We believe a glossary is key for any client trying to navigate through the range of complex terms and jargon in our industry.
Our most frequently defined terms are defined below but if there's something you think we should add, please contact us.
Basis point (bp)
1/100 of a percentage point, also expressed as 0.01%. Therefore 100bps = 1%.
Sustained decline in prices. See also bull market.
Measure against which a portfolio’s risk and return is assessed. For total assets, the benchmark may be the customers stream of liability cash flows, a customised asset mix or a peer group average, or median.
Statistical measure of the sensitivity of a security or portfolio to movements in the relevant market, usually calculated by regression analysis. A security with a beta of 1 is expected to move in line with the market; high beta stocks or portfolios (beta greater than 1) are expected to outperform in rising markets and underperform in falling markets; low beta stocks (beta less than 1) are considered to be defensive stocks. Strategies that contain both beta and alpha are exposed to market risk as well as active risk.
Price at which a security or a unit in a pooled fund can be sold. See also offer price.
Difference between the buying (offer) and selling (bid) price of a pooled fund unit or a security.
A tradeable loan issued by a borrower for a fixed period of time paying interest, known as the coupon, which is fixed at the issue date and is paid regularly to the holder of the bond until it is redeemed at maturity when the principal amount is repaid.
Value at which a security is recorded on a balance sheet, usually the cost of buying it, less any depreciation. If securities have been acquired at different times and different periods, the book value will reflect the average buying cost. See also market value.
Approach to investment management that gives priority to the identification and selection of companies to build up an optimum investment portfolio. This approach places emphasis on stock selection within a portfolio. See also top-down.
A bridge loan is a type of short-term loan, typically taken out for a period of two weeks to three years, pending the arrangement of larger or longer-term financing. These loans normally have high interest rates and are backed by some form of collateral such as real estate or inventory.
An individual or firm that acts as an intermediary between buyers and sellers, usually for payment of a commission. The broker may also buy and sell securities for a profit while fulfilling its role.
Period of sustained asset price growth. See also bear market.