS) Index: The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index tracks fixed-rate agency mortgage backed passthrough securities guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). The index is constructed by grouping individual TBA-deliverable MBS pools into aggregates or generics based on program, coupon and vintage.
Bloomberg Commodity Spot Index: formerly known as Dow Jones-UBS Commodity Spot Index (DJUBSSP), tracks the spot prices of a broadly diversified basket of commodities that comprise the total return index.
Bloomberg Dollar Spot Index (BBDXY): Tracks the performance of a basket of ten leading global currencies versus the U.S. dollar. Each currency in the basket and their weight is determined annually based on their share of international trade and FX liquidity.
Bloomberg Dollar Total Return Index: The index seeks to provide exposure to the U.S. dollar against a broad basket of developed and emerging market currencies based on global trade flows and liquidity measures.
Bloomberg U.S. Financial Conditions Index: tracks the overall level of financial stress in the U.S. money, bond, and equity markets to help assess the availability and cost of credit. A positive value indicates accommodative financial conditions, while a negative value indicates tighter financial conditions relative to pre-crisis norms.
BofA Merrill Lynch 0-5 Year US High Yield Constrained, Zero Duration Index: Tracks the performance of the combination of a long position in short maturity US high yield bonds and a short position in on the run US Treasuries where the net interest rate exposure of the index is adjusted to a zero year duration. Market values of long and short positions are rebalanced at month-end.
BofA Merrill Lynch 7-10 Year German Government Index: is a subset of The BofA Merrill Lynch German Government Index including all securities with a remaining term to final maturity greater than or equal to 7 years and less than 10 years.The BofA Merrill Lynch German Government Index tracks the performance of EUR denominated sovereign debt publicly issued by the German government in the German domestic or eurobond market.
BofA Merrill Lynch 7-10 Year Japan Government Index: is a subset of The BofA Merrill Lynch Japan Government Index including all securities with a remaining term to final maturity greater than or equal to 7 years and less than 10 years. The BofA Merrill Lynch Japan Government Index tracks the performance of JPY denominated sovereign debt publicly issued by the Japanese government in its domestic market.
BofA Merrill Lynch High Yield Index: The index is an unmanaged index comprised of U.S. dollar denominated below investment grade corporate debt securities publicly issued in the U.S. domestic market.
Book Value: refers to the net asset value of a company determined by subtracting liabilities and intangible assets from Total assets.
Book value per share: Total book value divided by the number of shares outstanding. Measured as a percentage change as of the annual Index screening date compared to the prior 12 months. Higher values indicate greater growth orientation.
Bottom-up: An investment approach that de-emphasizes the significance of economic and market cycles. This approach focuses on the analysis of individual securities.
Bovespa Index: a theoretical portfolio of stocks that seeks to serve as a gauge of performance for the Brazilian stock market.
B-rated: Standard & Poor’s credit rating that implies the issuer is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.
Break-even inflation rate: For a given bond maturity, for example five years, the interest rate on the five-year nominal bond minus the interest rate on the five-year inflation adjusted bond; meant to approximate expected inflation over that time frame, in this case five years.
Brexit: an abbreviation of “British exit” that mirrors the term Grexit. It refers to the possibility that Britain will withdraw from the European Unio.
BRIC: An acronym for Brazil, Russia, India and China.
BRICS: An acronym for Brazil, Russia, India, China and South Africa.
BSE Sensex 30 Index: A market capitalization-weighted index designed to measure the performance of 30 large, established firms listed on the Bombay Stock Exchange that represent the industries of India’s economy.
B-Shares: China securities incorporated in Mainland China, listed on the Shanghai Stock Exchange (USD) and Shenzhen Stock Exchange (HKD).
Bubble: when market participants drive stock prices above their “fair value” in relation to some system of stock valuation.
Bullish: a position that benefits when asset prices rise.
Bundesbank: The central bank of the Federal Republic of Germany.
Bundled fee: A marketing strategy that joins products or services together in order to sell them as a single combined unit.
Buyback: When a company uses its own cash to purchase its own outstanding shares; may positively impact the share price.
Buyback ratio: The ratio of the amount of a company’s buybacks to its market capitalization.
Buyback yield: amount of a company’s buybacks divided by its market capitalizatio.
Buyouts: The acquisition of a targeted firm by purchasing shares of the company to obtain ownershi.
BVP Nasdaq Emerging Cloud Index: designed to track the performance of emerging public companies primarily involved in providing cloud software to their customers.
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CAC 40 Index: The French stock market index that tracks the 40 largest French stocks based on market capitalization on the Paris Bourse (stock exchange).
Caixin Manufacturing PMI: Chinese manufacturing composite indicator designed to provide an assessment of manufacturing activity. A number below 50.0 indicates that the manufacturing economy is declining, and a value above 50.0 indicates an expansion of the manufacturing economy.
Call option: Financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period.
Call Spreads: An option spread strategy that is created when equal number of call options are bought and sold simultaneously.
Capex: 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.
Capital: Wealth available for a particular purpose, such as starting a company.
Capital account: Sometimes referred to as the financial account—second component of a country’s balance of payments that reflects the net change in the nation’s ownership of assets.
Capital adequacy ratio: A measure of a bank’s capital. It is expressed as a percentage of a bank’s risk-weighted credit exposures.
Capital asset pricing model (CAPM): a model that describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for the pricing of risky securities, generating expected returns for assets given the risk of those assets and calculating costs of capital.
Capital efficiency: The ability for an investment strategy to gain exposure to a particular market while using fewer assets.
Capital expenditures: Spending by a company typically made to enhance longer-term productive capacity.
Capital gains: Positive difference between the sale price of an asset and the original purchase price.
capital market desk: Staffed with professionals who are experts in ETF Trading and Liquidity and work with investors to get best execution when buying or selling ETFs.
Capital Market Line: A graphical representation of all the portfolios that optimally combine risk and return
Capital reserves: a pool of assets or collateral set aside to cover unexpected future liabilities.
Capital spending: Spending by a company typically made to enhance longer-term productive capacity.
Capital stock: Measure of investment available in a particular economy that represents the ownership interest in its businesses.
Cap rate: Ratio of net operating income to property asset value. Higher values indicate greater income generation per unit of property value.
Carry: The amount of return that accrues from investing in fixed income or currency forward contracts.
Cash-Collateralized: When short put positions on S&P 500 are secured with cash (1 month and 3 month Treasuries) serving as a collateral for maximum possible hypothetical losse.
Cash flow over assets (CFOA): Measures a corporation’s profitability by revealing how much cash flow a company generates relative to the level of assets used to generate them.
Cash flows: a measure of how much cash a business generates after taking into account all the necessary expenses, including net capital expenditures.
Cash reserve ratio (CRR): The portion of depositors’ balances banks must have on hand as cash determined by the country’s central bank.
Cboe Russell 2000 PutWrite Index (PUTR): An Index designed to track the performance of a hypothetical strategy that sells a monthly at-the-money (ATM) Russell 2000 Index put option. The written Russell 2000 put option is collateralized by a money market account invested in one-month Treasury bills.
CBOE S&P 500 PutWrite Index (PUT): Measures the performance of a hypothetical portfolio that sells S&P 500 Index (SPX) put options against collateralized cash reserves held in a money market account. The PUT strategy is designed to sell a sequence of one-month, at-the-money, S&P 500 Index puts and invest cash at one- and three-month Treasury Bill Rates. The number of puts sold varies from month to month but is limited so that the amount held in Treasury Bills can finance the maximum possible loss from final settlement of the SPX puts.
CBOE Volatility Index® (VIX®): a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. It is the premier benchmark for U.S. stock market volatility.
CCC-rated: Standard & Poor’s credit rating that implies the issuer is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
Central bank: Refers to the the monetary authority of any country.
Change of control provision: a contractual agreement in a securities offering that provides investor protections should a company be acquired.
Chicago Mercantile Exchange (CME): An organized exchange for the trading of futures and options. The CME trades futures, and in most cases options, in the sectors of agriculture, energy, stock indices, foreign exchange, interest rates, metals, real estate, and even weather.
Citi 10-Year Treasury Benchmark On-the-Run Index: Total return index for the Generic United States on-the-run 10-Year Treasury. Data is updated on the 1st day of the month for the last business day of the previous month and is final on that day. Index updates monthly subject to the existence of appropriate bonds for the specified period.
Citi 2-Year Treasury Benchmark On-the-Run Index: Total return index for the Generic United States on-the-run 2-Year Treasury. Data is updated on the 1st day of the month for the last business day of the previous month and is final on that day. Index updates monthly subject to the existence of appropriate bonds for the specified period.
Citi 5-Year Treasury Benchmark On-the-Run Index: Total return index for the Generic United States on-the-run 5-Year Treasury. Data is updated on the 1st day of the month for the last business day of the previous month and is final on that day. Index updates monthly subject to the existence of appropriate bonds for the specified period.
Citi Economic Surprise Index: An indicator of how actual economic data compares to analyst expectations. A downward trend means actual data has been trending below expectations, and an upward trend means actual data has been trending above expectations.
Clear the Market: When something “clears a market,” it means that it brings buyers and sellers together by solving for some other rigidity. A market can only be cleared when a price is agreed upon between the buyer and seller. ETFs allow the market to be cleared because they give us price discovery that you may not have in illiquid securities during a panic.
Cleveland Median CPI: Instead of calculating a weighted average of all of the prices, as the BLS does, the Cleveland Fed looks at the median price change—or the price change that’s right in the middle of the long list of all of the price changes. According to research from the Cleveland Fed, the Median CPI provides a better signal of the inflation trend than either the all-items CPI or the CPI excluding food and energy.
Closed-end fund: is a collective investment vehicle based on issuing a fixed number of shares which are not redeemable from the fund. New shares/units in a closed-end fund are not created by managers to meet demand from investors. Instead, the shares can be purchased (and sold) only in the market. Closed-end funds are usually listed on a recognized stock exchange and can be bought and sold on that exchange. The price per share is determined by the market and is usually different from the underlying value or net asset value (NAV) per share of the investments held by the fund.
Commodity Future Curve: A futures lcurve is a curve made by connecting prices of futures contracts of the same underlying, but different expiration dates. Commodity future curve is based on commodity future contract prices.
Competitive devaluation: a policy in which a country purposefully devalues their currency in order to improve the attractiveness of their goods and services.
Composite Factor Score (CFS): Taking individual measurements of factor exposures, and combining them into a single measure meant to represent multifactor exposure for a certain asset. For example, in the case of the WisdomTree U.S. Multifactor Index, the composite factor score aims to measure factor exposures to Value, Quality, Momentum and Low Correlation as they relate to a single asset..
Composite Momentum Framework: is a framework that incorporates three momentum signals across different time horizons to create a composite momentum signal.
Composite risk score: A term that refers to combining multiple factors—for example quality and momentum—to quantify the potential riskiness of a security relative to comparable companies.
Comps: Short hand for the comparison between 2 different company’s fundamentals.
Conditional commitment: Assurance of an action that becomes an actual commitment only conditions on inflation and unemployment.
Conference Board Consumer Confidence Index: The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The Conference Board is a global, independent business membership and research association working in the public interest.
Consensus estimates: Refers to the estimates of a broadly representative group of different economists, part of whose expertise involves forecasting potential rates of GDP growth.
Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.
Contagion: Scenario where one negative event feeds into a strengthening cascade of additional negative events. A singular bank failure could be an example in that once one bank fails, customers at other banks will tend to try and withdraw their funds all at once and adding stress to the overall banking system. .
Contango: A scenario when the futures price is above the spot price. .
Contrarian: Practice of seeing what the majority of market participants are focused on and attempting to look in the complete opposite direction.
Contrarian: An investment style that goes against prevailing market trends.
Convertibility: Refers to the process involved in exchanging different currencies so that an international investor can acquire securities outside their home country.
Convertibles: Securities, usually bonds or preferred shares, that can be converted into common stock. Convertibles are most often associated with convertible bonds, which allow bond holders to convert their creditor position to that of an equity holder at an agreed upon price.
Convexity: A measure of the curvature, or the degree of the curve, in the relationship between bond prices and bond yields.
TOPS® Global Equity Target Range™ Index: The Index tracks the performance of a cash-secured (i.e., collateralized) call spread strategy which consists of (1) buying long call options and selling short call options on a portfolio of four ETFs that track the performance of large- and mid-capitalization companies in the United States, developed market countries and emerging market countries, respectively, consisting of the SPDR® S&P 500® ETF Trust (“SPY”), iShares Russell 2000 ETF (“IWM”), iShares MSCI EAFE ETF (“EFA”), and iShares MSCI Emerging Markets ETF (“EEM”) (collectively, the “Underlying ETFs”); and (2) cash collateral.
Core consumer prices: Measure of prices that excludes certain items, such as food and energy, that face volatile price movements.
Core CPI: Long run trend in the price level that excludes items frequently subject to volatile prices, like food and energy. Can also be known as, CPI ex-Food & Energy
Core Earnings: Income generated by the company’s daily operations rather than one-time events or market fluctuations.
Correction: A drop of 10% or greater in an Index or stock from a recent high.
Correlation: Statistical measure of how two sets of returns move in relation to each other. Correlation coefficients range from -1 to 1. A correlation of 1 means the two subjects of analysis move in lockstep with each other. A correlation of -1 means the two subjects of analysis have moved in exactly the opposite direction.
Cost Of Debt: The effective rate that a company must pay in order to borrow from capital markets.
Cost Of Equity: Represents the amount of compensation investors demand to invest in the future profits of company.
Cost to hedge: Computed by assessing the interest rate differential between short-term rates in the U.S. and the respective foreign currency. This cost is baked into the performance of the fund and is not a separate fee.
Coupon: The annual interest rate stated on a bond when it’s issued. The coupon is typically paid semiannually. This is also referred to as the “coupon rate” or “coupon percent rate.&rdquo.
Covariance: A measure of the degree to which returns on two risk assets move together with one anothe.
Covenants: Agreements within financial securities that specify certain obligations that need to be met at distinct points in time.
Coverage ratio: Also referred to as interest coverage ratio, which compares earnings before interest and taxes to interest expense.
Creation and Redemption Process: The process whereby an ETF issuer takes in and disburses baskets of assets in exchange for the issuance or removal of new ETF shares.
Creation Unit (CU): A specified number of shares issued by an exchange-traded fund (ETF) in large blocks, generally between 25,000 and 200,000 shares. The authorized participants that buy creation units either keep the ETF shares that make up the creation unit or sell all or part of them on a stock exchange.
Credit: A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future.
Credit conditions: The markets perception of the willingness of lenders to extend credit to risky borrowers.
credit cycle: the process in which the pricing of and access to credit evolves over time.
Credit default spread: a market derived measure of risk that seeks to signal the likelihood that a borrower will default.
Credit Default Swap: A swap designed to transfer the credit exposure of fixed income products between parties. The purchaser of the swap makes payments up until the maturity date of a contract. Payments are made to the seller of the swap. In return, the seller agrees to pay off a third party debt if this party defaults on the loan.
Credit ratings: An assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. Credit assessment and evaluation for companies and governments is generally done by a credit rating agency such as Standard & Poor’s, Moody’s or Fitch.
Credit risk: The risk that a borrower will not meet their contractual obligations in conjunction with an investment.
Credit spread: The portion of a bond’s yield that compensates investors for taking credit risk.
Credit Target: the total principal value of loan amount that a lending institution is aiming to lend.
Crore: is part of the Indian counting system. One crore = 10 million.
Cross-Currency basis swap: an agreement whereby two parties can agree to exchange a series of cash-flows on a periodic basis at an agreed upon exchange rate.
Crossover buyers: Foreign investors buying positions outside of their home country.
Cross rate: synonymous with exchange rate, which tells the value of one currency in terms of another.
CRSP U.S. Mid Cap Index: Market capitalization-weighted measure of the performance of mid cap equities within the United States.
CRSP U.S. Small Cap Index: Market capitalization-weighted measure of the performance of small cap equities within the United States.
Cryptocurrency: a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.
CSI 300: is a capitalization-weighted stock market index designed to replicate the performance of 300 stocks traded in the Shanghai and Shenzhen stock exchanges.
Currency: Currency in which the underlying index returns are calculated. Euros: The returns are calculated, and there is no currency conversion; resulting statistics result purely from the returns of the equities. U.S. dollars: The returns are calculated and then converted into U.S. dollars; resulting statistics are the result of a combination of the euro’s performance against the U.S. dollar and the returns of the underlying equities.
Currency bet: an investment made in a currency in order to profit from a rise or fall in the valu.
Currency Factor: Currency is one of the factors that affect the fund return.
Currency hedging: Strategies designed to mitigate the impact of currency performance on investment returns.
Currency link: Measure that prevents a currency from fully market-determined behavior due to rules that may impact its exchange rate against another currency or currencies.
Currency risk: the risk that an investment will decline in value due to a change in foreign exchange rates.
Current ratios: The current ratio is a liquidity ratio that measures a company’s ability to pay short-term and long-term obligations.
Curve: Refers to the yield curve. Positioning on the yield curve is important to investors, especially during non-parallel shifts.
Curve-Fitted: mathematically optimizing a model for a given set of historic data.
Curve-flatten: a relative-value position that benefits if the spread between short and long maturity securities declines.
CUSIP: CUSIP stands for Committee on Uniform Securities Identification Procedures. A CUSIP number identifies most securities, including: stocks of all registered U.S. and Canadian companies, and U.S. government and municipal bonds.
Cyclical sectors: Consumer Discretionary, Energy, Industrials, Materials, Financials and Information Technology sectors.
Cyclical stocks: Refers to stocks in the Consumer Discretionary, Energy, Industrials, Materials, Financials and Information Technology sectors.
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Dallas Fed’s Trimmed Mean PCE indicator: alternative measure of core inflation in the price index for personal consumption expenditures (PCE) computed by the Dallas Fed. It can be thought of as a weighted average, or mean, of the rates of change in the prices of all the goods and services that make up the index.
Dark pools: A private securities exchange in which investors, typically large financial institutions, are able to make trades anonymously.
DAX Index: A stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free-float methodology is used to calculate the index weightings along with a measure of average trading volume.
DBIQ Emerging Markets USD Liquid Balanced Index: Tracks the performance of a selected basket of liquid emerging markets U.S. dollar-denominated government bonds. The methodology evaluates countries regarding eligibility for inclusion in the DBIQ Emerging Markets USD Liquid Balanced Index annually based on a defined set of qualifying criteria established by DB.
Dealer: A person or firm in the business of buying and selling securities for their own account, whether through a broker or otherwise.
Debt capacity: Attention to measures that have the potential to indicate if a market can take on additional debt without impacting the market price of existing debt to a large degree.
Debt-for-Bond Swap: The Chinese Finance Ministry enabled localities to sell up to 1 trillion yuan of government-guaranteed bonds to replace their existing debt—mostly in the form of short-term bank loans.
Debt Recovery Tribunal: A special appellate authority set up by Government of India to speed up the recovery in the case of Non-performing assets of Banks, Financial Institutions etc.
Debt Tax Shield: the amount in which corporations can reduce their taxable income by issuing debt.
Debt Tax Shield: The amount in which corporations can reduce their taxable income by issuing debt.
Debt-to-Asset Ratio: a leverage ratio that defines the total amount of debt relative to assets. .
Debt-to-Equity Ratio: Measure of a firm’s total outstanding debt to the book value, or value of its equity listed on its balance sheet. Higher values indicate greater debt issuance, and potentially greater risk if events occur that can negatively impact debt.
Decile: each of ten equal groups into which a data set can be divide.
Default: A failure to meet the legal obligations (or conditions) of a loan.
Default Rates: the frequency in which borrowers fail to fulfill their contractual obligations.
Default Risk: The risk that an issuer will be unable to make the payments on its debt necessary to satisfy its financial obligation to the investo.
Defensive characteristics: Greater exposure to the so-called more defensive sectors, especially Telecommunication Services and Utilities.
Defensive sectors: Consumer Staples, Health Care, Telecommunication Services and Utilities.
Defensives Relative to Cyclicals: The P/E ratio of defensive stocks divided by the P/E ratio of cyclical stocks. Higher values indicate that defensive stocks are rising more in price relative to their earnings per share than are cyclical stocks.
Defensive stocks: Refers to stocks in the Consumer Staples, Health Care, Utilities and Telecommunication Services sectors.
Deficit Finance: Instead of raising taxes, government borrows money to finance public expenditure.
Defined contribution: Type of retirement plan where participants decide to defer part of their current compensation into the plan and assume the risk of having sufficient future assets in retirement.
Deflation: The opposite of inflation, characterized by falling price levels.
Delegated Proof of Stake: A consensus algorithm developed to secure a blockchain by ensuring representation of transactions within it. DPoS is designed as an implementation of technology-based democracy, using voting and election process to protect blockchain from centralization and malicious usage.
Demonetization: The act of stripping a currency unit of its status as legal tender..
Deposit Rate: The rate parties receive for deposits at the central bank.
Derivative: a security whose value is determined by another asset.
Devaluation: deliberate downward adjustment to the value of a country’s currency, relative to another currenc.
Dirty hedge: a position that is used to offset a portion of risk in an investment. A dirty hedge will often exhibit an imperfect, negative correlation to the original investment.
Discount: When the price of an ETF is lower than its NAV.
Disinflation: Term used to describe instances of slowing inflation, different from deflation in that price levels are still increasing overall, just at a slower rate.
Dispersion: A measure of the statistical distribution of portfolio returns.
Disposable Income: Disposable income is the amount of money that households have available for spending and saving after income taxes have been accounted for.
Disposition Effect: the tendency for investors to be much more likely to sell a position at a gain rather than at a los.
Distribution Yield: Calculated by annualizing the most recent fund distribution and dividing by the fund’s current NAV. The yield represents a single distribution from the fund and does not represent the total returns of the fund.
Diversification: A risk management strategy that mixes a wide variety of investments within a portfolio.
Diversified Commodity Index: An index that tracks a diverse basket of commodities to measure their performance, often traded on exchanges allowing investors to gain easier access to commodities without having to enter the futures marke.
Diversified Trends Indicator™ (DTI®): are registered marks of Alpha Financial Technologies, LLC (AFT), and have been licensed by the Fund. The Fund is not sponsored, endorsed, sold or promoted by AFT. Diversified Trends Indicator™ is a long/short, rules-based managed futures index constructed of 24 liquid commodity and financial futures contracts.
Dividend: A portion of corporate profits paid out to shareholders.
Dividend coverage ratio: Earnings per share divided by dividends per share. Higher numbers indicate a firm has a greater amount of earnings per share relative to its dividend payments.
Dividend discount model (DDM): Method of determining whether a company’s share price is currently above or below where it could be if future dividend payments were the key determinant, as opposed to other factors.
Dividend-focused ETFs: ETFs that focus particularly on dividends when screening potential constituents for inclusion.
Dividend-focused indexes: Indexes that focus particularly on dividends when screening potential constituents for inclusion.
Dividend growth: The growth in trailing 12-month dividends for the specified universe.
Dividend Payout Ratio: The percentage of earnings paid to shareholders in dividends. Calculated as yearly dividends per share over earnings per share.
Dividends per Share: The sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued.
Dividend Stream: Refers to the regular dividends per share multiplied by the number of shares outstanding.
Dividend weighted: Constituent securities represented within the Index in proportion to their contribution to the dividend stream of the Index.
Dividend yield: A financial ratio that shows how much a company pays out in dividends each year relative to its share price.
Dividend yields: Refers to the trailing 12-month dividend yield. Dividends over the prior 12 months are added together and divided by the current share price. Higher values indicate more dividends are being generated per unit of share price.
Dodd-Frank Act: Legislation passed in response to the 2008–09 financial crisis, meant to focus on what were viewed as potential shortcomings in the regulatory framework that contributed to this crisis.
Dollar-denominated debt: Debt that is issued in U.S. dollars and must be paid in U.S. dollars. If the issuer’s local currency depreciates against the U.S. dollar, it becomes more expensive for the issuer to pay off the debt; if the issuer’s local currency appreciates against the U.S. dollar, the debt obligation becomes less expensive.
Dot Plot: a chart based on the economic projections of the Federal Reserve board members that illustrates their views on the appropriate pace of policy firming and provides a target range or target level for the federal funds rat.
Dovish: Description used when stimulation of economic growth is the primary concern in setting monetary policy decisions.
Dow Jones Emerging Markets Consumer Titans 30 Index: Index designed to measure the performance of the 30 leading emerging market companies in the consumer goods and consumer services industries. Weighting is by float-adjusted market capitalization, subject to diversification requirements.
Dow Jones EPAC Select Dividend Index: Designed to measure the performance of relatively higher-yielding companies in developed market countries outside the United States that meet certain dividend criteria defined by Dow Jones. Weighting is by dividend yield.
Dow Jones EURO STOXX 50 Index: A market capitalization-weighted stock index of 50 large, blue-chip European companies operating within eurozone nations.
Dow Jones Industrial Average: The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq.
Dow Jones U.S. Select Dividend Index: The index is a modified market capitalization approach and weights by dividend yield. Stocks are selected for fundamental strength relative to their peers, subject to various screens such as dividend quality and liquidity.
DuPont Equation: At the DuPont Corporation, Donaldson Brown created the concept that Return on equity (ROE) is broken down into the interaction between profit margin, by asset turnover, and the equity multiplier. These three pieces multiplied together are equal to ROE. .
Duration: A measure of a bond’s sensitivity to changes in interest rates. The weighted average accounts for the various durations of the bonds purchased as well as the proportion of the total government bond portfolio that they make up.
Duration Curve: The graphical representation of the trend in interest rates as it relates to length of loan. The plots on the graph will have an interest rate for a specific loan time period, usually 2,5,10,30 year.
DXY Index: Weighted geometric mean of the dollar’s value compared only with basket of 6 other major currencies, Euro, Japanese Yen, Pound Sterling, Canadian Dollar, Swedish Krona, and Swiss Franc.
Dynamic Hedge: Strategy in which a currency hedge can be varied (as opposed to targeting a constant level) and change over the course of time.
Dynamic Hedge Ratio: refers to the percent of currency risk that a strategy is seeking to mitigate ata particular point in time.
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EAFE: Refers to the geographical area that is made up of Europe, Australasia and the Far East.
Earnings growth estimates: Bloomberg analysts’ long-term earnings growth expectations, which encompass the estimated growth in operating earnings per share over the company’s next full business cycle, typically three to five years.
Earnings per share: Total earnings divided by the number of shares outstanding. Measured as a percentage change as of the annual Index screening date compared to the prior 12 months. Higher values indicate greater growth orientation.
Earnings Retention: Proportion of a firm’s earnings that are is not paid out to shareholders in the form of a dividend but rather reinvested back into the business. Higher numbers indicate a greater percentage of earnings are being reinvested.
Earnings Stream®: Earnings per share x the number of shares outstanding. For an index, these totals are added for all constituents.
Earnings-weighted: Earnings for all constituents in an index are added together, and individual constituents are subsequently weighted by their proportional contribution to that total.
Earnings yield: The earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company.
Econometrics: The study of economics that heavily emphasizes data and mathematics in order to prove, create or support different theories about what is more or less important within an economic system.
Economic solvency: Attention to a more medium- to long-term perspective relating to how spending relates to revenue and the ability of programs or policies of particular importance are viewed as to their longevity.
Effective Duration: This statistic provides a measure of the sensitivity of the Fund’s price to changes in interest rates and is calculated as the weighted average of the individual blond effective durations. Effective duration recognizes that changes in interest rates may also change the expected cash flows generated by any underlying bonds with embedded options. The calculation is expanded to incorporate the contribution of derivatives to the overall interest rate risk sensitivity to the portfolio. Credit ratings apply to the underlying holdings of the Fund, and not to the Fund itself. S&P and Moody’s study the financial condition of an entity to ascertain its creditworthiness. The credit ratings reflect the rating agency’s opinion of the holdings financial condition and histories.
Effective tax rate: The average tax rate at which a corporation’s pre-tax profits are taxed, taking into account all forms of taxation paid by the company.
Efficient frontier: An efficient frontier is a method of illustrating the expected risk and return profile of different portfolio.
Efficient Market Hypothesis: Current share prices correctly reflect all available information about publicly traded firms and continually incorporate the emergence of new information on a nearly instantaneous basis; there are no bubbles, and firms are neither expensive nor inexpensive.
Embedded Income Yield: Represents the annualized rate of return generated by a fund’s investments in both fixed income securities and derivatives exclusive of interest rate changes and movement in foreign exchange spot rates. The calculation is intended to capture the Fund’s potential to earn income return over the following year given current holdings and market conditions. The embedded income yield will differ from the portfolio’s yield to maturity, due to the incorporation of derivatives in the embedded income yield. Embedded income yield and portfolio yield to maturity may differ from a Funds actual distribution and SEC yield and do not reflect Fund expenses.
Emerging market: Characterized by greater market access and less potential for operational risks when compared to frontier markets, which leads to a larger base of potentially eligible investors.
Emerging market consumer: Broad-based EM consumer represented by Consumer Discretionary, Financials, Consumer Staples, Telceommunication Services, Information Technology, Industrials, Utilities and Health Care.
Employment Cost Index: Measure of the change in cost of labor, free from the influence of employment shifts among occupations and industries.
EMU4: Consists of Germany, France, Italy and Spain.
EM USD Sovereigns: Debt denominated in U.S. dollars issued by emerging market governments.
Endowment Effect: An emotional bias that causes an individual to value an asset already owned more than if they did not own it.
“Entitlement spending”: Refers to federal spending based on eligibility thresholds established by income, age or disability. Social Security, Medicare and Medicaid are the three largest entitlement programs and account for approximately $1.5 trillion in federal spending in 2012 (source: Congressional Budget Office).
Entrusted loan: A loan between borrowers and lenders that is organized by an agent bank.
EONIA (Euro Overnight Index Average): A daily reference rate that expresses the weighted average of unsecured overnight interbank lending in the European Union and the European Free Trade Association (EFTA), and is calculated by the European Central Bank (ECB) based on the loans made by 28 panel banks.
Euroclear eligible: a trade settlement system in Europe that allows for the efficient delivery of bonds and funds.
European Commission Economic Sentiment Indicator: refers to a composite indicator made up of five sectoral confidence indicators with different weights: Industrial confidence indicator, Services confidence indicator, Consumer confidence indicator, Construction confidence indicator Retail trade confidence indicator.
European currency risks: The assumption of European currency risk means that investment returns will be impacted not only by the underlying stocks but also the performance of the euro relative to the U.S. dollar. If the euro declines versus the U.S. dollar, there will be a negative impact on returns; if the euro appreciates there will be a positive impact.
Euro Stoxx: Refers to the Euro Stoxx 50 Index, a market capitalization-weighted stock index of 50 large, blue-chip European companies operating in Eurozone nations.
Eurozone (EZ): Consists of the following 18 countries that have adopted the euro as their currency: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain (source: European Central Bank, 2014).
EUR TWI: The trade-weighted euro is compiled as a weighted average of exchange rates of home versus foreign currencies, with the weight for each foreign country equal to its share in trade. This index is computed by the Bank of England.
Excess reserves: bank reserves in excess of a reserve requirement determined by local central bank. They represent reserves of cash more than the minimum required amount.
Excess Returns: refers to investment returns on a securities above that of a benchmark or index exhibiting similar risk characteristics.
Exchange rate: The exchange of one currency for another, or the conversion of one currency into another currency.
Exchange-traded notes: Different from exchange-traded funds in that they are a direct obligation of a financial entity—typically a bank—where the contract specifies that the bank will pay the holder of the note according to the returns of an underlying index minus applicable fees. Exchange-traded funds hold the underlying assets of the index and their returns represent the returns of the assets held.
Excise Tax: an indirect tax charged on the sale of a particular good.
Ex-date: The date after which shareholders in a particular stock may sell their shares but still be entitled to an upcoming dividend payment that has been previously announced but not yet paid.
Executional parties: Those able to assist in the execution process, or the process of getting in and out of an investment.
Expense ratio: The annual fee that all funds or exchange-traded funds charge their shareholders
Explicit forward guidance: Revealing the interest rate forecasts that may relate to the central bank’s objectives or its assessment of economic shocks and the functioning of the economy.
Ex post real return: ex post refers to actual results rather than forecasts. Real return refers to return after inflation. So in total, this is the return after inflation that actually happen.
Ex-SOEs: ex-state owned enterprises or companies that are neither wholly or partially owned and operated by a government.
External Debt: total public and private debt owed to nonresidents.
External vulnerability: Attention to measures such as current account and foreign exchange reserves that could potentially lead to a greater influence of macroeconomic factors occurring outside of a market influencing that particular market.
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FAANG: An acronym referring to the stocks of the five most popular and best-performing American technology companies: Facebook, Amazon, Apple, Netflix and Alphabet (formerly known as Google).
Factor: Attributes that based on its fundamentals or share price behavior, are associated with higher return.
Factor-based: Strategies that focus on groups of firms thought to share common attributes, be it in terms of their fundamentals or their share price behavior.
Factor loadings: For the purposes of this piece, factor loadings are synonymous with coefficients determined by a regression analysis. They provide estimates of the sensitivity of a series of returns to different external variables.
Factor selection: Refers to selection process that focuses on common attributes (i.e., factors), be it in terms of their fundamentals or their share price behavior, that are associated with higher returns.
Fairly priced: Implies that market prices are thought to be aligned with the underlying fundamentals of the firms in question, not appearing expensive and not appearing inexpensive.
Fair value: Also known as “eNAV.” It is essentially an indicative value (IV) that is made in real time by calculating the basket value on every underlying tick and by adjustments that account for updated market new.
Fair Value Model: A model that prices securities using eNAV, which is essentially an indicative value (IV) that is made in real time by calculating the basket value on every underlying tick and by adjustments that account for updated market news. If the basket is closed, the fair value model incorporates the closing price, currency movements and market news event to calculate a fair value for the ETF.
Fallen Angels: A bond or issuer that was given an investment-grade rating but has since been reduced to junk bond status due to weakening financial conditio.
Fama-French: Refers to a factor-based model to describe stock returns developed by Eugene Fama and Kenneth French. Their original three-factor model breaks down the components of stock returns to market risk, company size and book to market ratio, or value.  .
Federal Agencies: Special government organizations set up for a specific purpose such as the management of resources, financial oversight of industries or national security issues.
Federal budget: The government’s attempt to balance federal spending with revenue.
Federal Funds (Fed Funds): Excess reserves that commercial banks and other financial institutions deposit at regional Federal Reserve banks
Federal Funds Rate: The rate that banks that are members of the Federal Reserve system charge on overnight loans to one another. The Federal Open Market Committee sets this rate. Also referred to as the “policy rate” of the U.S. Federal Reserve.
Fed Fund Futures: A financial instrument that let’s market participants determine the future value of the Federal Funds Rate.
Fed funds target range: the interest rate band the Federal Open Market Committee decides to implement for the federal funds rate.
Fed Interest Rates: Refers to the Federal Funds Rate, which is the rate that banks that are members of the Federal Reserve system charge on overnight loans to one another. The Federal Open Market Committee sets this rate. Also referred to as the “policy rate” of the U.S. Federal Reserve.
Fed tightening: Refers to the Federal Reserve enacting monetary policies that have the overall impact of reducing the availability of credit, which is widely thought to have the potential to slow economic growth.
Fiat money: Any money that is accepted by a government for paying taxes or debt, but is not pegged to or backed directly by gold and other valuables.
Fibonacci retracement: A technical analysis tool displaying percentage lines which look at support and resistance levels, potentially signaling short-term price/yield reversals. The concept of retracement suggests that after a period of market movement, prices/yields can retrace a portion of their prior pattern before returning to their original trend.
Fiduciary: An individual in whom another has placed trust and confidence to manage and protect property or money.
Fintech: Describes new tech that seeks to improve and automate the delivery and use of financial services
First arrow policies: This refers to the component of Abenomics policy that is focused upon what the Bank of Japan can do from a monetary policy standpoint to attempt to stimulate growth.
Fiscal balance: a government’s tax revenues and proceeds from asset sales less government spendin.
Fiscal budget: is a period used for calculating annual budget requirements for a country or an organization or company.
Fiscal cliff: is a term used to describe the fiscal situation the federal government faces when a series of large tax increases and spending cuts are due to take effect at the end of 2012 and in early 2013.
Fiscal deficit: Situation where government spending exceeds government revenue.
Fiscal drag: This occurs when a national government’s spending less any taxes does not meet the net savings goals of the private economy. This usually leads to deflationary pressure in the economy.
Fiscal Package: a package of economic measures from the government (such as increasing government spending/ lower taxes) used to stimulate growth in the econom.
Fiscal Policy: Government spending policies that influence macroeconomic conditions. These policies affect tax rates, interest rates and government spending, in an effort to control the economy.
Fiscal Reflation: designed to expand a country’s output while controlling the effects of deflatio.
Fiscal surplus: a situation where government revenue (taxes) exceeds expenditures.
Fiscal sustainability: Attention to measures such as government spending plans and budgets and how these relate to government revenue policies, like taxation.
Fiscal union: A single body that makes decisions surrounding the collection and expenditure of government revenue/taxes.
Five-year government bond yields: The single discount rate that equates the present value of a government bond’s cash flows to its market price which matures in 5 years.
Fixed-cost gearing: Impact that can allow operating profit to increase at a faster rate than sales due to a firm’s cost structure.
Fixed income: An investment security that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity.
Fixed Indexed Annuity: An annuity structured with a minimum floor return coupled with equity market upside. Equity index options are purchased with the proceeds and income from the annuity’s fixed income portfolio to provide the equity market upside.
Float-adjusted market capitalization: Share price x number of shares outstanding, adjusted for the fact that in many emerging markets, not all of the shares outstanding regularly trade, which leads to a reduction in the number of shares outstanding used in the calculation.
Floating Rate Security: A debt instrument with a variable interest rate usually tied to a benchmark rate such as the US Treasury Bill Rate or the London Interbank Offered Rate.
Floating Rate Security: A debt instrument with a variable interest rate usually tied to a benchmark rate such as the US Treasury Bill Rate or the London Interbank Offered Rate.
Floating Rate Treasury Note: a debt instrument issued by the U.S. government whose coupon payments are linked to the 13-week Treasury bill auction rate.
Flow of funds: A set of accounts that is used to follow the flow of money within various sectors of an economy. Specifically, the account analyzes economic data on borrowing, lending and investment throughout the economic sectors.
Flows: Monetary investment from foreign investors.
Foreign 3m LIBOR: the average 3-month rate that major banks offer to lend to one another for short-term unsecured funds in a particular currency in London. LIBOR refers to the London Interbank Offered Rate.
Foreign exchange reserves: The total balance of foreign currency deposits and bonds held by a central bank or monetary authority.
Foreign Institutional Investment (FII): An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing. Institutional investors include hedge fund, insurance companies, pension funds and mutual funds.
Foreign institutional investor: An investor or investment fund that is from or registered in a country outside of the one in which it is currently investing.
Foreign Large Blend: Characterized by exposure spanning across stocks exhibiting both value and growth attributes. This is achieved while focusing on relatively larger companies abroad.
Foreign Large Growth: Characterized by higher price levels relative to fundamentals, such as dividends or earnings. Price levels are higher because investors are willing to pay more due to their expectations of future improvements in these fundamentals. This is achieved while focusing on relatively larger companies abroad.
Foreign Large Value: Characterized by lower price levels relative to fundamentals, such as earnings or dividends. Prices are lower because investors are less certain of the performance of these fundamentals in the future. This is achieved while focusing on relatively larger companies abroad.
Forward discount: A term that denotes a condition in which the forward or expected future price for a currency is less than the spot price. It is an indication by the market that the current domestic exchange rate is going to decline against another currency.
Forward contracts: Agreements to buy or sell a specific currency at a future date at an agreed upon rate.
Forward currency contracts: A forward contract in the forex market that locks in the price at which an entity can buy or sell a currency on a future date.
Forward guidance: A central bank policy tool intended to guide market expectations regarding the future of policy rates.
Forward P/E ratio: Share price divided by compilation of analyst estimates for earnings-per-share over the coming 12-month period. These are estimates that may be subject to revision or prove to be incorrect over time.
Forward Volatility: Forward volatility is a measure of the implied volatility of a financial instrument over a period in the future, extracted from the term structure of volatility (which refers to how implied volatility differs for related financial instruments with different maturities).
fractional reserve banking: A banking system where only a fraction of deposits are backed by actual cash, and therefore available for withdrawal, at a point in time. This is meant to increase capital lending and expand the economy.
Framing: a behavioral finance concept for how investors view the same or similar outcomes differently depending on how the information is presented. .
Frankfurt’s DAX: A stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free-float methodology is used to calculate the index weightings along with a measure of average trading volume.
Free Cash Flow: A measure of how much cash is left in the company after taking into account all the necessary expenses, including net capital expenditures.
Free cash flow over debt service: A common measure of solvency that measures the relationship between the cash a company generates vs. what is required to meet their borrowing obligations.
Free fall: rapid and steep decline in market price.
free-floating: an exchange rate regime whereby the value of the currency is determined by supply and demand against other currencies.
Free-float market capitalization: a market capitalization weighting method that is calculated by excluding closely held shares owned by governments or company insiders.
Frexit: an abbreviation of “French exit” that mirrors the term Grexit. It refers to the possibility that French will withdraw from the European Unio.
Frontier market: Typically characterized by a higher degree of potential risk, including issues that may inhibit the flow of assets across national borders and awareness of potential difficulties for foreigners to establish accounts.
Front month: The nearest expiration date for a futures contract. Contracts that have later expiration dates than front month contracts are called back month, or 'far month', contracts.
FTSE 100 Index: A market capitalization-weighted index measuring the performance of the 100 largest companies listed on the London Stock Exchange.
FTSE China 25 Index: Represents the 25 largest and most liquid Chinese stocks (H Shares and Red Chips) listed and trading on the Hong Kong Stock Exchange.
FTSE China 50 Index: a market capitalization weighted index tracking the top 50 Chinese companies. Stocks are weighted by H or Red Chip share cap as appropriate.
FTSE Developed ex North America Index: A market-capitalization weighted index representing the performance of around 1380 large and mid cap companies in 23 Developed markets, excluding the USA and Canada. The index is derived from the FTSE Global Equity Index Series (GEIS).
FTSE Emerging Markets All Cap China A Inclusion Index: a market-capitalization weighted index representing the performance of large, mid and small cap stocks in Emerging markets. The index is comprised of approximately 3350 securities from 22 countries, and is part of the FTSE China A Inclusion Indexes which contain FTSE China A All Cap Index securities adjusted for the aggregate approved QFII and RQFII quotas available to international investor.
FTSE Emerging Markets Index: A free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.
FTSE EPRA/NAREIT Global ex US Index: The FTSE EPRA/NAREIT Global ex US Index is a market capitalization-weighted index consisting of the most heavily traded real estate stocks all over the world except the USA.
FTSE MIB Index: The FTSE MIB Index is the primary benchmark index for the Italian equity market. Capturing approximately 80% of the domestic market capitalization, the FTSE MIB Index measures the performance of the 40 most liquid and capitalized Italian shares and seeks to replicate the broad sector weights of the Italian stock market.
FTSE Russell: The trading name of London Stock Exchange Group (LSEG) subsidiaries FTSE International Limited (or known as FTSE Group) and Frank Russell Company. The division is notable for FTSE 100 Index, Russell 2000 Index as well as other indexes.
FTSEurofirst 300 Index: The FTSEurofirst 300 Index is part of the FTSEurofirst Index Series and the FTSEurofirst 300 Indices, which are tradable indices measuring the performance of European portfolios. It is a capitalization-weighted price index which uses free-float. It measures the performance of Europe’s largest 300 companies by market capitalizatio.
Functional currency: The currency in which foreign subsidiaries of a parent company conduct their operations.
Fundamental fair value: What the share price of a firm would be if the sole determinant were the behavior of the underlying fundamental factor, an example of which would be the dividend per share.
Fundamentals: Attributes related to a company’s actual operations and production as opposed to changes in share price.
Fundamental value: The value of a firm that is related to a company’s actual operations and production as opposed to changes in share price.
Fundamental weighting: A type of equity index in which components are chosen based on fundamental criteria as opposed to market capitalization. Fundamentally weighted indexes may be based on fundamental metrics such as revenue, dividend rates, earnings or book value.
Fund Distribution Yield: The fund distribution yield is calculated by annualizing the most recent fund distribution and dividing by the fund’s current NAV. The yield represents a single distribution from the fund and does not represent the total returns of the fund.
Funding rates: rate at which one can fund themselves in the financial markets.
Fund of funds: Funds that, instead of investing in individual securities, invest their assets in mixes of other fund.
FX Reserves: assets held by central banks and monetary authorities, usually in different reserve currencies, used to back its liabilitie.
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G10/Group of Ten: A group of industrialized nations that meet on an annual basis to plan, debate, and cooperate on international financial matters. Member countries include: Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, United Kingdom, and United States.
G20: Group of 20 of the world’s largest economies that meets regularly in order to coordinate global economic policies.
G3: The world’s three leading economic blocs, currently comprising the United States, Europe and Japan.
G5: Consists of five of the world's leading industrialized countries/areas: Japan, the United Kingdom, the United States, Canada and the Euro Zone.
G7: The Group of 7 is a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
G-7 Countries: France, Germany, Italy, Japan, United States, United Kingdom, and Canada.
Generic 1st Brent Crude Oil Contract: An index created from continuously rolling generic or the immediate 1st month oil contract. It is supposed to closely reflect historical prices of crude oil in the market.
German 10-year bund: a debt instrument issued by the German government with an original maturity of 10 years.
German 2-year bund: a debt instrument issued by the German government with an original maturity of 2 years.
German bunds: A debt security issued by Germany’s federal government, which is the German equivalent of a U.S. Treasury bond.
GICS: Global Investment Classification System, which assigns companies to specific industries and sectors.
Gilt: Bonds issued by the UK government and generally considered to be low risk and the primary vehicle in which QE is carried out in the UK.
Global bank: Large financial institution capable of making bulk-sized international transactions.
Global carry trades: Occur when investors borrow money in a low-interest-rate country at low cost and use it to invest in a higher-interest-rate country. The potential profit that exists relates to the difference in interest rates between the two countries, minus applicable trading costs.
Global Standards Screening (GSS): Assesses companies impact on stakeholders and the extent to which a company causes, contributes or is linked to violations of international norms and standards.
Golden cross: Generally referenced when a shorter-term moving average crosses above a longer-term moving average and is a bullish indicator. When a shorter-term moving average crosses below a longer-term moving average, it may be referred to as a “death cross” and is a bearish indicator.
Goldman Sachs ActiveBeta U.S. Large Cap Equity: Capturing common sources of active equity returns such as value (price-to-market value), momentum (performance history), quality (profitability relative to total assets) and volatility ( consistency of returns). Rebalances quarterly. .
Gold standard: A monetary system where the value of a country’s currency is directly linked to gold. This system was abandoned by the U.S. during the mid-20th century and replaced with the complete use of fiat money./span>.
Government bonds: A debt securities issued by a government to support fiscal spending.
Government-related exposure: a debt security whose value is implicitly guaranteed by a government, government sponsored entity, or supranational organization. Securitized: a debt security whose value is backed by an asset or pool of assets such as a mortgage.
Government Revenues: refers to the money received by a government from sources such as taxes, government owned corporations or central banks.
Grexit: an abbreviation of “Greece exit” that mirrors the term Brexit. It refers to the possibility that Greece will withdraw from the European Union.
Gross domestic investment: Consists of outlays on additions to the fixed assets of the economy plus net changes in the level of inventories.
Gross Profitability: a company’s total revenue (equivalent to total sales) minus the cost of goods sol.
Gross profits over assets (GPOA): Measures a corporation’s profitability by revealing how much gross profit a company generates relative to the level of assets used to generate them.
Gross Value Added (GVA): A productivity metric that measures the difference between output and intermediate consumption. Gross value added provides a dollar value for the amount of goods and services that have been produced, less the cost of all inputs and raw materials that are directly attributable to that production.
Growth: Characterized by higher price levels relative to fundamentals, such as dividends or earnings. Price levels are higher because investors are willing to pay more due to their expectations of future improvements in these fundamentals.
Growth stocks: Stocks whose share prices are higher relative to their earnings per share or dividends per share. Investors are willing to pay more because of their earnings or dividend growth expectations going forward.
Growth style: Style of investing emphasizing stocks with share prices typically higher in relation to financial metrics, such as dividends or earnings.
GST Bill: India’s Goods and Services Tax Bill aimed at streamlining the country’s tax syste.
Gulf Cooperation Council (GCC): A political and economic union of the Arab states bordering the Persian Gulf and located on or near the Arabian Peninsula.
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Haircut: Refers to scenario where prices of bonds carried on bank balance sheets are given a lower current price, commensurate with how the bonds would trade at their market price.
Hang Seng Index: One of the earliest stock market indexes in Hong Kong. Publicly launched on 24 November 1969, the HSI has become the most widely quoted indicator of the performance of the Hong Kong stock market. To better reflect the price movements of major industry sectors of the market, HSI constituent securities are grouped into Finance, Utilities, Properties, and Commerce and Industry Sub-indexes.
Hawkish: Description used when worries about inflation are the primary concerns in setting monetary policy decisions.
Headline CPI: measure of the total inflation within an economy, including commodities such as food and energy prices.
Headline Rate: A basic rate of taxation before distorting factors have been removed.
Headwind: challenges to performance or expectations of performance.
Hedge: Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.
Hedge currency exposure: Engage in transactions that mitigate the impact of currency fluctuations on the total returns of foreign investments. Hedging can help returns when a foreign currency depreciates against the U.S. dollar, but it can hurt when the foreign currency appreciates against the U.S. dollar.
Hedge fund: A hedge fund resembles a pooled investment vehicle administered by a professional management firm. It is often structured as a limited partnership or limited liability company. Hedge funds invest in a diverse range of markets and use a wide variety of investment styles and financial instruments.
Hedge fund like returns: exhibiting returns sharing characteristics of many actively managed hedge fund strategies.
Hedge Ratio: The specified percentage of currency exposure being hedged, with 0% indicating that none of the currency exposure is being hedged and 100% indicating that all of the currency exposure is being hedged.
Hedgers: Individuals—typically taking a longer-term view—looking to conduct business or make an investment in a particular country where they want to minimize the exchange rate impact as part of their strategic focus.
Hedging Indicator: An indicator in the strategy to show when and how much to hedge the long position.
Helicopter money: has been proposed as an alternative to Quantitative Easing (QE) when interest rates are close to zero and the economy remains weak or enters recession. Economists have used the term ‘helicopter money’ to refer to two very different policies. The first set of policies emphasizes the ‘permanent’ monetization of budget deficits. The second set of policies involves the central bank making direct transfers to the private sector financed with base money, without the direct involvement of fiscal authorities.
Herfindahl-Hirschman Index (HHI): A common measure of market concentration. The index can range from close zero in a perfectly competitive market to 10,000 in a perfect monopoly. It is calculated by squaring the market share of each firm competing in a market and then summing.
Heuristic: A term in behavioral finance referring to mental biases in investor thinking developed from personal experience rather than specific data.
HFRI index: Captures the breadth of hedge fund performance trends across various strategies and region.
High-Discount Margin: the additional compensation over the reference rate that investors demand for holding a floating rate securit.
High Dividend Yield Years: Average of the 1-year forward performance, taken for each individual 1-year period, following year-end trailing 12-month dividend yields above the median value for all 24 values for the MSCI Emerging Markets Index. This is not an average annual retur.
Higher-income individuals: Single tax filers reporting $400,000 or more in income after any applicable deductions, and household tax filers reporting $450,000 or more in income after any applicable deductions.
Higher-income investors: Married tax filers with adjusted gross income greater than $250,000, and single filers with adjusted gross income greater than $200,000.
High Frequency Trading: A fast-speed, high volume trading program that uses algorithms to execute trades based on different market signals.
High Yield: Sometimes referred to as “junk bonds,” these securities have a higher risk of default than investment-grade securitie.
High-yield Bonds: A high yield bond is a debt security issued by a corporation with a lower than investment grade rating. It is a major component of the leveraged finance market.
High-yield bond spread: The amount of incremental income a bondholder receives for assuming credit risk, specifically that of companies rated below investment grade credit.
Hiking Cycle: monetary policies that have the overall impact of reducing the availability of credit, which is widely thought to have the potential to slow economic growth.
Home Bias: A term in behavioral finance referring to the tendency for investors to have a preference for domestic market investments.
Household consumption: Market value of all goods and services, including durable products purchased by households.
HSBC Asian Local Bond Index (ALBI): The HSBC Asian Local Bond Index tracks the total return performance of liquid bonds denominated in the local currencies in China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. Country weightings are driven by market capitalization, liquidity, accessibility, and market development, while security weightings within the countries are based on market capitalization.
H-Share: A share of a company incorporated in the Chinese mainland that is listed on the Hong Kong Stock Exchange or other foreign exchange.
Human capital: measure of the skills of the labor force within an economy, as well as their experience. A large number of people with high skills and experience relevant to what is needed within the economic system indicates a high level of human capital.
Hurdle rate: Rate at which the currency needs to depreciate in order to compensate for the high carry of the currency.
Hyperinflation: Extremely rapid, uncontrolled rise in price levels during a short period of time.
Hypothetical capacity: Refers to a hypothetical capacity level for assets tracking the performance of the WisdomTree Emerging Markets Equity Income Index, which denotes the level of assets where the Index would prescribe taking its first 10% position in an underlying constituent.
ICE BofAML US Corporate Index(C0A0): The ICE BofAML US Corporate Index tracks the performance of the universe of US dollar denominated investment grade corporate debt publicly issued in the US market.
ICE BofAML US High Yield Index (H0A0): The ICE BofAML US High Yield Index tracks the performance of the universe of US dollar denominated below investment grade corporate debt publicly issued in the US market.
ICE U.S. Dollar Index (DXY): a geometrically- averaged calculation of six currencies weighted against the U.S. dollar. Current exposures include the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and, & Swiss franc.
ICE U.S. Treasury 1-3 Year TR Index: This index tracks U.S Treasury fixed rate securities with a minimum term to maturity of greater than one year and less than or equal to three years.
Idiosyncratic risk: Risk that pertains to a specific asset which can be minimized through diversificatio.
IFO sentiment indexes: Prepared by the IFO Institute for Economic Research in Munich. The Ifo Business Climate Index is based on ca. 7,000 monthly survey responses of firms in manufacturing, construction, wholesaling and retailing. The firms are asked to give their assessments of the current business situation and their expectations for the next six months.
Illiquidity: The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset. The lack of ready buyers also leads to larger discrepancies between the asking price (from the seller) and the bidding price (from a buyer) than would be found in an orderly market with daily trading activity.
Impact investing: nvesting in a socially or environmentally conscious manner in addition to financial profit.
Implied Fed Funds Rate: refers to the Federal Funds Target Rate implied by the daily trading values of the Fed Funds Futures.
Implied interest rate: The annualized interest rate implied by forward currency contracts relative to spot rates.
Implied/Underlying Liquidity: Implied liquidity or implied daily tradable shares (IDTS) is a representation of how many shares can potentially be traded daily in an ETF as portrayed by the creation unit. The formula is: (30 day average daily volumes * variable percentage) / shares per creation unit) * creation unit siz.
Implied volatility: The estimated volatility of a security’s price. Implied volatility is a way of estimating the future fluctuations of a security’s worth. It is backtracked from live option prices with a future maturity date.
Implied yield: The annualized rate of return generated by a fund’s investment in forward currency contracts. The calculation is intended to show the yield of forward currency contracts, assuming that foreign exchange rates remain constant.
India Inc.: Used to refer to the formal (comprising government and corporate) sector of the nation. It employed 7 percent of the workforce in 2000 and contributed 60 per cent of the nominal GDP of the nation.
Indian Rupee spot rate: The national currency of India and most commonly traded against the U.S. dollar. It is the rate at which the Indian currency can be converted to the U.S. dollar and vice versa.
Indicated dividend stream: refers to the regular dividends per share indicated to be paid in the coming year multiplied by the number of shares outstanding.
Indicated Dividend Yield: Indicated dividends per share are annualized and then divided by the current share price. High values indicate low prices relative to indicate low prices relative to indicated dividends.
Indicative Value (IV): The indicative value (IV) is the value that ETF issuers provide to offer a more real-time indication of the value of each ETF portfolio. It is also sometimes known as the indicative optimized portfolio value (IOPV) or intraday indicative value (IIV.
Inflation-adjusted bonds: Bonds with interest rates that adjust in order to compensate the holder for the impact of inflation.
Inflation expectations: Expectations of inflation based on the pricing of nominal and inflation-adjusted bonds.
Inflation gap: A measure in economics that seeks to quantify the difference between a theoretical “full-employment” level of gross domestic product growth—meaning the capability of the economic system where it is not over extending its productive capacity—and the actual level of gross domestic product growth when there is a positive difference, meaning the economy is growing beyond the theoretical full-employment level. A recessionary gap is when this difference is negative.
Inflation-targeting regime: An economic policy in which the central bank of a country estimates the “target” inflation rate and uses monetary tools to steer actual inflation to the targeted inflation.
In formation ratio: A risk-adjusted return measure calculated by taking the excess return against the benchmark and dividing by the tracking error.
Infrastructure-as-a-service (IaaS): A type of cloud computing service that offers essential compute, storage, and networking resources on demand, on a pay-as-you-go basis. IaaS is one of the four types of cloud services, along with software as a service (SaaS), platform as a service (PaaS), and serverless.
In-kind transfers: As money flows into or out of different index-tracking strategies, the ability to execute in-kind transfers, i.e., exchange securities for shares or shares for securities allows these strategies to be more operationally efficient.
In-line: When trade execution of a fund occurs close to the published quote or to the value of underlying basket.
Input costs: Costs of resources used to produce a good or service.
Interbank: a transaction or transfer occurring between two financial entities.
Interest Coverage: A measure of a firms earnings before interest and taxes divided by interest expense.
Interest Rate Futures: An interest rate future is a financial derivative (a futures contract) with an interest-bearing instrument as the underlying asset. It is a particular type of interest rate derivative.
Interest rate premium: Refers to the difference between short-term interest rates in different domiciles.
Interest rate risk: The risk that an investment’s value will decline due to an increase in interest rates.
Interest rates: The rate at which interest is paid by a borrower for the use of money.
Intergovernmental organization: An organization composed primarily of sovereign states, or of other intergovernmental organizations. IGOs are established by treaty or other agreement that acts as a charter creating the group. Examples include the United Nations, the World Bank, or the European Union.
International Monetary Fund: international organization for global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth around the world.
Internet of things: network of objects that communicate internally and externally via network connection.
In-the-money (ITM): An in-the-money call option is an option with a strike price below the current market price.
Intrinsic value: Value of a firm based on its operations, business practices and profitability, which may or may not be closely related to the value of that same firm based on its equity share price.
Inverted Yield Curve: An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality.
Investment: The percentage of the market size that is rated an investment-grade credit by either Standard & Poor’s, Moody’s or Fitch.
Investment Grade: A rating given to a municipal or corporate bond. It is a relatively favorable rating by either Moody’s or Standard & Poor’s indicating a higher chance an issuer performs interest and principal obligations as promised by the terms of the debt issuance.
ISM Purchasing Managers’ Index: Represents the health of the manufacturing sector based on new orders, inventory levels, production, supplier deliveries and the employment environment. A PMI above 50 signifies expansion while below 50 signifies contraction.
January Effect: Refers to market gains that may take place in during the month of January, as investors establish new positions for the year after selling losing positions in December to engage in tax-loss harvesting.
Japanese Government Bond (JGB): A bond issued by the government of Japan. The government pays interest on the bond until the maturity date. At the maturity date, the full price of the bond is returned to the bondholder. Japanese government bonds play a key role in the financial securities market in Japan.
Japan Nationwide Consumer Price Index: An index meant to measure price levels in Japan that Japanese consumers face; upward values indicate a trend of increasing prices, downward values indicate a trend of decreasing prices.
Japan real estate investment trusts (J-REITs): Investment structure containing a basket of different exposures to real estate, be it directly in properties or in mortgages traded on the Tokyo Stock Exchange. Returns predominantly relate to changes in property values and income from rental payments.
Japan’s Nikkei: 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 on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the U.S.
Japan’s Treasury: The Bank provides the following services: (1) receipt, disbursement, and accounting of treasury funds; (2) management of deposits of the government; and (3) custody of securities acquired by or submitted to the government. Treasury funds consist of revenues from the public, such as national taxes and social security premiums, and government expenditures, for example, payments such as public works expenditures and public pensions.
Job Openings and Labor Turnvover Survey (JOLTS): Job Openings and Labor Turnover Survey (JOLTS) program produces data on job openings, hires, and separations. This data serves as demand-side indicators of labor shortages at the national level.
John Clifton “Jack” Bogle: is the founder and retired CEO of The Vanguard Group. He is known for his 1999 book Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor, which became a bestseller and is considered a classic in the investment community. Bogle is famous for his insistence on the superiority of index funds over traditional, actively managed mutual funds.
JP Morgan CEMBI Broad Index: a market capitalization weighted index consisting of US dollar-denominated Emerging Market corporate bonds. The index serves as a global corporate benchmark representing Asia, Latin America, Europe and Middle East / Africa. US dollar-denominated corporate issues from index-eligible countries are narrowed further by only including issues with more than $300m current face outstanding and at least five years to maturity (at the time of inclusion into the index).
JP Morgan Corporate Emerging Markets Bond Index Broad (CEMBI Broad): The JPMorgan Corporate Emerging Markets Bond Index Broad (CEMBI Broad) is a market capitalization weighted index consisting of US dollar-denominated Emerging Market corporate bonds. The index serves as a global corporate benchmark representing Asia, Latin America, Europe and Middle East / Africa. US dollar-denominated corporate issues from index-eligible countries are narrowed further by only including issues with more than $300m current face outstanding and at least five years to maturity (at the time of inclusion into the index).
JP Morgan ELMI+ China Index: The JPMorgan Emerging Local Markets Index Plus and its underlying country and regional subindices track the total returns for local-currency denominated money market instruments in emerging market countries. The China subindex uses a weighted basket of 1-, 2-, 3- months currency forwards collaterized with U.S. money market rates to proxy the total returns of an investment in local-currency money market instruments. The returns are reported in U.S. dollar terms.
JP Morgan ELMI+ India Index: The JPMorgan Emerging Local Markets Index Plus and its underlying country and regional subindices track the total returns for local-currency denominated money market instruments in emerging market countries. The India subindex uses a weighted basket of 1-, 2-, 3- months currency forwards collateralized with U.S. money market rates to proxy the total returns of an investment in local-currency money market instruments.
JP Morgan EMBI Global Core Index: The first comprehensive EM sovereign index in the market, after the EMBI+. It provides full coverage of the EM asset class with representative countries, investable instruments (sovereign and quasi-sovereign), and transparent rules. The EMBI Global includes only USD-denominated emerging markets sovereign bonds and uses a traditional, market capitalization weighted method for country allocation.
JP Morgan Emerging Local Markets Index Plus (JPM ELMI+): tracks total returns for local currency–denominated money market instruments in 23 emerging markets. Risks associated with the securities comprising this index include fixed income, emerging markets, and foreign currency.
JP Morgan Emerging Markets Bond Index Global (EMBI Global): The JPMorgan Emerging Markets Bond Index Global (EMBI Global) tracks total returns for US dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities including Brady bonds, loans, Eurobonds.
JP Morgan GBI-EM CORE Index: A measure of the performance of the debt of emerging market governments measured in their own local currencies.
JP Morgan GBI-EM Global Diversified Hungary Index: The JP Morgan GBI EM Global Diversified Index and its underlying country and regional subindices tracks the performance of local currency debt issued by emerging market governments, whose debt is accessible by most of the international investor base. The Hungary subindex represents government debt issued in Hungarian forint.
JP Morgan GBI-EM Global Diversified Index: tracks the performance of local currency debt issued by emerging market governments, whose debt is accessible by most of the international investor base. The index incorporates a constrained market-capitalization methodology in which individual issuer exposures are capped at 10%, (with the excess distributed to smaller issuers) for greater diversification among issuing governments.
JP Morgan GBI-EM India Index: The JP Morgan GBI EM Index and its underlying country and regional subindices tracks the performance of local currency debt issued by emerging market governments, whose debt is accessible by most of the international investor base. The India subindex represents government debt issued in Indian rupee.
JP Morgan Government Bond Index – Emerging Markets (GBI-EM) Global Diversified: The JP Morgan GBI EM Global Diversified tracks the performance of local currency debt issued by emerging market governments, whose debt is accessible by most of the international investor base. The index incorporates a constrained market-capitalization methodology in which individual issuer exposures are capped at 10%, (with the excess distributed to smaller issuers) for greater diversification among issuing governments.
JPX-Nikkei 400: is composed common stocks whose main market is the TSE 1st section, 2nd section, Mothers or JASDAQ market (in principle). The components are reviewed annually to keep the representativeness of the market. The Annual Review shall be conducted at the end of August as follows.(1)1000 stocks are selected based on trading value in the past 3 years and the market value on the selection base date (the end of June) of the Annual Review, (2)Each stock is scored by 3-year average ROE, 3-year cumulative operating profit and market value on the selection base date with the weights on the each indicator 40%, 40%, 20% respectively, (3)400 stocks are selected by the final ranking with the scores calculated in (2) and qualitative factors from the perspectives of corporate governance and disclosure. In case of delisting of the components due to a merger or bankruptcy etc, new stocks shall not be added in principle. When the Annual Review is conducted, the number of components is back to 400, therefore the index is calculated with less than 400 components until then.
JPY TWI: The trade-weighted yen is compiled as a weighted average of exchange rates of <em>home</em> versus <em>foreign</em> currencies, with the weight for each foreign country equal to its share in trade. This index is computed by the Bank of England.
Junk Bond: A high-yield or non-investment grade bond. Junk bonds are fixed-income instruments that carry a rating of ‘BB’ or lower by Standard & Poor’s, or ‘Ba’ or below by Moody’s. Junk bonds are so called because of their higher default risk in relation to investment-grade bonds.
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K-1: A tax document used to report the incomes, losses and dividends of a person’s interest in an entity.
Labor productivity: Measure of how much labor is able to accomplish, given the use of a set amount of resources, most often the number of hours worked.
Ladder: A fixed income strategy that seeks equal allocations across the yield curve in order to limit reinvestment risk.
Large: Characterized by exposure to the top 70% of market capitalization (share price x number of shares outstanding) within the Value, Blend or Growth style zones with the majority of the fund’s weight.
Large Blend: Characterized by exposure spanning across stocks exhibiting both value and growth attributes. This is achieved while focusing on relatively larger companies.
Large-Capitalization (Large-Cap): A term used by the investment community to refer to companies with a market capitalization value of more than $10 billion. Large cap is an abbreviation of the term “large market capitalization”. Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its stock price per share.
Large-cap Value: Refers to companies with a market capitalization value of more than $10 billion, characterized by lower price levels relative to fundamentals, such as earnings or dividends. Prices are lower because investors are less certain of the performance of these fundamentals in the future. This term is also related to the Value Factor, which associates these stock characteristics with excess returns vs the market over time
Large Value: Characterized by lower price levels relative to fundamentals, such as earnings or dividends. Prices are lower because investors are less certain of the performance of these fundamentals in the future. This is achieved while focusing on relatively larger companies.
Last price: The last price the security traded at on the stock exchange.
Lead Market Maker (LMM): A broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security.
Leverage: Total assets divided by equity. Higher numbers indicate greater borrowing to finance asset purchases; leverage can tend to make positive performance more positive and negative performance more negative.
Leveraged-loan crisis: Excessive leverage by financial institutions and consumers that led to the financial crisis of 2007–2009.
Leveraged loan market: Loans extended to companies or individuals that already have undertaken considerable amounts of debt, thereby increasing their risk of potential default.
Leverage Ratio: Total amount of debt given a total amount of assets i.e., total Debt divided by total asset.
Limit Orders: An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
Limit up-limit down rule (LULD): FINRA mechanism to prevent trades in NMS stocks from occurring outside of specified price bands, coupled with trading pauses to accommodate more fundamental price moves.
Liquid alternative: An alternative investment, one that is not one of the three traditional asset types (stocks, bonds and cash), that can be bought and sold on a daily basis.
Liquidity: The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid asset.
Liquidity aggregator: An agency broker (does not commit capital) that takes a client buy or sell order and contacts a variety of market makers. This puts the market makers in competition with one another and this process helps client source liquidity for their order. The liquidity aggregator typically has access and relationships with market makers that the client does not.
Liquidity premium: activity amongst investors that indicates a demand to be able to buy and sell particular assets quickly in any quantity needed. The current demand for government-issued bonds, signified by very low interest rates, is one such example.
Liquidity providers: Traders that facilitate the trading of ETF shares by conducting the transference of liquidity between the underlying basket shares and the ETF.
Liquidity Risk: the risk that an investor will not be able to buy or sell a security at quoted prices.
Liquidity trap: a situation where central bank’s monetary actions are ineffective in decreasing interest rates and stimulating growth. In this type of situation, people have a tendency to hoard cash, which can worsen the situation further.
Liquid market: A market in which it is easy to execute a trade with minimal price impact.
Loan-to-Deposit Ratio: A liquidity ratio generally applied to banks or financial institutions which compares the total loans it makes to consumers and business to the total deposits its received from others over a time period, expressed as a percentage. Higher ratios are generally considered unfavorable, as it indicates the institution has a propensity to over-lend and may not have enough liquidity to meet unforeseen funding obligations.
London Interbank Offered Rate (LIBOR): the average rate that major banks offer to lend to each other for short-term unsecured funds in a particular currency for a particular maturity in the wholesale money market in London. It can range from overnight to one year and is utilized as a benchmark for various loans and in the capital markets.
Long (or Long Position): The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value, the opposite of Short (or Short Position).
Long-run steady state: a period where a set of conditions within a system like an economy enter an environment characterized by stability and lack of expectations of immediate, large change.
Long/short: An investing strategy that takes long positions in stocks that are expected to appreciate and short positions in stocks that are expected to decline.
Long-term debt: Long-term debt consists of loans and financial obligations lasting over one yea.
Long-term debt to equity: Ratio of long-term debt, typically over one year in maturity, to the level of equity. Higher numbers indicate a greater reliance on borrowing to finance firm activity.
Long-Term Earnings Estimates: Estimated compounded annual growth rate of the operating earnings per share (EPS) over the company’s next full business cycle (typically 3-5 years).
Long-Term Earnings Growth Expectations: Compilation of analyst estimates of the growth in operating earnings expected to occur over the next full business cycle, typically 3 to 5 years, sourced from Bloomberg.
Losers: Stocks that have delivered negative performance since the investor made their initial investment.
Low Correlation: Characterized by assets that have a relatively lower correlation vs the market over time. This term is also associated with the Low Correlation Factor which associates these stock characteristics with excess returns vs the market over time.
Low Dividend Yield Years: Average of the 1-year forward performance, taken for each individual 1-year period, following year-end trailing 12-month dividend yields below the median value for all 24 values for the MSCI Emerging Markets Index. This is not an average annual return.
Lower bound: : Central bank target rates that are at or close to zero, implying limited room for further easing.
Low Volatility: Characterized by lower standard deviation of price over time. This term is also associated with the Low Volatility Factor, which associates lower volatility stocks with better risk-adjusted returns vs the market over time.
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M1: refers to the M1 money supply that includes physical money, such as coins and currency, as well as demand deposits, checking accounts, and Negotiable Order of Withdrawal accounts.
M2 money supply: Contains all funds deposited in checking accounts as well as funds deposited in savings accounts and certificates of deposit. There are various ways to measure the money supply of an economy. This one is meant to broadly account for the majority of savings and checking accounts held by individuals and businesses across the economic landscape.
Maastricht Treaty: the original treaty that established the formation and rules of the European Union and the eur.
Machine learning : The use and development of computer systems that are able to learn and adapt without following explicit instructions, by using algorithms and statistical models to analyze and draw inferences from patterns in data.
Macro: Focused on issues impacting the overall economic landscape as opposed to those only impacting individual companies.
Macroprudential Policy: an approach to financial regulation that is aimed at reducing the systemic risk to the financial system as a whole with a focus on elements such as capital and liquidity requirements.  .
Main refinancing operations (MRO): a periodic open market operation executed for the purpose of providing the banking system with the amount of liquidity that the ECB desires. Main refinancing operations are conducted through weekly standard tenders (in which banks can bid for liquidity) and normally have a maturity of one wee.
Managed-float: an exchange rate regime whereby the value of the currency is allowed to float around a proscribed range. The central bank intervenes in the market to maintain the trading range or to limit volatility.
Managed futures: An alternative investment strategy in which futures contracts are used as part of the investment strategy.
Management buyout (MBO): the process by which a corporate officer agrees to purchase a company from existing shareholders.
M&A: aspects of management dealing with the buying, selling, dividing and combining entities that can potentially help create value down the road.
Marginal Cost: The cost added by producing one additional unit of a product or service.
Marketable securities: Very liquid securities that can be converted into cash quickly at a reasonable price.
Market Capitalization: Market cap = share prices x number of shares outstanding. Firms with the highest values receive the highest weights in approaches designed to weight firms by market cap.
Market capitalization-weighting: Market cap = share prices x number of shares outstanding. Firms with the highest values receive the highest weights in approaches designed to weight firms by market cap.
Market Factor: Measures sensitivity of a security to the overall market movements.
Market maker: Someone who quotes a buy and a sell price in a financial instrument.
Market neutral: Strategy that seeks to avoid market risk by hedging a percentage equal to total long exposure.
Market Orders: An order that an investor makes through a broker or brokerage service to buy or sell an investment immediately at the best available current price.
Market participant: Anyone interacting with the ETFs in some capacity. It can be end investors, market makers, hedgers, authorized participants.
Markit iBoxx USD Liquid Investment Grade Index: Designed to provide a balanced representation of the USD investment-grade corporate market and to meet investor demand for a USD-denominated, highly liquid and representative investment-grade corporate index.
Master limited partnership (MLP): Investment structure where holdings typically must derive most of their cash flows from real estate, natural resources or commodities, combining the tax benefits of a partnership—taxes occur when holders receive distributions—with the liquidity of a publicly traded company.
Maturity: The amount of time until a loan is repai.
Mean reversion: The concept that a series of returns has a tendency to return to its average level over longer periods, even if shorter periods can exhibit wide swings.
Median: The median is the value within a dataset at which 50% of all observations occur above and 50% occur below.
Median earnings yield: Earnings per share divided by share price. Value reflects the point where 50% of values are above and 50% are below.
Median Forward Price-to-Earnings (P/E) Ratio: Ratio of current price per share to estimated earnings per share over the course of the next year. Median refers to the middle observation, meaning that 50% of the dataset is below and 50% is above this value.
Median long-term earnings growth estimates: Compilation of analyst estimates of the growth in operating earnings expected to occur over the company’s next full business cycle, typically three to five years. Value reflects the point where 50% of values are above and 50% are below.
Median trailing 12-month dividend yield: Dividends over the prior 12-months are added up and divided by the current share price. Higher values indicate more dividends are being generated per unit of share price.
Medium Dividend Yield Years: Average of the 1-year forward performance, taken for each individual 1-year period, following year-end trailing 12-month dividend yields not among the 8 highest or 8 lowest of all 24 values. This is not an average annual return.
Mega Cap: Market Capitalization over $100 Billion.
Mental Accounting: A tendency for people to separate money into separate mental accounts based on source of money or intent for the account.
Mergent Dividend Achievers Select Index: Designed to track the performance of dividend-paying companies in the U.S. that have increased their annual dividend payments for the last 10 or more consecutive years.
Merger Arbitrage: An event-driven investment strategy that involves exploiting pricing inefficiencies that exist between markets for the same security after a company merger or acquisition, in order to generate a profit.
Messenger RNA (mRNA): A single-stranded RNA molecule that is complementary to one of the DNA strands of a gene. The mRNA is an RNA version of the gene that leaves the cell nucleus and moves to the cytoplasm where proteins are made. During protein synthesis, an organelle called a ribosome moves along the mRNA, reads its base sequence, and uses the genetic code to translate each three-base triplet, or codon, into its corresponding amino acid.
Micro: Focused on issues impacting individual companies as opposed to those impacting the broader economic landscape.
Mid-Cap: Characterized by exposure to the next 20% of market capitalization (after the top 70% have been removed) within the Value, Blend or Growth style zones with the majority of the fund’s weight.
Mid-Cap Value: Characterized by lower price levels relative to fundamentals, such as earnings or dividends. Prices are lower because investors are less certain of the performance of these fundamentals in the future. This is achieved while focusing on mid-cap companies.
Minimum Volatility: Funds that use an optimization that will consider the correlation of companies to each other in order to get a lower volatility index overall.
Modern Alpha: Modern Alpha® combines the outperformance potential of active with the benefits of passive—to offer investor strategies that are built for performance.
Modern Monetary Theory (MMT): a macroeconomic theory that suggests that economic cycles can be managed by largely by fiscal policy, since monetarily sovereign nations (like the U.S., Japan, Canada, etc.) can print as much money as they need to achieve their economic goals.
Modern Portfolio Theory (MPT): A financial theory that seeks to juxtapose investors’ attitudes toward risk and return by maximizing the expected returns of a portfolio for a given level of risk, since greater expected returns usually involve absorbing additional risk.
Modified equal-weighted indexes: Equal-weighted indexes place an equal weight on each constituent, the major result being that index weight has no connection to company size. Modified equal-weighted methodologies similarly disconnect index weight from company size but do not prescribe exactly equal weights for each constituent.
Momentum: Characterized by assets with recent price increase trends over time. This term is also associated with the Momentum Factor which associates these stock characteristics with excess return vs the market over time.
Momentum Factor: Characterized by assets with recent price increase trends over time. This term is also associated with the Momentum Factor which associates these stock characteristics with excess return vs the market over time.
Momentum Stocks: Stocks characterized by high sensitivity to sentiment and perception of potential, with lower sensitivity to actual business operation.
Momentum traders: Individuals whose buy and sell decisions are influenced more heavily by recent price performance than any other factors; they typically buy after upward movements and sell after downward moves.
Monetary Base: For a particular economy, the sum total of all cash and bank deposits in circulation. Increasing this number is one way to stimulate economic growth.
Monetary easing policies: Actions undertaken by a central bank with the ultimate desired effect of lowering interest rates and stimulating the economy.
Monetary Expansion: Actions undertaken by a central bank with the ultimate desired effect of lowering interest rates and stimulating the economy.
Monetary policy: Actions of a central bank or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates.
Monetary stimulus: refers to attempts to use monetary policy like lowering interest rates or quantitative easing to stimulate the economy.
Monetary tightening: A course of action undertaken by the Federal Reserve to constrict spending in an economy that is seen to be growing too quickly or to curb inflation when it is rising too fas.
Monetary union: A system where two or more states agree to use the same currency.
Monetizing: When a central bank purchases debt with the consequence of increasing the money supply.
Money Market: a market for highly-liquid assets generally maturing in one year or les.
Money Market Fund: A fund that Invests in high quality, liquid short-term debt securities and monetary instruments such as US Treasury bills and commercial paper.
Morningstar Dividend Yield Focus Index: This focused benchmark tracks income-producing securities issued by financially healthy companies with sustainable profits. The index includes the top 75 income-producing stocks that meet certain eligibility criteria. The index aims to maximize yield by using a fundamental, dividend-based weighting system.
Morningstar Short-Government Category: As defined by Morningstar, short-government portfolios have at least 90% of their bond holdings in bonds backed by the U.S. government or by government-linked agencies. This backing minimizes the credit risk of these portfolios, as the U.S. government is unlikely to default on its debt. These portfolios have durations typically between 1.0 and 3.5 years, so they have relatively less sensitivity to interest rates and, thus, low risk potential. Morningstar calculates monthly breakpoints using the effective duration of the Morningstar Core Bond Index in determining duration assignment. Short is defined as 25% to 75% of the three-year average effective duration of the MCBI.
Mortgage-backed spreads: represents spreads on mortgage-backed securities. Spread represents the portion of the bond’s yield that compensates investors for taking on additional risk over a benchmark security with a similar maturity profile.
Mortgage Bonds: A bond secured by a mortgage on one or more assets. These bonds are typically backed by real estate holdings or real property such as equipment. In a default situation, mortgage bondholders have a claim to the underlying property and could sell it off to compensate for the default.
MSCI AC Asia Pacific ex Japan Index: The MSCI AC Asia Pacific ex Japan Index captures large and mid cap representation across 4 of 5 Developed Markets countries (excluding Japan) and 8 Emerging Markets countries in the Asia Pacific region. With 683 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Developed Markets countries in the index include: Australia, Hong Kong, New Zealand and Singapore. Emerging Markets countries include: China, India, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand.
MSCI ACWI ex-U.S. Index: A free-float adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets excluding companies based in the United States.
MSCI ACWI ex-US Small Cap Index: captures small cap representation across 23 of 24 Developed Markets (DM) countries (excluding the US) and 21 Emerging Markets (EM) countries.
MSCI ACWI Growth Index: A free-float adjusted market capitalization-weighted index that is designed to measure securities exhibiting overall growth style characteristics of developed and emerging markets.
MSCI ACWI Index: A free-float adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets.
MSCI ACWI Investable Market Index: The MSCI ACWI Investable Market Index (IMI) captures large, mid and small cap representation across developed and emerging markets that measures approximately 99% of the global equity investment opportunity set.
MSCI ACWI Small Cap Index: A free-float adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets, specifically focusing on the small-cap segment of these equity markets.
MSCI ACWI Value Index: A free-float adjusted market capitalization-weighted index that is designed to measure securities exhibiting overall value style characteristics of developed and emerging markets.
MSCI AC World ex-US Index: Measures the performance of companies incorporated in both emerging markets and developed markets, excluding the United States. Index weighting is by market cap.
MSCI AC World ex-US Sector Sub Indexes: Composed of companies within the broad MSCI AC World ex-US Index classified into indexes encompassing each of the following 10 GICS industry sectors: Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Telecommunication Services and Utilities.
MSCI All Country World Index: a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed and emerging market countries.
MSCI Australia Index: Market capitalization-weighted index designed to measure the performance of Australian equities.
MSCI Brazil Index: Index weighted by float-adjusted market capitalization designed to measure the performance of the Brazilian equity market.
MSCI BRIC Index: free float- adjusted market capitalization weighted index designed to measure the equity market performance across the Brazil, Russia, India, and China country indexes.
MSCI Canada Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of the Canadian equity market.
MSCI China A International Index: Captures large and mid-cap representation and includes the China A-share constituents of the MSCI China All Shares Index. It is based on the concept of the integrated MSCI China equity universe with China A-shares included.
MSCI China Index: A free float-adjusted, market capitalization-weighted equity index designed to measure the performance of the Chinese equity market.
MSCI Country Index: a free float-adjusted, market capitalization-weighted equity index designed to measure the performance of a specific countries market.
MSCI EAFE Enhanced Value Indexes: aims to reflect the performance of the Value factor with by focusing on companies with favorable price to book, price to forward earnings, and enterprise value to cash flow numbers within the EAFE universe.
MSCI EAFE Financials Index: Captures large and mid cap representation across 21 of 23 Developed Markets (DM) countries around the world, excluding the US and Canada. All securities in the index are classified in the Financials sector as per the Global Industry Classification Standard.
MSCI EAFE Growth Index: Market capitalization-weighted subset of stocks within the MSCI EAFE Index that have higher share prices relative to their earnings or dividends per share.
MSCI EAFE IMI Index: A free float adjusted market cap-weighted index composed of companies representative of the developed market structure of developed countries in Europe, Australasia and Japan, covering the large-cap, mid-cap and small-cap segments of the capitalization spectrum.
MSCI EAFE Index: is a market cap-weighted index composed of companies representative of the developed market structure of developed countries in Europe, Australasia and Japan.
MSCI EAFE Local Currency Index: A market cap-weighted index composed of companies representative of the developed market structure of developed countries in Europe, Australasia and Japan, with performance measured in local currency term.
MSCI EAFE Mid Cap Growth Index: A free float-adjusted market capitalization-weighted equity index that captures mid-cap representation across developed markets around the world, excluding the U.S. and Canada, focusing on those with higher earnings growth characteristics.
MSCI EAFE Mid Cap Index: A free float-adjusted market capitalization equity index that captures mid-cap representation across developed market countries around the world, excluding the U.S. and Canada.
MSCI EAFE Mid Cap Value Index: A free float-adjusted market capitalization-weighted equity index that captures mid-cap representation across developed markets around the world, excluding the U.S. and Canada, focusing on those with higher book value-to-market value ratios.
MSCI EAFE Momentum: aims to reflect the performance of the Momentum factor with a simple and transparent methodology within the EAFE universe.
MSCI EAFE Quality Index: The index captures large and Mid cap representation across 21 Developed Market countries around the world, aims to represent the performance of quality, value and low volatility factor strategies.
MSCI EAFE Small Cap Growth Index: A free float-adjusted market capitalization-weighted equity index that captures small-cap representation across developed market countries around the world, excluding the U.S. and Canada, focusing on those with higher earnings growth characteristics.
MSCI EAFE Small Cap Index: A free float-adjusted market capitalization equity index that captures small-cap representation across developed market countries around the world, excluding the U.S. and Canada.
MSCI EAFE Small Cap Value Index: A free float-adjusted market capitalization-weighted equity index that captures small-cap representation across developed market countries around the world, excluding the U.S. and Canada, focusing on those with higher book value-to-market value ratios.
MSCI EAFE Value Index: Market capitalization-weighted subset of stocks within the MSCI EAFE Index that have lower share prices relative to their earnings or dividends per share.
MSCI EM Currency Index: The MSCI Emerging Markets Currency Index will track the performance of twenty-five emerging market currencies relative to US Dollar.
MSCI Emerging Market Index: The MSCI Em (Emerging Markets) Index is a free-float weighted equity index that captures large and mid cap representation across Emerging Markets (EM) countries.
MSCI Emerging Markets Growth Index: A market capitalization-weighted subset of stocks in the MSCI Emerging Markets Index that have higher share prices relative to their earnings or dividends per share.
MSCI Emerging Markets High Dividend Yield Index: Index designed to reflect the performance of equities in the MSCI Emerging Markets Index with higher than average dividend yields that are both sustainable and persistent and exhibit quality fundamental characteristics.
MSCI Emerging Markets Index: a broad market cap-weighted Index showing performance of equities across 23 emerging market countries defined as “emerging markets” by MSCI.
MSCI Emerging Markets Investable Market Index: The MSCI Emerging Markets Investable Market Index (IMI) captures large, mid and small cap representation across 23 Emerging Markets (EM) countries. With 2,661 constituents, the index covers approximately 99% of the free float-adjusted market capitalization in each countr.
MSCI Emerging Markets Minimum Volatility Index: An index with constituents selected from the MSCI Emerging Markets Index, with a focus on an optimization process subject to constraints, that attempts to generate lower volatility than the MSCI Emerging Markets Index.
MSCI Emerging Markets Quality Index: Measure of the performance of companies from within the MSCI Emerging Markets Index that have exhibited profitability, earnings stability and low debt to equity.
MSCI Emerging Markets U.S. Dollar Hedged Index: represents a close estimation of the performance that can be achieved by hedging the currency exposures of its parent index, the MSCI EM Index, to the USD, the “home” currency for the hedged index.
MSCI Emerging Markets Value Index: A market capitalization-weighted subset of stocks in the MSCI Emerging Markets Index that have lower share prices relative to their earnings per share, dividends per share, or lower prices relative to other financial metrics.
MSCI EM Small Cap Index: Includes small cap representation across 21 Emerging Markets countries. The small cap segment tends to capture more local economic and sector characteristics relative to larger Emerging Markets capitalization segments.
MSCI EMU 100% Hedged Index: Achieves an index return very similar to the MSCI EMU Index but with the addition of hedging its currency exposures.
MSCI EMU 100% Hedged to USD Index: represents a close estimation of the performance that can be achieved by hedging the currency exposure of its parent index, the MSCI EMU Index, to USD, the “home” currency for the hedged index. The index is 100% hedged to USD by selling the EUR forward at the one-month forward rate. The parent index is composed of large and mid-cap stocks across 10 Developed Market countries.
MSCI EMU Consumer Staples Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Consumer Staples sector in the European Monetary Union.
MSCI EMU Consumer Utilities Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Utilities sector in the European Monetary Union.
MSCI EMU Health Care Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Health Care sector in the European Monetary Union.
MSCI EMU Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of the markets in the European Monetary Union.
MSCI EMU Local Currency Index: captures large- and mid-cap representation across the 11 developed market countries in the EMU and provides local currency returns, which are not translated back to U.S. dollars.
MSCI EMU Small Cap Index: captures the small cap representation across countries in the European Economic and Monetary Union.
MSCI Europe IMI: An investable market index (IMI) designed to measure the performance of the large, mid, and small cap composition of the 15 developed market countries throughout Europe. The index covers approximately 99% of the free-float adjusted market cap across these countrie.
MSCI Europe Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of developed equity markets in Europe.
MSCI Europe Small Cap Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of developed equity markets in Europe, specifically focusing on the small-cap segment of these equity markets.
MSCI Frontier Markets 100 Index: Includes 100 of the largest and most liquid constituents of the MSCI Frontier Markets Index. The MSCI Frontier Markets Index is a broad market cap-weighted index, taking investability requirements into consideration, across 26 countries defined as frontier markets by MSCI.
MSCI Germany Materials Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Materials sector in Germany.
MSCI Hong Kong Index: A market capitalization-weighted index designed to measure the performance of the Hong Kong equity market.
MSCI India Financials: The MSCI India/Financials Index is a free -float weighted equity index designed to measure the equity performance of the Financial sector of India . It was developed with a base value of 100 as of December 31, 199.
MSCI Italy Consumer Discretionary Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Consumer Discretionary sector in Italy.
MSCI Italy Financials Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Financials sector in Italy.
MSCI Italy Industrials Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Industrials sector in Italy.
MSCI Japan 100% Hedged to USD Index: A market cap-weighted subset of the MSCI EAFE Index that measures the performance of the Japanese equity market.The Index seeks to neutralize the impact of the yen vs. U.S. dollar exchange rate on returns.
MSCI Japan Small Cap Index: A free float-adjusted market capitalization-weighted index that measures the performance of the small cap segment of the Japanese market.
MSCI Japan Small Cap Value Index: A free-float adjusted market capitalization-weighted index that is designed to measure small cap securities exhibiting overall value style characteristics of the Japanese equity markets.
MSCI Low Volatility Index: designed to embody the performance of a minimum variance equity strategy or managed volatility strategy and is calculated by optimizing a traditional cap weighted “parent MSCI Index” to attain the minimum level of volatility for a set of constraints.
MSCI Momentum Index: designed to embody the performance of an equity momentum strategy by to emphasizing stocks with high price momentum, while also maintaining reasonably high trading liquidity, investment capacity and moderate investment turnover.
MSCI Netherlands Index: A market capitalization-weighted index designed to measure the performance of the Netherlands equity market.
MSCI Pacific Ex Japan Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of the large and mid cap equity markets of the developed markets countries in the Pacific region excluding Japan.
MSCI Qatar Index: A market capitalization-weighted equity index designed to measure the performance of the Qatari equity market.
MSCI Russia Energy Index: Designed to measure the market performance of the Energy sector within the Russian equity market.
MSCI Russia Index: Index weighted by float-adjusted market capitalization designed to measure the performance of the Russian equity market.
MSCI Singapore Index: A market capitalization-weighted index designed to measure the performance of the Singapore equity market.
MSCI Size Index: designed to capture returns of smaller firms relative to their larger counterparts via market capitalization.
MSCI South Africa Index: A market capitalization-weighted index designed to measure the performance of the South African equity market.
MSCI Thailand Index: A market capitalization-weighted index designed to measure the performance of the Thailand equity market.
MSCI UAE Index: A market capitalization-weighted index designed to measure the performance of the UAE equity market.
MSCI United Kingdom IMI: An investable market index (IMI) designed to measure the performance of the large, mid and small cap segments of the United Kingdom equity market, covering approximately 99% of the free float-adjusted market cap of the U.K.
MSCI United Kingdom Index: A market capitalization-weighted index designed to measure the performance of the United Kingdom equity market.
MSCI United Kingdom US Dollar Hedged Index: represents a close estimation of the performance that can be achieved by hedging the currency exposures of its parent index, the MSCI United Kingdom Index, to the USD, the “home” currency for the hedged index.
MSCI USA Diversified Multiple-Factor Index: The index aims to maximize exposure to the Value, Momentum Quality and Low Size Factors while maintain a similar risk profile to its parent index, the MSCI USA Index. .
MSCI USA Enhanced Value Index: Large and Mid-cap stocks exhibiting higher value characteristics relative to peers within their respective GICS sector. Value measured by Price-to-Book Value, Price-to-Forward Earnings and Enterprise Value-to-Cash flow from Operation.
MSCI USA Financials Index: Designed to measure the performance of US large and mid cap companies that are classified in the Financials sector according to GICS.
MSCI USA IMI Index: The MSCI USA Investable Market Index (IMI) is an all-cap market-capitalization weighted Index of US companies with an emphasis on index liquidity, investability and replicability.
MSCI USA Index: is designed to measure the performance of large and mid cap segments of the US market.
MSCI USA Information Technology Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Information Technology sector in the USA.
MSCI USA Minimum Volatility Index: Aims to reflect the performance characteristics of a minimum variance strategy applied to the large and mid cap USA equity universe.
MSCI USA Quality Index: refers to the MSCI USA Quality Index which is a large and mid cap US equity index aiming to capture the performance of quality growth stock. The Index screens its parent index, the MSCI USA Index for ROE, stable year-over-year earnings growth, and low financial leverage.
MSCI USA Sector Neutral Quality Index: Refers to the MSCI USA Quality Index which is a large and mid cap US equity index aiming to capture the performance of quality growth stock. The Index screens its parent index, the MSCI USA Index for ROE, stable year-over-year earnings growth, and low financial leverage. Seeks to match the sector exposures the MSCI USA Index.
MSCI USA Small Caps Index: a small-cap US equity index aiming to capture the performance of the securities within this size segment. .
MSCI USA Utilities Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of stocks within the Utilities sector in the USA.
MSCI USA Value Index: is a large and mid cap US equity index aiming to capture securities exhibiting overall value style characteristics. The Index screens for book value to price, 12-month forward earnings to price, and dividend yield as value characteristics.
MSCI US REIT Index: a market capitalization index measuring the performance of equity Real Estate Investment Trusts (REITs) with the United States.
MSCI World Equity Index: The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
Multiple expansion: Term for a rising P/E ratio, meaning that share prices are rising faster than earnings are growing.
Municipal Bond: A debt security issued by a state, municipality or county to finance its capital expenditure.
Mutual Funds: An investment vehicle made up of a pool of moneys collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.
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Nasdaq 100 Index: Includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies, including investment companies.
Nasdaq Composite Index: The market capitalization-weighted index of over 2,500 common equities listed on the Nasdaq stock exchange.
NASDAQ International Dividend Achievers Index: Designed to measure the performance of companies in developed international markets that have increased their dividends for the past five consecutive years. Weighting is by dividend yield.
NASDAQ US Dividend Achievers Select Index: Designed to track the performance of dividend-paying companies in the U.S. that have increased their annual dividend payments for the last 10 or more consecutive years.
Natural Rate of Employment (NAIRU): Economic concept that in the long run, there will be a typical rate of employment determined by market forces which the government can increase only by causing high rate of inflation. In some industrialized countries, however, this rate is seen to move upwards over time due to gains in productivity.
Negative equity: Negative equity occurs when the value of real estate property falls below the outstanding balance on the mortgage used to purchase that property. Negative equity is calculated simply by taking the current market value of the property and subtracting the amount remaining on the mortgage.
Negative carry: the amount of negative return that accrues from short positions in fixed income or forward currency contracts.
Negative correlation: Indicated by a tendency of two series of data to move in opposite directions. Shown in the chart (in the red box), the USD-to-GBP exchange rate is trending downward while the FTSE 100 Index is trending upward.
Negative deposit rates: A new European Central Bank policy measure aimed at charging banks for parking their excess cash with the central banks.
Negative duration strategies: Refer to WisdomTree’s Interest Rate Strategies that target a negative overall duration; namely, the WisdomTree Barclays U.S. Aggregate Bond Negative Duration Fund and the WisdomTree BofA Merrill Lynch High Yield Bond Negative Duration Fund. .
Negative interest rates: Usually borrowers make regular interest payments to their lenders for the money they owe. Under a system of negative interest rates this relationship would be reversed and the lender would pay the borrower for the privilege of lending.
Net Asset Purchases: The net total of central bank purchases of government bonds and other financial assets and its maturing securities.
Net Asset Value (NAV): The calculated assets minus liabilities divided by shares outstanding. NAV is the straightforward account of the actual assets in the fun.
Net beta: market exposure of a portfolio relative to a benchmark.
Net Buyback Yield: A company’s net share buyback is the difference between the capital raised by issuing new shares and the money the company spent on buying back any outstanding shares. A positive net share buyback means that more was spent on buying back existing shares than received from issuing new shares. Net buyback yield is the amount of a company’s net buybacks divided by its market capitalization. Please note that net buyback yield does not represent a dividend paid by the company.
Net Current Assets: Current assets minus current liabilities. This amount indicates how much capital is being generated or used up by day-to-day activities.
Net Debt-to-EBITDA: A financial ratio that expresses an entity’s capacity to pay its debt, based on generated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). Higher levels are considered less favorable, as it indicates that a company has larger debt liabilities that it must pay which are in line with the operating income it generates.
Net Equity Exposure: The difference between a fund or portfolio’s long and short equity exposure.
Net exports: a component of gross domestic product that refers to the quantity or value of exports minus imports for an economy. A positive number means greater value of exports than imports and a positive contribution to overall GDP.
Net income: A company’s total earnings (or profit), which are calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses.
Net income profit margin: Net income divided by total sales. Higher values indicate a greater fraction of each dollar of sales being left to the firm and its owners after expenses are accounted for.
Net interest margin: A measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets.
Net present value: The difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.
Net profit: A measure of profitability after accounting for all costs.
Net share buyback: Takes both the issuance of any new shares and the buyback of any outstanding shares into account. A positive net share buyback means that more was spent on buying back existing shares than on issuing new shares.
Net tangible equity: the remaining common shareholder equity in a company after intangible assets (such as patents, goodwill, etc.) have been removed from the calculation.
Network Effects: When the value of a good or service exchanged in a network increases with the numbers of user.
New economy sectors: High-growth industries that are on the cutting edge of technology and are the driving force of economic growth, such as Information Technology, Health Care and to some degree the consumer-oriented sectors.
NFIB Small Business Optimism Index : NFIB Research Foundation has collected Small Business Economic Trends Data with Quarterly surveys since 1973 and monthly surveys since 1986. The sample is drawn from the membership files of the National Federation of Independent Business (NFIB).
Nifty 50: The 50 stocks that were most favored by institutional investors in the 1960s and 1970s. Companies in this group were usually characterized by consistent earnings growth and high P/E ratios.
Nifty Index: The National Stock Exchange of India’s benchmark index for the Indian equity marke.
NISA: Nippon Individual Savings Account. Nippon is the Japanese word for Japan.
Noisy Market Hypothesis: A hypothesis that the prices of securities are not always the best estimate of the true underlying value of a firm. Prices may be subject to temporary shocks that may be “noise” obscuring a security’s true fundamental value.
Non-investment grade debt: Sometimes referred to as “junk bonds,” these securities have a higher risk of default than investment-grade securities.
Non-performing asset: A classification used by financial institutions that refers to loans that are in jeopardy of default.
Non-performing loan: A loan that is in default or close to being in default. Many loans become non-performing after being in default for 90 days, but this can depend on the contract terms.
Normalization: The process by which a policy or action returns to its historically normal levels.
“Not Held”: An order type preference allowing the platform desk to execute on behalf of the investor.
Notional: The dollar value of the derivative contract.
NSE S&P CNX Nifty Index: A market capitalization-weighted index designed to measure the performance of 50 large companies listed on the National Stock Exchange of India.
N-Shares: Chinese securities (including ADRs) incorporated outside Greater China (mainland China, Hong Kong, Macao and Taiwan), listed on the NYSE Euronext-New York, NASDAQ, and NYSE AMEX traded in U.S. dollar (USD).
Number of constituents optimized: These numbers refer to hypothetical optimizations in which every security in the Index is held (“0”) to omitting the 20 most constraining positions (“20”). Weight of optimized constituents: The weight of the constituents excluded as a result of any optimization. A lower number indicates that the assets tracking the Index are closer to holding every security within the Index in its prescribed weight.
NYSE FactSet Global Cyber Security Index : A rules-based equity benchmark designed to track the performance of globally listed hardware, software and services companies engaged in protecting enterprise or personal networks, applications and data from unauthorized attacks and damages. I
NYSE Rule 48: is a mechanism used by the New York Stock Exchange to ease market opening while volatility is high. It may have the effect of pre-empting trading at disrupted prices, as the designated market makers do not have to disseminate price indications prior to the market open.
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Offer: The price at which investors are willing to sell.
Offshore: Refers to firms producing goods and/or services outside Japan, frequently in the country to which they are being sold.
Okun’s Law: an economic theory that states that every percentage point drop in unemployment should lead to a 2% gross domestic product (GDP) growth above the mean.
O’Neil Growth Index : An index comprised of mid- and large-cap companies that provide exposure to high growth and momentum U.S. exchange-listed companies.
One Month Contract: Refers to an expiration date for a futures contract that is one month from the current date. Contracts that have later expiration dates than one month are often called back month, or 'far month', contracts.
Onshore: Refers to Japanese firms producing goods and/or services within Japan that can be sent outside Japan.
Open architecture: unrestricted architecture, open-architecture, or unrestricted universe means that a model portfolio may include ETFs other than WisdomTree ETFs.
Open Election: An election where there is no incumbent candidate.
Open-End Mutual Funds: Type of mutual fund that does not have restrictions on the amount of shares the fund will issue, so if demand is high enough the fund will continue to issue shares. These funds buy back shares when investors wish to sell.
Opening Indications: the supply and demand of both investors and market makers in an individual security prior to the market open.
Open interest: Refers to the total number of outstanding derivative contracts that have not been settled.
Operating cash flow: Measure of the amount of cash generated by a company’s normal business operations, calculated by adjusting net income for items like depreciation and changes in inventory and receivables.
Operating earnings: Earnings from continued, regular business operations that do not account for certain one-time charges that may be unique to a particular quarter or period and not repeatable.
Operating income growth: Percentage growth of operating income, or profit after operating expenses and depreciation.
Operating income over sales: Also known as operating profit margin, takes operating income, or profit after operating expenses and depreciation, divided by sales.
Operating Leverage: A measure of the change in operating income relative to the change in revenue.
Operating margin: Operating income divided by total sales. Higher numbers indicate higher profitability.
Operating profit margin: Operating income divided by total sales. Higher values indicate a greater fraction of each dollar of sales being left to the firm and its owners after expenses are accounted for.
Option-adjusted spread (OAS): Represents a measure of income. Spread represents the portion of the bond’s yield that compensates investors for taking credit risk. OAS adjusts the spread to take into account embedded options within the bond (if any).
Option Dilution: An increase in the number of diluted shares outstanding resulting from the exercise of employee stock options.
Option premium: The current price of any specific option contract that has yet to expire.
Options: Financial derivatives that give buyers the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price and date.
Order flow: The collective orders to either buy or sell specific securities.
Organization of the Petroleum Exporting Countries (OPEC): whose mandate is to coordinate and unify the petroleum policies of its members and to ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.
Outflows: a large amount of money that moves or is transferred out of a place.
Output gap: The difference between actual GDP or actual output and potential GDP or potential output.
Overnight Index Swap (OIS): an interest rate swap that consists of both a fixed and a floating rate component. The floating rate part uses an overnight rate index, in the case of the U.S. dollar the Federal Funds Rate, while the fixed portion is set at an agreed-upon rate between the two parties.
Over-the-Counter (OTC): A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc.
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Pair trade: The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.
Parity: Euro at parity means the euro would be trading at rate of $1 equals €1.
Passive: Indexes that take a rules-based approach with regular rebalancing schedules that are not changed due to market conditions.
Payout ratio: The percentage of earnings paid to shareholders in dividends. Calculated as yearly dividends per share over earnings per share.
P Chips: China securities of non-government owned companies incorporated outside Mainland China, listed on the Hong Kong Stock Exchange (HKD).
Peer-to-peer lending (P2P): A method of debt financing that enables individuals to borrow and lend money – without the use of an official financial institution as an intermediary.
PEG ratio: A stock’s price-to-earnings ratio divided by the growth rate of its earning.
Pension Protection Act (PPA): An act of legislation that makes a large number of reforms to U.S. pension plan laws and regulations. It also attempts to strengthen the overall pension system and reduce the reliance on the federal pension system and the Pension Benefit Guaranty Corporation. .
People’s Bank of China (PBOC): is the central bank of the People’s Republic of China with the power to control monetary policy and regulate financial institutions in mainland China.
Per capita gross domestic product (GDP): Gross domestic product of an economy divided by the number of people within that economy. Higher numbers indicate a higher standard of living for that economy.
Per capita income: The sum of the value of all goods and services produced in a particular country divided by the total population of that country. Higher values imply a higher standard of living for that country’s citizens.
Phillips curve: An economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship. According to the Phillips curve, the lower an economy’s rate of unemployment, the more rapidly wages paid to labor increase in that economy.
Pink sheets: Refer to a listing service for stocks that trade via over-the-counter (OTC). Pink sheet listings are companies that are not listed on a major exchange like the New York Stock Exchange or NYSE.
Platform-as-a-Service (PaaS): A complete development and deployment environment in the cloud, with resources that enable you to deliver everything from simple cloud-based apps to sophisticated, cloud-enabled enterprise applications.
Plaza Accord: An agreement between the United States, France, Germany, the U.K. and Japan that depreciated the U.S. dollar against the German mark and the Japanese yen. The agreement was negotiated and signed at the Plaza Hotel in New York City.
Policy Rate Normalization: steps to raise/lower the federal funds rate and other short-term interest rates to more normal level.
Pork-barrel spending: portions of different legislation that relate to smaller spending initiatives within constituencies of different government representatives, thought to entice those representatives to vote in favor of passing the larger legislative action.
Portfolio flows: the movement or transfer of assets to facilitate security transactions.
Portfolio netting: The practice where, in a rebalance situation, the client or broker will look at the underlying exposure of buys and sells and net off any overlap. The net result is trading less in the market place.
Portfolio-Optimization: refers to the process of determining weights of different assets in a portfolio where some characteristic/s are being maximized subject to a trade-off.
Potential dividend growers: 300 constituents from the WisdomTree Dividend Index screened for characteristics that WisdomTree believes to be associated with potential dividend growth.
Preferred stock: A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.
Premium: When the price of an ETF is higher than its NAV.
Price Discovery: The process of the market finding a fair price for an asset through the process of bringing together buyers and sellers.
Price-to-book ratio: Share price divided by book value per share. Lower numbers indicate an ability to access greater amounts of earnings per dollar invested.
Price-to-cash flow (P/CF) ratio: Share price divided by cash flow per share. Lower numbers indicate an ability to access greater amounts of cash flows per dollar invested.
Primary balance: Equals the government budget balance (revenues minus expenditures) before interest payments.
Primary Market: The primary market is the market where shares of an ETF are created or redeeme.
Principal facilitation: An execution whereby the broker takes on the risk of the execution. In most cases, the client trades at an agreed upon price and the broker then goes out and hedges themselves afterwards.
Proof of Capacity (PoC): Proof of capacity (PoC) is a consensus mechanism algorithm used in blockchains that allows for mining devices in the network to use their available hard drive space to decide mining rights and validate transactions.
Proof of Elapsed Time (PoET): Proof of elapsed time (PoET) is a blockchain network consensus mechanism algorithm that prevents high resource utilization and high energy consumption and keeps the process more efficient by following a fair lottery system.
Proof of Importance (PoI): Proof of importance (PoI) is a cryptocurrency term defined as a blockchain consensus technique – essentially, proof of importance works to prove the utility of nodes in a cryptocurrency system, so that they can create blocks.
Proof of Stake (PoS): The Proof of Stake (PoS) concept states that a person can mine or validate block transactions according to how many coins they hold
Proof of Work (PoW): A system that requires a not-insignificant but feasible amount of effort in order to deter frivolous or malicious uses of computing power, such as sending spam emails or launching denial of service attacks.
Public capital: refers to a pool of government owned assets that are used for private productivit.
Publicly listed: Companies that list their shares on a stock exchange in order to facilitate their raising money in efforts to enhance the overall value of the entire company.
Purchases: Refers to the ongoing monthly purchases of both U.S. Treasury and mortgage-backed securities of over $80 billion.
Purchasing Managers’ Index (PMI): An indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction while 50 indicates no change.
Purchasing power parity: Academic concept stating that exchange rates should adjust so that equivalent goods and services cost the same across countries, after accounting for exchange-rate differences.
Put/call ratio: The ratio of the trading volume of put options to call options and is used as an indicator of investor sentiment in the markets.
Put options: an option to sell assets at an agreed price on or before a particular date.
Put Premium: An option premium is the income received by an investor who sells or 'writes' an option contract to another party.
PUT Writing: Put writing is an essential part of options strategies. Selling a put is a strategy where an investor writes a put contract, and by selling the contract to the put buyer, the investor has sold the right to sell shares at a specific price. Thus, the put buyer now has the right to sell shares to the put seller.
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Qualified dividends: Dividend paid by corporations meeting certain criteria defined by the Internal Revenue Service and therefore eligible in certain instances to be taxed at rates below a tax filer’s tax bracket on ordinary income.
Quality: Characterized by higher efficiency and profitability. Typical measures include earnings, return on equity, return on assets, operating profitability as well as others. This term is also related to the Quality Factor, which associates these stock characteristics with excess returns vs the market over tim.
Quality Factor: Excess returns achieved by companies exhibiting higher quality or profitability vs the market. Typically measured using operating profitability, return on equity and/or return on assets. .
Quantamental: A portmanteau of the words “quantitative” and “fundamental.” Refers to an investing strategy that is predicated on both quantitative and fundamental research and analysis.
Quantitative and qualitative monetary easing (QQE): A central bank monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital, in an effort to promote increased lending and liquidity.
Quantitative Easing (QE): A government monetary policy occasionally used to increase the money supply by buying government securities or other securities from the market. Quantitative easing increases the money supply by flooding financial institutions with capital, in an effort to promote increased lending and liquidity.
Quantitative Tightening: Quantitative easing is a process whereby a central bank targets lowering longer-term interest rates by purchasing bonds and other securities to stimulate the economy. Quantitative tightening is the reverse process whereby securities are either sold or the proceeds of maturing securities are not reinvested with the goal of tightening economic conditions to prevent the economy from overheating.
Quartile: Statistical measure that groups a series of values into four groups after ranking them from lowest to highest. The first quartile will have the lowest values, whereas the fourth quartile will have the highest.
Quintile: One of the class of values of a variate which divides the members of and batch or sample into equal-sized subgroups of adjacent values or a probability distribution into distributions of equal probability.
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Rate Cut: A decision by a central bank to reduce its main interest rate, usually to influence rates charged by other financial institution.
Rate-Hedged: A bond portfolio that has offsetting positions in Treasury securities to reduce interest rate risk.
Rate Hike: refers to an increase in the policy rate set by a central bank. In the U.S., this generally refers to the Federal Funds Target Rate.
Ratings Agencies: nationally-recognized statistical ratings organizations who perform analysis on the credit worthiness of bond issuers.
Real assets: Assets that have their own value independent of their price, typically used to mitigate the potential impact of inflation lessening the purchasing power of an investor’s home currency.
Real effective exchange rate: The weighted average of a country’s currency relative to an index or basket of other major currencies, adjusted for the effects of inflation.
Real effective exchange rates (REERs): REERs represent the weighted average of a country’s currency relative to an index or basket of other major currencies, adjusted for the effects of inflation. While investors normally quote returns in nominal terms, most analysts find REER helpful when analyzing currency impact on economic competitiveness and trade. Generally speaking, REERs tend to be more instructive of economic trends, particularly during periods with positive inflation.
Real estate investment trust (REIT): Investment structure containing a basket of different exposures to real estate, be it directly in properties or in mortgages. Returns predominantly relate to changes in property values and income from rental payments.
Real growth: Refers to the rate of economic growth with the inflation rate subtracted from it.
Real growth potential: Potential rate of growth for an economy given that a set of policy assumptions are realized.
Real interest rate: Interest rate accounting for the impact of inflation. From the nominal interest rate, which does not account for the impact of inflation, the rate of inflation is subtracted to get to the real interest rate.
Realized Volatility: The daily standard deviation of returns of an underlying asset, index, instrument, security, or ET.
Real policy rate: Reflects the policy rate controlled by the central bank, net of the expected inflation rate.
Real Time Calculations: A price calculation used if the basket is open to calculate the current price of a security also known as “fair value&rdquo.
Real yield: the annual interest rate that an investor demands for holding a bond to maturity including the impact of inflation.
Rebalance: An index is created by applying a certain set of selection and weighting rules at a certain frequency. WisdomTree rebalances, or re-applies its rules based selection and weighting process on an annual basis.
Recency Bias: When people more prominently recall and emphasize recent events and observations than those in the near or distant past.
Recession: two consecutive quarters of negative GDP growth, characterized generally by a slowing economy and higher unemploymen.
Reconciliation process: A process established by the Congressional Budget Act of 1974 by which Congress changes existing laws to conform tax and spending levels to the levels set in a budget resolution. Used in recent decades as a parliamentary tactic for resolving disputes in budget-related bills, the process limits debate and thereby bypasses Senate filibusters. This makes it possible for a Party in control of the Senate to pass controversial legislation with as little as 50 Senate votes, assuming the Vice president casts the tie-breaking vote. The Omnibus Budget Reconciliation Act of 1993, which raised top marginal tax rates to 39.6%, was passed using the reconciliation process.
Record Signal Overlay: The specific strategy of dynamic currency hedging that utilizes three signals, developed by WisdomTree and Record.
Recovery rate: The percentage of principal and interest that is ultimately recovered in the event of bankruptc.
Red chip: Chinese securities of state-owned companies incorporated outside mainland China, listed on the Hong Kong Stock Exchange traded in Hong Kong dollars (HKD).
Redemption Fee: A fee collected by selling an investment before a specified time. Also referred to as an “exit fee”, “back-end load” or “contingent deferred sales charge”.
Reflation: The term is used to describe the first phase of economic recovery after a period of contraction. This period is typically characterized by the act of stimulating the economy through accommodative central bank policies and reducing taxes, to bring growth and inflation back up to the long-term trend.
Reflationary: Characterized by an environment of rising price levels.
Regression analysis: statistical process for estimating the relationships among variables. It helps one understand how the typical value of the dependent variable (Y- variable) changes when any one of the independent variables is varied, while the other independent variables are held fixed.
Regular cash dividends: Dividends that companies indicate they will commit to paying on an ongoing basis at a set frequency.
Relative price: Refers to the share price of the ETF. A large demand for shares, all other things being equal, would be assumed to increase this price.
Relative strength: A momentum investing technique that compares the performance of a stock, exchange-traded fund or mutual fund to that of the overall market.
Relative Strength Index (RSI): A technical analysis measure designed to track speed and price changes in an investment vehicle. It is used to identify potential overbought and/or oversold conditions.
Relative value: The relationship between a particular attribute, e.g., a dividend, and the firm’s share price compared to that of another firm.
Renminbi (RMB): is the official currency of the People’s Republic of China.
Repo rates: Repo rate is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds.
Reserve requirements: Mandated amounts of cash that banks must hold on hand to cover their liabilities.
Restaurant Leaders INDXX Index: Seeks to provide access to the U.S. publicly traded restaurant industry. Based upon industry research the index tilts about 70% towards Quick Service Restaurants (QSR). The index rebalances its holdings quarterly and uses proprietary quantitative screens to remove 6 relatively underperforming stocks; thereby establishing leadership.
Resting orders: A limit order to buy at a price below or to sell at a price above the prevailing market that is being held by a floor broker.
Retained earnings: Portion of earnings that is not paid as dividends but held by the company for future investment opportunities.
Return on assets (ROA): Firm profits (after accounting for all expenses) divided by the firm’s total assets. Higher numbers indicate greater profits relative to the level of assets utilized to generate them.
Return on capital: Measures a corporation’s profitability by revealing how much profit a company generates relative to its capital.
Return on Equity (ROE): Measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.
Risk: Also standard deviation, which measures the spread of actual returns around an average return during a specific period. Higher risk indicates greater potential for returns to be farther away from this average.
Risk-adjusted basis: When calculating the return, we refines the return by measuring how much risk is involved in producing that return.
Risk-adjusted returns: Returns measured in relation to their own variability. High returns with a high level of risk indicate a lower probability that actual returns were close to average returns. High returns with a low level of risk would be more desirable, as they indicate a higher probability that actual returns were close to average returns.
Risk Aversion: The preference of an investor to accept a lower yield for lower risk versus a higher yield with greater uncertainty.
Risk capital: When a broker deal firm accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security.
Risk-free rate: Typically an interest rate on a bond issued by a government entity, where the risk of default is so small as to be deemed nonexistent.
Riskier assets: Assets not backed by the full faith and credit of a government entity.
Risk of default: the risk that a borrower will not meet their contractual obligations in conjunction with an investment.
Risk-on/risk-off: refers to changes in investment activity in response to perceived risk. During periods when risk is perceived as low, investors tend to engage in higher-risk investments. When risk is perceived as high, investors tend to gravitate toward lower-risk investments.
Risk Parity: A risk management strategy that seeks to diversify assets based on their contribution to portfolio volatility.
Risk premium: Equity investments are not risk free, but it is thought that investors buy stocks because the returns they expect are high enough to allow them to take the risk.
Risk screen: A process of filtering, or removing, companies that are eligible for an investment process based on certain risk parameters.
Risk sentiment: The degree of comfort an investor has for tolerating market risk.
Rolling: trading out of a security that is close to maturing and into the same or similar security with a later maturity date.
Roll-over risk: occurs when a debt issuing entity has debt that will mature soon and must be “rolled over” into new debt, with the risk that the new debt will be at a higher interest rate.
Roll Yield: The yield that an investor in futures receives as the long position converges to spot. .
Rosneft: Russia-based company engaged in exploration, development, production and sale of crude oil and gas, as well as refining, transportation and sale of petroleum products.
Roth IRA: An individual retirement plan (a type of qualified retirement plan) that bears many similarities to the traditional IRA. The biggest distinction between the two is how they’re taxed. Since traditional IRAs contributions are made with pretax dollars, you pay income tax when you withdraw money from the account during retirement. Conversely, Roth IRAs are funded with after-tax dollars; the contributions are not tax, depending on your income and life situation. But when you start withdrawing funds, these qualified distributions are tax free.
R-squared: Represents the percentage of a fund or security’s movements that can be explained by the independent variable.
Run-rate: Extrapolation of a financial figure for the purpose of adding context to a singular data point.
Russell 1000 Growth Index: A measure of the large-cap growth segment of the U.S. equity universe, selecting from the Russell 1000 Index.
Russell 1000 Index: A measure of the performance of the 1,000 largest companies by market capitalization in the Russell 3000 Index.
Russell 1000 Value Index: A measure of the large-cap value segment of the U.S. equity universe, selecting from the Russell 1000 Index.
Russell 2000 Biotech Index: Market capitalization-weighted measure of performance of the smallest biotech companies in the Russell 3000 Index.
Russell 2000 Energy Index: Market capitalization-weighted measure of performance of the smallest energy companies in the Russell 3000 Index.
Russell 2000 Growth Index: Measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 2000 Index: Measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
Russell 2000 Value Index: measures the performance of small-cap value segment of the U.S. equity universe. It includes those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values.
Russell 2500 Index: A market-cap-weighted index that includes the smallest 2,500 companies covered in the broad-based Russell 3000 sphere of United States-based listed equities. All 2,500 of the companies included in the Index cover the small- and mid-cap market capitalizations.
Russell Midcap Growth Index: Measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell Midcap Index: The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.
Russell MidCap Value Index: measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth values.
S&P 500 Quality Index: Designed to track high quality stocks in the S&P 500 by quality score, which is calculated based on return on equity, accruals ratio and financial leverage ratio.
Safe-haven: Characterized by being a potentially desirable focal point of investment flows during periods of increased volatility and market risk. Safe-haven is not synonymous with risk-free.
Sales per share: Total sales divided by the number of shares outstanding. Measured as a percentage change as of the annual Index screening date compared to the prior 12 months. Higher values indicate greater growth orientation.
S&P 500 Consumer Discretionary Index: Market capitalization weighted measure of the performance of companies within the S&P 500 Index that are in the consumer discretionary sector.
S&P 500 Consumer Staples Index: Market capitalization weighted measure of the performance of companies within the S&P 500 Index that are in the consumer staples sector.
S&P 500 Growth Index: A market capitalization-weighted benchmark designed to measure the growth segment of the S&P 500 Index.
S&P 500 Health Care Index: Market capitalization weighted measure of the performance of companies within the S&P 500 Index that are in the health care sector.
S&P 500 High Dividend Index: Serves as a benchmark for income seeking equity investors. The index is designed to measure the performance of 80 high yield companies within the S&P 500 and is equally weighted to best represent the performance of this group, regardless of constituent size.
S&P 500 Index: Market capitalization-weighted benchmark of 500 stocks selected by the Standard and Poor’s Index Committee designed to represent the performance of the leading industries in the United States economy.
S&P 500 Information Technology Index: a market capitalization weighted index that is designed to measure the performance of the Information Technology sector, as defined by the Global Industry Classification Standard.
S&P 500 Price Index: Designed to track high quality stocks in the S&P 500 by quality score, which is calculated based on return on equity, accruals ratio and financial leverage ratio.
S&P 500 Sector Sub-Indexes: Composed of companies within the broad S&P 500 Index classified into indexes encompassing each of the following 10 GICS Industry sectors: Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Telecommunication Services and Utilities.
S&P 500 Software & Services: a market capitalization weighted index that is designed to measure the performance of the Software & Services industry, as defined by the Global Industry Classification Standard.
S&P 500 Toronto Stock Exchange 60: a capitalization-weighted index. It consists of 60 of the largest and most liquid (heavily traded) stocks listed on the Toronto Stock Exchange (TSX)
S&P 500 Utilities Index: Market capitalization weighted measure of the performance of companies within the S&P 500 Index that are in the Utilities sector.
S&P 500 Value Index: A market capitalization-weighted benchmark designed to measure the value segment of the S&P 500 Index.
S&P 500 Value Index: a score-weighted index developed by Standard and Poor's (S&P). The index uses what it calls a "style-attractiveness-weighting scheme" and only consists of stocks within the S&P 500 Index that exhibit strong value characteristics.
S&P/Case-Shiller Home Price Indexes: A group of indexes that tracks changes in home prices throughout the United States. The indexes are based on a constant level of data on properties that have undergone at least two arm’s length transactions. Case-Shiller produces indexes representing certain metropolitan statistical areas (MSA) as well as a national index.
S&P China 500 Index: Comprises 500 of the largest, most liquid Chinese companies while approximating the sector composition of the broader Chinese equity market. All Chinese share classes including A-shares and offshore listings are eligible for inclusion.
S&P China BMI Index: A comprehensive benchmark that defines and measures the investable universe of publicly traded companies domiciled in China, but are legally available to foreign investors.
S&P Composite 1500 Index : A stock market index of US stocks made by Standard & Poor's which includes all stocks in the S&P 500, S&P 400, and S&P 600.
S&P Emerging Markets Dividend Opportunities Index: The S&P Emerging Markets Dividend Opportunities Index provides exposure to high yielding emerging markets common stocks. The index is part of the S&P Dividend Opportunities Series which aims to provide income seeking investors with exposure to global high yielding common stocks while meeting diversification, stability, and tradability requirements.
S&P Europe 350 Index: A float adjusted market capitalization-weighted measure of the performance of large cap equities within European markets.
S&P GSCI Commodity Index: Comprised of the principal physical commodity futures, this index is primarily calculated on a world production weighted basis.
S&P GSCI Index: leading measure of general commodity price movements and performance over time.
S&P High Yield Dividend Aristocrats Index: Designed to track the performance of dividend-paying companies in the U.S. that have increased their annual dividend payments for the last 20 or more consecutive years.
S&P International Dividend Opportunities Index: Designed to measure the performance of companies in developed international markets with relatively higher dividend yields that meet other criteria defined by Standard & Poor’s. Weighting is by dividend yield.
S&P MidCap 400 Index: provides investors with a benchmark for mid-sized companies. The index covers over 7% of the U.S. equity market, and seeks to remain an accurate measure of mid-sized companies, reflecting the risk and return characteristics of the broader mid-cap universe on an on-going basis.
S&P MidCap 400 Value Index: Provides investors with a measure of the performance of the value segment of the S&P MidCap 400 Index.
S&P SmallCap 600 Growth Index: A market capitalization-weighted measure of the performance of small-cap growth equities within the United States, with constituents required to demonstrate profitability prior to gaining initial inclusion.
S&P SmallCap 600 Index: Market capitalization-weighted measure of the performance of small cap equities within the United States, with constituents required to demonstrate profitability prior to gaining initial inclusion.
S&P SmallCap 600 Pure Growth Index: Measures growth stocks using three factors: sales growth, the ratio of earnings change to price, and momentum. S&P Pure Growth Indices includes only those components of the parent index that exhibit strong growth characteristics, and weights them by growth score. Constituents are drawn from the S&P SmallCap 600®.
S&P SmallCap 600 Pure Value Index: Measures value stocks using three factors: the ratios of book value, earnings, and sales to price. S&P Pure Value Indices include only those components of the parent index that exhibit strong value characteristics, and weights them by value score. Constituents are drawn from the S&P SmallCap 600®.
S&P SmallCap 600 Value Index: A market capitalization-weighted measure of the performance of small-cap value equities within the United States, with constituents required to demonstrate profitability prior to gaining initial inclusion.
Seasonally Adjusted Annual Rate (SAAR): 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.
SEC 30-Day Yield: The yield figure reflects the dividends and interest earned during the period, after deduction of the Fund’s expenses. This is also referred to as the “standardized yield.&rdquo.
Second arrow policies: This refers to the component of Abenomics policy that is focused upon spending that the Japanese government can undertake from a fiscal standpoint to attempt to stimulate growth.
Secondary: Refers to a “secondary offering” of stock, in which a firm increases its number of shares outstandin.
Secondary market: A market where investors purchase or sell securities or assets from or to other investors, rather than from issuing companies themselves—exchanges such as the New York Stock Exchange and the NASDAQ—are secondary markets.
Secondary market liquidity: The liquidity shown visibly on the exchange. When you pull up a “quote” in an ETF, you will see the secondary market liquidity shown by the size offered on the bid and the ask.
Sector-Neutral: refers to a sector weight constraint that aims to match that of a respective benchmar.
Sector-specific exposures: Strategies that specifically generate exposure to a single industry or sector rather than diversifying across all sectors.
Secular bond bull: a prolonged period generally characterized by lower interest rates.
Secular Bull Market: A long term series upward or bullish movements in a market where the average upward move outpaces that of the average downward move.
Secular Decline: Long term negative trend where the longer-term negative movements cancel out any shorter-term positive movements.
Secular Growth: Long term positive trend where the longer-term positive movements cancel out any shorter-term negative movements.
Securitized: a debt security whose value is backed by an asset or pool of assets such as a mortgage.
Securitized debt: a debt security whose value is backed by an asset or pool of assets such as a mortgage.
Securitized loans: Investment that represents a pooling or grouping together of many people’s loans utilized to make large purchases, such as houses or cars. As they people pay their debts, the security generates cash flows.
SELIC Rate: the benchmark overnight interest rate by which the Brazilian Central Bank seeks to affect monetary policy.
Semi-government: state and territory governments in Australia who help fund public infrastructure investments and manage regional balance sheets.
Senior loans: a privately arranged debt obligation between a company and a bank that is generally senior to other creditor.
Sensex: An abbreviation of the Bombay Exchange Sensitive Index (Sensex) – the benchmark index of the Bombay Stock Exchange (BSE). It is composed of 30 of the largest and most actively-traded stocks on the BSE. Initially compiled in 1986, the Sensex is the oldest stock index in India.
Sequence of returns risk: The risk that an investor will experience negative portfolio returns very late in their working lives and/or early in retirement vs. the returns that they experienced earlier in the life of their portfolio.
Shadow banking system: A collection of non-bank financial intermediaries that provide services similar to traditional commercial banks.
Shanghai Composite Index: A stock market index of all A shares and B shares that are traded on the Shanghai Stock Exchange.
Share buybacks: Firms using cash to purchase their own outstanding shares; may positively impact the share price.
Shareholder Yield: A data point that references the combination of dividend yield and buyback yield.
Share Issuance: A transaction in which a company sells its own shares to the marketplace.
Share price: Measured as the cumulative change in share price for the 12 months leading up to the Index screening date. Higher values indicate greater growth orientation.
Share Repurchase: A transaction in which a company purchases its own shares from the marketplace.
Shares outstanding: all the shares of a corporation or financial asset that have been authorized, issued and purchased by investors.
Sharpe ratio: Measure of risk-adjusted return. Higher values indicate greater return per unit of risk, specifically standard deviation, which is viewed as being desirable.
Shenzhen Composite Index: An actual market-cap weighted index (no free float factor) that tracks the stock performance of all the A-share and B-share lists on Shenzhen Stock Exchange.
Shinzo Abe: Japanese Prime Minister Shinzo Abe was elected into office on December 16, 2012 and has enacted a series of policies aimed at stimulating Japan’s economic growth.
Short (or Short Position): The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value, the opposite of Long (or Long Position).
Short Agg Composite: represents a subset of securities in the Bloomberg Barclays U.S. Aggregate Index which mature between 1 and 5 years.
Short Call: An options trading strategy in which the trader is betting that the price of the asset on which they are placing the option is going to drop.
Short-term liquidity factors: Factors relating to the ability of a country’s government to make payments on certain projects, obligations or other expenses with current resources on hand, most notably cash.
Short-term rates: the rate of interest on a debt instrument maturing in two years or less.
Shunto: the Japanese word for the annual spring round of wage negotiations conducted between big business and trade unions within Japan.
Significant factor: Possesses a p-value less than 0.05, implying that the variable is significant at the 95th percentil.
Single-B-credit rating: represents the middle level of a highly speculative credit risk according to Standard & Poor’s and Fitch. This level represents borrowers that are more vulnerable than BB rated issuers, but still currently have the capacity to meet its commitments.
Size: Characterized by smaller companies rather than larger companies by market capitalization. This term is also related to the Size Factor, which associates smaller market-cap stocks with excess returns vs the market over time.
Size capitalization: A measure by which a company’s size is classified. Large caps are usually classified as companies that have a market cap over $10 billion. Mid caps range from $2 billion to $10 billion. Small caps are typically new or relatively young companies and have a market cap between $200 million to $2 billion.
Size effect: measure of the strength of the phenomenon when investing in specific size cuts in the markets.
Size Factor: the average returns of small portfolios minus the average returns of the large portfolios after adjusting for growth or value tendencies.
Size on the screen: The amount of shares that are bid for and offered that can be seen by looking at the quote.
Slippage: The difference between the expected price of conducting a transaction compared to the actual execution price.
Small: Characterized by exposure to the bottom 10% of market capitalization within the Value, Blend or Growth style zones with the majority of the fund’s weight.
Sovereign Debt: Bonds issued by a national government in a foreign currency, in order to finance the issuing country’s growth.
Sovereign Risk Premium: The incremental return demanded to compensate them for the risk of investing in markets that may have more geopolitical risk than mainstream economies such as the United States.
Sovereign Wealth Fund: Pools of money derived from a country’s reserves, which are set aside for investment purposes.
Special Purpose Acquisition Company (SPAC): A company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.
Special dividends: A non-recurring distribution of company assets, usually in the form of cash, to shareholders.
Speculators: Individuals—typically taking a shorter-term view—looking to trade quickly in and out of a position in an attempt to access a financial gain that is based purely on the currency’s shifting exchange rate.
Split-adjusted basis: modification made to a security’s price that takes into consideration the effect of a split on the total number of shares or units outstandin.
Spot currency: The foreign exchange rate of a currency available for immediate delivery.
Spot price: The current price at which a particular security can be bought or sold at a specified time and place.
Spot return: return generated from changes in spot price.
Spread: Typically refers to a difference between a measure of yield for one asset class and a measure of yield for either a different subset of that asset class or a different asset class entirely.
Spread sectors: segments of the fixed income market that pay higher yields than government securities of a comparable maturity.
S shares: Chinese securities (including ADRs) incorporated outside Greater China (mainland China, Hong Kong, Macao and Taiwan), listed on the Singapore Stock Exchange, traded in Singapore dollars (SGD).
Stagflation: a situation in which the inflation rate is high, the economic growth rate slows.
Standard deviation: measure of how widely an investment or investment strategy’s returns move relative to its average returns for an observed period. A higher value implies more “risk”, in that there is more of a chance the actual return observed is farther away from the average return.
Starting dividend yield: Refers to the trailing 12-month dividend yield for an equity index at the start of a period, in this case 6/30/1998, 15 years ago.
State clearing: Removal of empty accounts to reduce time of syncing on the network
State-owned enterprise: Companies in which governments have a significant ownership stake and the potential to influence the firms’ actions over time.
Statutory liquidity ratio (SLR): The amount of money that is invested in pre-specified securities, predominantly central government and state government securities.
Steepen: an increase in the spread between short-term interest rates and longer-term rates.
Sterilization: Activity undertaken by a central bank meant to mitigate the impact of other policies on changing the overall supply of money in an econom.
Stewardship code: Aims to enhance the quality of engagement between asset managers and companies to help improve the long-term experience of shareholders.
Sticky Price CPI: published by Federal reserve Bank of Atlanta, sticky price index sorts the components of the consumer price index (CPI) into either flexible or sticky (slow to change) categories based on the frequency of their price adjustment.
Stock buybacks: When a company uses cash to purchase shares of its own stock within the market, which is thought to be supportive for the share price.
Stock Connect: A program connecting Hong Kong, Shanghai, and Shenzhen stock exchanges to allow international and mainland Chinese investors to trade Chinese stocks.
Stock options: Conveys to an executive the right to buy a number of shares of his firm’s stock at a pre-specified price at some time in the future. Stock option holders are not eligible for any dividend distributions to shareholders.
Stop-loss market orders: an order whereby the investor instructs the broker to automatically sell the stock if it drops to a certain price.
“Stop Price”: A specified price chosen for a stop loss order or a stop loss limit order that triggers the order.
Store of Value: An asset that maintains its value over time without depreciating.
Stock options: A function of currencies where their value today is expected to remain consistent for savings and transactions expected to take place in the future
STOXX Europe 600 Index: The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Stress tests: Standards applied, most typically to banks, meant to gauge how well these firms might be able to weather adverse market event.
Strike Price: The set price at which a derivative contract can be bought or sold when it is exercised.
Structural bull case: Reasons to believe that an equity market is maintaining drivers of long-term appreciation.
Style: Morningstar defines its style box along two axes—large, mid-cap and small, as well as value, blend and growth. If two strategies are in the same style box, it does not mean that they hold the exact same portfolios, but it means that it might be harder to generate significantly different returns, as compared to strategies in different style boxes.
Style Drift: The divergence of a fund from its investment style or objective. Style drift can result from capital appreciation. It can also occur from a change in the fund’s management.
Supranational: Organization (such as the World Bank or the International Monetary Fund) formed by two or more non-governmental organizations aimed at promoting economic development.
Sustainable dividend growth: Refers to a value coming from the dividend discount model multiplying the earnings retention rate by the return on equity. It is for purely theoretical purposes and does not imply that companies for which this is computed will definitely grow their dividends at this rate.
Sustainable investing: Investing in companies that seek to combat climate change, environmental destruction, while promoting corporate responsibility.
Swap: A swap is an agreement between two parties to exchange payments based on a reference asset, which may be a currency or interest rate but also may be a single asset, a pool of assets or an index of assets.
Switching costs: the costs incurred, both monetary and non-monetary, that a consumer incurs when switching from an incumbent to an alternative product or service.
System Open Market Account (SOMA): An account that is managed by the Federal Reserve Bank, containing assets acquired through operations in the open market. The assets in SOMA serve as a management tool for the Federal Reserve’s assets, a store of liquidity to be used in an emergency event where the need for liquidity arises, and as collateral for the liabilities on the Federal Reserve’s balance sheet such as U.S. dollars in circulation.
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T+1 (T+2, T+3): Abbreviations refer to the settlement date of security transactions. The T stands for transaction date, which is the day the transaction takes place. The numbers 1, 2 or 3 denote how many days after the transaction date the settlement or the transfer of money and security ownership takes place.
Tail risk: Also known as tail hedge. It is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution.
Tail risk hedging: Strategies which seek to mitigate of potential effects of low probability events on a portfolio.
Tailwind: Situation that will help growth in a sector/asset class because of some development in another sector/asset class.
Tankan: Short-Term Economic Survey of Enterprises in Japan issued by the Bank of Japan.
Tapering: A shift in monetary policy by which the Federal Reserve would begin decreasing the amount of bonds it purchases.
Taper tantrum: a period in which global interest rates rose dramatically in 2013 as a response to a shift in monetary policy by the Federal Reserve.
Target-Date Fund: A mutual fund in the hybrid category that automatically resets the asset mix of stocks, bonds and cash equivalents in its portfolio according to a selected time frame that is appropriate for a particular investor. A target-date fund is similar to a life-cycle fund except that a target-date fund is structured to address some date in the future, such as retirement. Its returns are not guaranteed, but depend on how the market performs.
Tax-insensitive investors: Those who utilize accounts that are not subject to year-by-year taxation. Examples include individual retirement accounts, pension funds, 401(k)’s, endowments and annuities.
Tax Loss Harvesting: Selling securities at a loss to offset a capital gains tax liability. Tax gain/loss harvesting is typically used to limit the recognition of short-term capital gains, which are normally taxed at higher federal income tax rates than long-term capital gains.
Tax loss swap: A method of crystallizing capital losses by selling losing positions and purchasing companies within similar industries that have similar fundamentals.
Tax-preferred income: Refers to the fact that dividend tax rates tend to be lower than ordinary income tax rates.
Tax qualified accounts: Offer tax benefits, including tax deferral of income within the account, tax deductions or exclusions for contributions to a traditional qualified accoun.
“Taylor Rule”: approach to determining an appropriate level of the Federal Funds rate based on economic inputs developed by Professor John B. Taylor of Stanford University.
Tech Bubble: Market collapse between 1999-2001 that was led by technology stock.
Technical indicators: Type of analysis that tries to determine future price patterns using historical price patterns.
Technocrat: A government official whose policy decisions are based primarily on technical expertise as opposed to political opinions.
Technology-driven platform: A company with a non-linear, multi-sided business model focused on creating value by facilitating interactions between two or more interdependent groups through technology.
Term premium: The term premium represents the incremental yield that investors require to hold a longer-term bond, as opposed to a combination of shorter-maturity bonds.
The BofA Merrill Lynch US High Yield Index: tracks the performance of US dollar denominated below investment grade corporate debt publicly issued in the US domestic market. Qualifying securities must have a below investment grade rating (based on an average of Moody’s, S&P and Fitch), at least 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $100 million.
The Investment Company Act of 1940: An act of Congress which regulates the organization of investment companies and the activities they engage in, and sets standards for the investment company industry.
The Qatar Exchange Index: A capitalization-weighted index comprising the 20 most highly capitalized and liquid companies traded on the Qatar Exchange.
Third arrow policies: The part of Japan’s Abenomics process of reform that is focused on structural changes intended to promote economic growth.
Third Plenum: Known more formally as the Third Plenary Session of the Central Committee of the Communist Party of China. This meeting allows Party leaders to lay out a blueprint for achieving the political and economic goals of the government.
TOPIX Small Index: A free float-adjusted market capitalization-weighted index that is calculated based on all the domestic common stocks listed on the Tokyo Stock Exchange First Section excluding the TOPIX 500 stocks and non-eligible stocks.
Total Attribution: refers to the portion or entire return that is derived from or attributable to a particular subset of a portfolio.
Total attribution: Quantitative comparison of the performance between one index or investment and another, based on the difference in total returns between the two. Attribution measures the contribution to relative performance of certain characteristics, be it differences in underlying stock holdings within sectors or weighting different sectors more or less heavily.
Trailing 12-month Dividend Growth: Dividends paid over the prior 12-months as of a particular date are summed and compared to dividends paid over the prior 12-months as of a different date at some point occurring earlier. The percentage change measured between these two points is equivalent to the growth rate in trailing 12-month dividends.
Trailing 12-month dividend yield: Dividends over the prior 12-months are added together and divided by the current share price. Higher values indicate more dividends are being generated per unit of share price.
Trailing 12-months (TTM): A term used to describe the past 12 consecutive months of a company’s performance data, that’s used for reporting financial figures.
Trailing 12-month year-end dividend yield: Dividends over the prior 12-months at most recent calendar year-end are added together and divided by the current share price. Higher values indicate more dividends are being generated per unit of share price.
Trailing Earnings: The amount of profit that a company produces during prior fiscal year.
Trailing five-year: The most recent 5-year historical period from the current analysis date.
Trailing Price-to-earnings (P/E) ratio: Trailing Price-to-earnings (P/E) ratio: Share price divided by trailing 12-month earnings per share. Lower numbers indicate an ability to access greater amounts of earnings per dollar invested.
Transfer risk: The risk that a company’s assets or profits are appropriated by the government.
Translating: The accounting procedure which occurs when a multinational company recognizes revenue outside of its home market and then must bring those revenues back into its home currency, with the process being strongly influenced by any exchange rate moves occurring over those periods, typically quarterly.
Trans-Pacific Partnership (TPP): a trade agreement among twelve of the pacific rim countries (including China) which aims to 'promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in the signatories' countries; and promote transparency, good governance, and enhanced labor and environmental protections.
Transparency: The extent to which investors have ready access to any required financial information about a company, such as price levels, market depth and audited financial reports.
Treasury: Debt obligation issued by the U.S. government with payments of principal and interest backed by the full faith and credit of the U.S. government.
Treasury Bill: A treasury bill (T-Bill) is a short-term debt obligation backed by the U.S. government with a maturity of one month (four weeks), three months (13 weeks) or six months (26 weeks).
Treasury Inflation-Protected Securities (TIPS): Bonds issued by the U.S. government. TIPS provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.
Treasury International Capital (TIC): Monthly statistics from the Treasury Dept. that details holdings and transactions in U.S. and foreign securities by domestic and international residents.
Treasury notes: A debt obligation issued by the United States government that matures in less than 30 year.
Treasury yield: The return on investment, expressed as a percentage, on the debt obligations of the U.S. government.
Trend-following: Also known as trend trading. It is a trading style that attempts to capture gains through the analysis of an asset's momentum in a particular direction.
Trimmed mean: a mean is an average, so a trimmed mean is an average that takes out some of the more extreme values within a designated framewor.
TSE Mothers Index: A market capitalization-weighted measure of the performance of small-cap stocks listed primarily in Japan.
Twin Deficit: a macroeconomic occurrence where a country runs both a current account deficit and a government budget deficit.
Two-sigma rule: empirical rule stating that, for a normal distribution, 95% of the population under consideration is being included in the outcom.
Two-Year note: a debt obligation of the U.S. government with an original maturity of two year.
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Uncovered interest rate parity: the interest rate differential between two countries is equal to the expected change in the exchange rate between currencies. .
Underlying basket: Securities held by a fund to replicate an investment strategy or index.
Underlying liquidity: The liquidity in the underlying basket of the ETF. This liquidity is not always visible on the stock exchange, but market makers can facilitate large investments into ETFs if there is sufficient underlying liquidity.
Unhedged: Strategy that includes the performance of both the underlying asset as well as the currency in which it is denominated. The performance of the currency can either help or hurt the total return experienced.
Unit labor costs: Measure of economic productivity, indicating the efficiency of labor utilization in an economy.
University of Michigan Consumer Sentiment Index: a consumer confidence index published monthly by the University of Michigan. The index is normalized to have a value of 100 in December 1966. Each month at least 500 telephone interviews are conducted of a contiguous United States sample. Fifty core questions are asked.
Unsecured: Lending without any specified assets designated as collateral.
Upside capture: A measure of how one index performs during periods when a benchmark index is moving in the positive direction. A value of 100% indicates that both would tend to move upward at the exact same pace.
Upside estimation bias: Process of estimation where a conservative standard is applied in such a way that there is potential for an original estimate to be too conservative for the observed reality.
U.S. Agg Corporate Index: A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate, taxable corporate bond market. It includes USD-denominated securities publicly issued by U.S. and non-U.S. industrial, utility, and financial issuers that meet specified maturity, liquidity, and quality requirements.
U.S. Corporate High-Yield Index: measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt.
U.S. Dollar Index (USDX): A measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.
U.S. Secured Overnight Financing Rate (SOFR): An influential interest rate that banks use to price U.S. dollar-denominated derivatives and loans. The daily SOFR is based on transactions in the Treasury repurchase market, where investors offer banks overnight loans backed by their bond assets.
U.S. Treasury Bill: A short-term debt obligation backed by the U.S. government with a maturity of less than one year.
Valuation: Refers to metrics that relate financial statistics for equities to their price levels to determine if certain attributes, such as earnings or dividends, are cheap or expensive.
Valuation risk: The risk of buying or over-weighting a particular stock that has appreciated significantly in price relative to its dividends, earnings or any other fundamental metric.
Value: Characterized by lower price levels relative to fundamentals, such as earnings or dividends. Prices are lower because investors are less certain of the performance of these fundamentals in the future. This term is also related to the Value Factor, which associates these stock characteristics with excess returns vs the market over tim.
Value-added tax (VAT): is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale.
Value effect: measure of the strength of the phenomenon when investing in either the value or growth cuts of the markets.
Value Factor: Characterized by lower price levels relative to fundamentals, such as earnings or dividends. Prices are lower because investors are less certain of the performance of these fundamentals in the future. This term is also related to the Value Factor, which associates these stock characteristics with excess returns vs the market over time.
Value Premium: The greater risk-adjusted return of value stocks over growth stock.
Value Signal: Signal using purchasing power parity (PPP), an academic concept stating that exchange rates should adjust so that equivalent goods and services cost the same across countries, after accounting for exchange-rate differences in order to contribute to a view as to whether a currency might be under or overvalued.
Value stocks: Stocks whose share prices are lower relative to their earnings per share or dividends per share. Investors pay less for these stocks because their earnings or dividend growth expectations going forward are lower.
Value Trap: a security that appears to be inexpensive based on valuation metrics, which may accurately reflect grim business prospects and inherent risk rather than an attractive, underpriced opportunity to capture upside potential.
Variable annuities: As opposed to a fixed rate annuity, a variable annuity transfers investment risk to the investor by giving the opportunity to generate higher returns while assuming the risk of a smaller income stream during lower return environments.
Variable Interest Entity (VIE): Refers to a legal business structure in which an investor has a controlling interest despite not having a majority of voting rights.
Variance: a measure of the spread between values in a data set.
Velocity of money: Measure of the frequency that money changes hands within a broader economy. Higher levels indicate the potential for greater levels of economic activity.
Venture Capital: Capital funded to startup companies in its early stages with long term growth potential.
Vertical Integration: refers to a company’s methods of production, where it begins to take ownership of the different production operations along its supply chain. .
VIX Future Curve: A futures curve is a curve made by connecting prices of futures contracts of the same underlying, but different expiration dates. VIX futures curve is made of prices of individual VIX futures contract.
Volatility: A measure of the dispersion of actual returns around a particular average level. .
Wash-Sale Rule: An Internal Revenue Service rule that prohibits a taxpayer from claiming a loss on the sale or trade of a security in a wash sale. The rule defines a wash sale as one that occurs when an individual sells or trades a security at a loss, and within 30 days before or after this sale, buys a “substantially identical” stock or security, or acquires a contract or option to do so.
Wealth effect: When individuals see their investment portfolio increasing in value; even if they don’t sell and take profits, they tend to feel better about their potential consumption due to these gains.
Weighted Average Interest Rate: Cost of borrowing for multiple different liabilities undertaken, scaled by the relative size of those liabilities, meaning that the cost of borrowing for the largest liability is more influential than the cost of borrowing on the smallest.
Weighted average market cap: Measure of the average market capitalization that takes into account how constituents are weighted—weighting large market capitalization firms more heavily will tend to increase this figure.
Weight of optimized constituents: The weight of the constituents excluded as a result of any optimization. A lower number indicates that the assets tracking the Index are closer to holding every security within the Index in its prescribed weight.
Whipsaw Risk: A position is established based on recent trends but volatility whipsaws into a different direction.
Wholesale Prince Index (WPI): An index that measures and tracks the changes in price of goods in the stages before the retail level. Wholesale price indexes (WPIs) report monthly to show the average price changes of goods sold in bulk, and they are a group of the indicators that follow growth in the economy.
Widen: an increase in the amount of compensation bond holders require to lend to risky borrowers. When spreads widen, the market is implying that borrowers pose greater risk to lenders.
Winners: Stocks that have delivered positive performance since the investor made their initial investment.
Wirehouse platforms: The agency desk of a wirehouse firm such as Morgan Stanley, Bank of America Merrill Lynch, UBS, Wells Fargo.
WisdomTree Australia Dividend Index: Index designed to measure the performance of dividend-paying companies in Australia. At maximum the 10-largest Australian dividend-paying companies are selected from each of the 10 sectors on the basis of their market capitalizations. Weighting is by dividend yield.
WisdomTree China Dividend ex-Financials Index: The Index measures the performance of dividend paying stocks outside financials sector. It is comprised of the 10 largest stocks selected by float adjusted market capitalization in each sector except financials, selected from a universe of Chinese companies with at least $1 billion of float-adjusted market capitalization.
WisdomTree DEFA Equity Income Index: A fundamentally weighted index that measures the performance of dividend-paying companies in the industrialized world, excluding Canada and the United States, that pay regular cash dividends and are among the 30% highest-yielding equities within the WisdomTree DEFA Index as of the annual Index screening date.
WisdomTree Dividend ex-Financials Index: The Index measures the performance of high dividend-yielding stocks outside of the financial sector. The Index consists primarily of large- and mid-capitalization companies listed on major U.S. stock exchanges. Weighting is by dividend yield.
WisdomTree Dividend Index: Measures the performance of dividend-paying companies incorporated in the United States that pay regular cash dividends and meet WisdomTree’s eligibility requirements. Weighted by indicated cash dividends.
WisdomTree Dynamic Bearish U.S. Equity Index: A rules-based long/short index that includes long equity positions or long U.S. Treasury positions and short equity positions. The Long Equity Index consists of approximately 100 U.S. large- and mid-capitalization stocks that meet Index eligibility requirements and have the best combined score based on fundamental growth and value signals. Stocks are weighted in the Long Equity Index according to their volatility characteristics. The Short Equity Index consists of short positions in the largest 500 U.S. companies, weighted by market capitalization, designed to act as a market risk hedge. The Index provides a dynamic allocation of exposure to the Long Equity Index ranging from 100% to 0% while employing a variable monthly hedge ratio ranging from 75% to 100% exposure to the Short Equity Index based on a quantitative rules-based market indicator that scores growth and value market signals. During times when the market indicator shows unattractive readings on valuation and growth characteristics, the Index can move to 100% exposure to the Long Treasury Index (and accordingly no exposure to the Long Equity Index).
WisdomTree Dynamic Currency Hedged International Equity Index: Fundamentally weighted Index that measures the performance of dividend-paying companies in the industrialized world, excluding Canada and the United States, and is designed to remove from Index performance the impact of changes to the value of foreign currencies relative to the U.S. dollar with a hedge ratio ranging from 0 to 100% on a monthly basis. The Index is comprised of companies incorporated in 15 developed European countries, Japan, Australia, New Zealand, Hong Kong, Israel and Singapore. Companies are weighted in the Index based on annual cash dividends paid.
WisdomTree Dynamic Currency Hedged International SmallCap Equity Index: Fundamentally weighted Index that measures the performance of the small-capitalization segment of the dividend-paying market in the industrialized world outside the U.S. and Canada and is designed to remove from Index performance the impact of changes to the value of foreign currencies relative to the U.S. dollar with a hedge ratio ranging from 0 to 100% on a monthly basis. The Index is comprised of the companies that compose the bottom 25% of the market capitalization of the WisdomTree International Equity Index after the 300 largest companies have been removed. Companies are weighted in the Index based on annual cash dividends paid.
WisdomTree Earnings 500 Index: A fundamentally weighted index that measures the performance of earnings-generating companies within the large-capitalization segment of the U.S. Stock Market. Companies in the index are incorporated and listed in the U.S and have generated positive cumulative earnings over their most recent four fiscal quarters prior to the index measurement date. The index is comprised of the 500 largest companies ranked by market capitalization in the WisdomTree Earnings Index.
WisdomTree Earnings Index: Fundamentally-weighted index that measures the performance of earnings-generating companies within the broad U.S. stock market.
WisdomTree Emerging Markets Consumer Growth Index: A fundamentally weighted index designed to measure the performance of emerging market equities that have a potential heightened sensitivity to increased emerging market consumption. Weighting is by earnings.
WisdomTree Emerging Markets Dividend Growth Index: A fundamentally weighted index designed to track the performance of dividend-paying emerging market companies that WisdomTree believes have the potential to increase their dividends due to certain factors, which include estimated earnings growth, return on equity and return on assets. Weighting is by trailing 12-month cash dividends.
WisdomTree Emerging Markets Equity Income Index: A subset of the WisdomTree Emerging Markets Dividend Index measuring the performance of the higher-yielding stocks as measured by trailing 12-month dividend yields, weighted by cash dividends.
WisdomTree Equity Income Index: Measures the performance of the 30% highest-yielding dividend-paying equities within the WisdomTree Dividend Index, weighted by indicated cash dividends.
WisdomTree Europe Dividend Growth Index: A fundamentally weighted index that measures the performance of dividend-paying common stocks with growth characteristics selected from the WisdomTree DEFA Index. The Index comprises companies from the eligible universe based on their combined ranking of growth and quality.
WisdomTree Europe Hedged Equity Index: Index designed to provide exposure to European equities while at the same time neutralizing exposure to fluctuations between the Euro and the U.S. dollar. Constituents are European dividend-paying firms with a least 50% of their revenues from outside of Europe. Weighting is by cash dividends paid.
WisdomTree Germany Hedged Equity: broadly focused measure of the equity performance of dividend-paying equities within Germany, with specific methodology focusing on hedging the performance of the euro against the U.S. dollar. Weighting is by cash dividends paid.
WisdomTree Global Dividend Index: WisdomTree’s broadest measure of dividend-paying stocks, including firms incorporated in emerging markets, developed international markets and the United States, weighted by cash dividends.
WisdomTree Global ex-U.S. Dividend Growth Index: Designed to measure the performance of dividend-paying companies outside the United States with what WisdomTree believes to be potential for future dividend increases. Weighting is by dividend stream.
WisdomTree Global ex-US Real Estate Index: A fundamentally weighted index that measures the performance of companies from developed and emerging markets outside of the United States that are classified as being part of the “Global Real Estate” sector.
WisdomTree Global ex-U.S. Utilities Index: a fundamentally weighted index that measures the performance of utilities companies from developed and emerging markets outside of the United States classified as being part of the “Global Utilities” sector.
WisdomTree Global High Dividend Index: A fundamentally weighted index that measures the performance of high-dividend-yielding companies selected from the WisdomTree Global Dividend Index, which measures the performance of dividend-paying companies in the U.S., developed and emerging markets. At the index measurement date, companies with market capitalizations of at least $2 billion are ranked by dividend yield, and those companies in the top 30% by dividend yield within each region are selected for inclusion.
WisdomTree Global Quality Dividend Growth Index: A fundamentally weighted index that measures the performance of dividend-paying common stocks with growth characteristics selected from the WisdomTree Global Dividend Index. The Index comprises 300 securities with the best combined rank of growth and quality factors from each region (i.e., the U.S., developed and emerging markets).
WisdomTree India Earnings Index: A fundamentally weighted Index that measures the performance of companies incorporated and traded in India that are profitable and that are eligible to be purchased by foreign investors. Companies are weighted in the Index based on their earnings in their fiscal year prior to the Index measurement date, adjusted for a factor that takes into account shares available to foreign investors.
WisdomTree International Dividend ex-Financials Index: Measures the performance of high dividend-yielding stocks outside the financial sector. Selects the 10 largest dividend-paying stocks within each sector outside of financials, then the resulting list is weighted by dividend yield.
WisdomTree International Equity Index: A fundamentally weighted index that measures the performance of dividend-paying companies in the industrialized world, excluding Canada and the United States, that pay regular cash dividends and that meet other liquidity and capitalization requirements. It comprises companies incorporated in 15 developed European countries, Japan, Australia, New Zealand, Hong Kong and Singapore. Companies are weighted in the Index based on annual cash dividends paid.
WisdomTree International Hedged Dividend Growth Index: Designed to provide exposure to the developed market companies while neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar. Comprises companies from the WisdomTree DEFA Index with the best combined rank of growth and quality factors.
WisdomTree International LargeCap Dividend Index: A fundamentally weighted index that measures the performance of the large-capitalization segment of the dividend-paying market in the industrialized world outside the U.S. and Canada. The Index comprises the 300 largest companies ranked by market capitalization from the WisdomTree DEFA Index. Companies are weighted in the Index based on annual cash dividends paid.
WisdomTree International MidCap Dividend Index: A fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market. The Index is comprised of the companies that compose the top 75% of the market capitalization of the WisdomTree Dividend Index after the 300 largest companies have been removed. The index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share.
WisdomTree International SmallCap Dividend Index: A fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market. The Index is comprised of the companies that compose the bottom 25% of the market capitalization of the WisdomTree Dividend Index after the 300 largest companies have been removed. The index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share.
WisdomTree Japan Hedged Capital Goods Index: An index weighted by float-adjusted market capitalization, designed to provide exposure to Japanese capital goods companies while at the same time neutralizing exposure to fluctuations between the yen and the U.S. dollar.
WisdomTree Japan Hedged Equity Index: Index designed to provide exposure to Japanese equity markets while at the same time neutralizing exposure to fluctuations of the Japanese yen movements against the U.S. dollar. Constituents are dividend-paying companies incorporated in Japan that derive less than 80% of their revenue from sources in Japan. Weighting is by cash dividends paid.
WisdomTree Japan Hedged Financials Index: An index weighted by float-adjusted market capitalization, designed to provide exposure to Japanese financial companies while at the same time neutralizing exposure to fluctuations between the yen and the U.S. dollar.
WisdomTree Japan Hedged Health Care Index: An index weighted by float-adjusted market capitalization, designed to provide exposure to Japanese health care companies while at the same time neutralizing exposure to fluctuations between the yen and the U.S. dollar.
WisdomTree Japan Hedged Quality Dividend Growth Fund (JHDG): was designed to track the returns, before expenses, of the WisdomTree Japan Hedged Quality Dividend Growth Index. The WisdomTree Japan Quality Dividend Growth Fund (JDG) was designed to track the returns, before expenses, of the WisdomTree Japan Quality Dividend Growth Index.
WisdomTree Japan Hedged Real Estate Index: An index weighted by float-adjusted market capitalization, designed to provide exposure to Japanese real estate companies while at the same time neutralizing exposure to fluctuations between the yen and the U.S. dollar.
WisdomTree Japan Hedged Tech, Media and Telecom Index: An index weighted by float-adjusted market capitalization, designed to provide exposure to Japanese tech, media and telecom companies while at the same time neutralizing exposure to fluctuations between the yen and the U.S. dollar.
WisdomTree Korea Hedged Equity Index: Designed to measure the performance of Korean equities that derive less than 80% of their revenues from within South Korea, while at the same time hedging the impact resulting from the performance of the Korean won. The Index is weighted by earnings.
WisdomTree LargeCap Dividend Index: Measures the performance of the 300 largest companies in the WisdomTree Dividend Index ranked by market capitalization. Weighting is by indicated cash dividends.
WisdomTree MidCap Dividend Index: A fundamentally weighted index that measures the performance of the mid-capitalization segment of the U.S. dividend-paying market. The Index comprises the companies that constitute the top 75% of the market capitalization of the WisdomTree Dividend Index after the 300 largest companies have been removed. The index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share.
WisdomTree MidCap Earnings Index: Fundamentally-weighted index that measures the performance of the top 75% of the market capitalization of the WisdomTree Earnings Index after the 500 largest companies have been removed.
WisdomTree Middle East Dividend Index: A fundamentally weighted index that measures the performance of companies in the Middle East that pay regular cash dividends on shares of common stock and meet specified requirements as of the Index measurement date. The Index is dividend weighted and updated to reflect market prices and exchange rates.
WisdomTree SmallCap Dividend Index: A fundamentally weighted index measuring the performance of the small-capitalization segment of the U.S. dividend-paying market. The Index comprises the companies that constitute the bottom 25% of the market capitalization of the WisdomTree Dividend Index after the 300 largest companies have been removed. The Index is dividend weighted annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share.
WisdomTree SmallCap Earnings Index (WTSEI): measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. Stock Market. The index is comprised of the companies in the bottom 25% of the market capitalization of the WisdomTree Earnings Index after the 500 largest companies have been removed.
WisdomTree United Kingdom Hedged Equity Index: Designed to provide exposure to United Kingdom equities while at the same time neutralizing exposure to fluctuations between the British pound and the U.S. dollar. The Index is based on dividend-paying companies in the WisdomTree DEFA Index that are domiciled in the UK and are traded in British pounds, have at least $1 billion market capitalization and derive at least 80% of their revenue in the latest fiscal year from countries outside the UK. The component securities are weighted in the Index based on annual cash dividends paid with the following caps: maximum individual position capped at 5%, maximum sector weight capped at 25.
WisdomTree U.S. Dividend Growth Index: A fundamentally weighted index designed to track the performance of dividend-paying companies in the U.S. that WisdomTree believes have the potential to increase their dividends due to certain factors, which include estimated earnings growth, return on equity and return on assets. Weighting is by indicated cash dividends.
WisdomTree U.S. SmallCap Dividend Growth Index (WTSDG): A fundamentally weighted index designed to track the performance of dividend-paying companies in the U.S. small-cap equity universe that WisdomTree believes have the potential to increase their dividends due to certain factors, which include estimated earnings growth, return on equity and return on assets. Weighting is by indicated cash dividends.
World Bank’s “Doing Business” Ranking: The Doing Business project provides objective measures of business regulations and their enforcement across 189 economies and selected cities at the subnational and regional level. Economies are ranked on their ease of doing business, from 1–189. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic.
World Government Bond Index (WGBI): A broad index providing exposure to the global sovereign fixed income market, the index measures the performance of fixed-rate, local currency, investment-grade sovereign bonds. It comprises sovereign debt from over 20 countries, denominated in a variety of currencies.
Write-downs: Occur when assets on a firm’s balance sheet are reduced in value in a way thought to be closer to what the market’s current valuation would be, should those assets need to be sold at present. The impact of this lowering in value is felt on the income statement in terms of lower earnings.
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Yield: The income return on an investment. Refers to the interest or dividends received from a security that is typically expressed annually as a percentage of the market or face value.
Yield curve: Graphical Depiction of interest rates on government bonds, with the current yield on the vertical axis and the years to maturity on the horizontal axis.
Yield premium: the additional amount of income investors require for holding a security.
Yield spread: the amount of incremental income a bondholder receives for assuming credit risk.
Yield To Maturity: Portfolio Yield to Maturity represents the weighted average yield to maturity of a Fund’s investments in money market securities and fixed income securities as a specified date. Yield to maturity is the rate of return generated on these securities, assuming interest payments and capital gains or losses as if the instrument is held to maturity. The weighted average yield is calculated based on the market value of each security. The calculation does not incorporate yield from any derivative instruments that are part of the Fund’s investments.
Yield to maturity: The single discount rate that equates the present value of a bond’s cash flows to its market price. Also referred to as the internal rate of return of a bond.
Yield to worst: The rate of return generated assuming a bond is redeemed by the issuer on the least desirable date for the investor.
Yuan: the currency of the People’s Republic of Chin.
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Zaito Bonds: Low interest rate bonds issued through the Fiscal Investment and Loan program, which is designed to fund public investin.
Zaito institutions: Public corporations participating in the government’s fiscal investment and loan program, known as “zaito.&rdquo.
Zero duration strategies: Refer to WisdomTree’s Interest Rate Strategies that target an overall portfolio duration of zero; namely, the WisdomTree Barclays U.S. Aggregate Bond Zero Duration Fund and the WisdomTree BofA Merrill Lynch High Yield Bond Zero Duration Fund.