Asset allocation is a strategic approach involving the distribution of investments among various asset classes to optimize returns while minimizing risk. Asset proportions can be adjusted based on market conditions.
Asset Management involves the systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner. This term is typically used in the financial world to describe the management of investments, aiming to grow their value over time and achieve higher returns.
A strategic investment approach where an investor lowers the average price paid for a company's shares by purchasing additional shares as the price decreases.
A balanced mutual fund invests in a mixture of common stock, preferred stock, and bonds to achieve the highest possible return while maintaining a low-risk strategy.
The BCG Matrix, also known as the Boston Matrix, is a strategic tool used for analyzing a company's portfolio of business units or products. Created by the Boston Consulting Group in the 1970s, this matrix helps companies identify which of their business units generate cash and which utilize it, aiding in the development of overall business strategy.
A measure of the volatility of a share in relation to the overall market. A share with a high beta coefficient is likely to respond to stock market movements by rising or falling in value by more than the market average.
The Boston Matrix, also known as the Growth-Share Matrix, is a strategic business tool developed by the Boston Consulting Group to help organizations evaluate their product lines or business units.
The Capital Asset Pricing Model (CAPM) is a cornerstone of modern financial theory, providing a framework used to determine the expected return on an investment for a given level of risk.
The Chartered Financial Analyst (CFA) designation is a professional credential offered by the CFA Institute. Widely regarded as the gold standard in the field of investment management, the CFA program covers a broad range of topics including equity analysis, fixed-income analysis, portfolio management, and ethical and professional standards.
Closet indexing involves structuring a mutual fund or other managed portfolio to nearly replicate an index while avoiding full disclosure and charging active management fees.
A common stock fund is a type of mutual fund that exclusively invests in common stocks of publicly traded companies. These funds aim to provide capital growth through equities.
The practice of spreading investments or a series of business operations across different sectors, asset classes, or geographies to mitigate risks and maximize returns.
A 'Dog' is a term used in the Boston Consulting Group (BCG) Growth-Share Matrix to categorize products or business units with low market share in a mature industry. Typically, Dogs generate low or negative cash flow and are considered prime candidates for divestitures.
Expected return is a key concept in finance that estimates the likely return on an investment, based on historical data or anticipated performance. This measure helps investors evaluate the potential profitability of various investment options and make informed decisions.
A comprehensive overview of FTSE Indexes, including their types, historical significance, and relevance to investors and portfolio managers.
A full-service broker is a financial professional who offers a wide range of services to clients, including investment advice, research, and portfolio management. This contrasts with a discount broker, who typically only executes trades.
A Fund of Funds (FoF) is a mutual fund or hedge fund that invests in a portfolio consisting of other investment funds rather than investing directly in stocks, bonds, or other securities. This investment strategy provides enhanced diversification and the potential for reduced risk by spreading investments across multiple fund managers and asset classes.
A hedge is a financial transaction designed to mitigate the risk of other financial exposures by balancing potential losses with gains in other financial instruments.
An index fund is a type of mutual fund designed to replicate the performance of a specific market index, such as the Standard & Poor's 500 Index (S&P 500). These funds aim to match the returns of the chosen index by holding identical proportions of the underlying assets.
Indexing refers to the method of adjusting various economic interests—such as wages, taxes, and investment portfolios—based on the performance of a specific index, like the S&P 500 or the Consumer Price Index (CPI).
An investment club is a group of individuals who pool their money to make joint investment decisions. Each member contributes capital and decisions on investments are made collectively.
The time span from the acquisition of an investment to its final disposition. It encompasses all relevant investment contributions, cash flows, and resale proceeds, providing the best measure of the rate of return from the investment over its entire duration.
An investment account consisting of money that one or more clients entrust to a manager, who decides when and where to invest it. Such an account may be handled by a bank trust department or by an investment advisory firm.
A management company provides various services to manage and oversee the operations, administration, and maintenance of businesses or investments, usually in exchange for a fee.
A management fee is a charge against assets for the administration and management of portfolios, funds, or real estate properties. It encompasses services such as investment management, shareholder relations, administration, rent collection, maintenance, and bookkeeping.
A Market Index is a statistical measure that tracks the performance of a group of assets in order to provide a benchmark for the wider market or specific sectors of it.
Unrealized gain (loss) in an investment or portfolio, calculated by comparing the current market price to the investor's cost.
A profit-taking strategy is a method employed by investors and traders to sell an asset and secure profits after it has achieved a predefined target price.
In capital budgeting and portfolio management, the risk-adjusted discount rate is the discount rate used in calculations of present value to reflect the level of risk embodied in the cash flows being considered.
An essential concept in investment management suggesting that the potential return on any investment rises with an increase in risk. In practice, higher-risk investments generally offer greater potential returns, and vice versa.
Switching refers to the process of moving assets from one mutual fund to another. This movement can occur either within a family of funds or between different fund families.
Telephone switching in the context of finance refers to the process of shifting assets from one mutual fund to another via a phone call. This can take place within the various types of funds (stock, bond, money market) of a single family of funds or across different families of funds.
An investment strategy or approach where the investor focuses on macroeconomic factors before identifying specific industries and individual companies that are likely to benefit from those broader trends.
Unwinding a trade involves reversing a securities transaction through an offsetting transaction, typically to close out a position by selling or buying back the corresponding amounts of the security originally traded.
Value-at-Risk (VaR) is a statistical technique developed to measure and quantify the level of financial risk within a firm or portfolio over a specific time frame. It represents the maximum potential loss with a given confidence level.
Value-at-Risk (VaR) is a statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over a specific time frame.
