Glossary of Terms

 

Investment Terms

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Alpha

A measure of the active return on an investment, the performance of that investment compared with a suitable market index.

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Asset Allocation

Is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor’s risk tolerance, goals and investment time frame. The focus is on the characteristics of the overall portfolio.

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Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

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Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates.

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Investment Grade

Investment grade indicates that a bond presents a relatively low risk of default. Non-investment grade bonds involve greater risks of default. 

Indices

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1-10 Years Municipal Bond Index

Is an unmanaged index that measures the performance of municipal bonds with time to maturity of between one and ten years. One cannot invest directly in an index.

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Bloomberg Barclays Aggregate Bond Index

Measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities and commercial mortgage-backed securities. Index Inception: 1/1/1986. One cannot invest directly in an index.

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Bloomberg Barclays Global Aggregate Credit Index

Covers the credit sector of the global investment grade fixed-rate bond market. Credit issuers include corporate, sovereign (when issuing in a currency other than the sovereign’s home currency), supranational, and foreign local agencies/authorities. One cannot invest directly in an index.

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ICE Bank of America Merrill Lynch U.S. Cash Pay U.S. High Yield Index

Tracks the performance of US dollar denominated below in- vestment grade corporate debt publicly issued in the US domestic market. Qualifying securities must have a below investment grade rating, at least 18 months to final maturity at the time of issuance, at least 1-year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $100 million. One cannot invest directly in an index.

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MSCI US REIT Index

A free float-adjusted market capitalization weighted index that is comprised of equity REITs that are included in the MSCI US Investable Market 2500 Index, with the exception of specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations. The index represents approximately 85% of the US REIT universe. One cannot invest directly in an index.