AA+: Standard and Poor's next to highest credit rating.
Active manager: Portfolio managers who run funds that attempt to outperform the market by selecting those securities they believe to be the best. Passive
All capr:An index or investment that has exposures to large, mid and small companies, as measured by their market capitalization.
Basis Point: 1/100th of 1 percent.
Bear market: A sustained downturn in market prices, increasing the chances of negative portfolio returns.
Bloomberg Barclays Canadian Issues 300M Index: This gauge measures spreads of Canadian dollar corporates with at least 300 million in outstanding debt.
CAD Government Yields: Yield levels in the Canadian government bond market.
Canadian (CAD) 10-Year Yields: The yield on the 10-year Canadian government security.
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.
Currency hedging:Strategies designed to mitigate the impact of currency performance on investment returns.
Cyclically Adjusted Price to Earnings (CAPE) Ratio: a valuation measure of the S&P 500 Index that is adjusted for inflation and takes into account cyclical fluctuations in market earnings relative to longer term averages.
Dividend: A portion of corporate profits paid out to shareholders.
Dividend Payout Ratio: The percentage of earnings paid to shareholders in dividends. Calculated as yearly dividends per share over earnings per share.
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.
Dovish: Description used when stimulation of economic growth is the primary concern in setting monetary policy decisions.
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-to-price (e/p) ratio: Earnings per share divided by share price.
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.
Federal Open Market Committee (FOMC): The branch of the Federal Reserve Board that determines the direction of monetary policy.
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.
Federal Reserve: The Federal Reserve System is the central banking system of the United States.
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.
Hawkish:Description used when worries about inflation are the primary concerns in setting monetary policy decisions.
Inflation: Characterized by rising price levels.G5: Consists of five of the world's leading industrialized countries: France, Germany, Japan, the United Kingdom, and the United States.
G7: The Group of 7 is a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
GICS: Global Investment Classification System, which assigns companies to specific industries and sectors.
German 10-Year: A debt instrument issued by the German government with an original maturity of 10 years.
Hawkish:A central bank “hawk” leans toward raising interest rates or restricting monetary policy, while a “dove” is the opposite.
Inflation: Characterized by rising price levels.
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.
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 assets..
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.
Market cap-weighted: Market cap = share price x number of shares outstanding. Firms with the highest values receive the highest weights.
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..
Morgan Stanley Global Correlation index: An average of regional correlations and cross-asset correlations, with the sub-components from Equity, Credit, Rates and Forex asset classes.
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.
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.
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 Canada Index: A free float-adjusted market capitalization-weighted index designed to measure the performance of the Canadian equity market.
MSCI Canada Large Cap:A free-float weighted equity index that tracks large Canadian companies.
MSCI EAFE Index: A market cap-weighted index composed of companies representative of the developed market structure of countries in Europe, Australasia and Japan.
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..
Personal Consumption Expenditure (PCE): Measure of price changes in consumer goods and services in the U.S. economy.
Price-to-earnings (P/E) ratio: Share price divided by earnings per share. Lower numbers indicate an ability to access greater amounts of earnings per dollar invested.
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.
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 time.
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.
Redemption:The return of an investor's principal in a fixed-income security, such as a preferred stock or bond, or the sale of units in a mutual fund.
Return on equity (ROE):Firm profits (after accounting for all expenses) divided by the firm’s equity. Higher numbers indicate greater profits relative to the level of equity.
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.
S&P 500 Equal Weight Index: Designed to track the equally weighted performance of the 500 constituents in the S&P 500 Index.
S&P High Yield Dividend Aristocrats Index CAD Hedged: The index hedges the performance of the S&P High Yield Dividend Aristocrats® against fluctuations in the Canadian dollar. The S&P High Yield Dividend Aristocrats® index is designed to measure the performance of companies within the S&P Composite 1500® that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 years.
S&P 500 Depository Receipt (SPY): an exchange traded fund that tracks the S&P 500 index.
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 Low Volatility High Dividend Index: The S&P 500 Low Volatility High Dividend index measures the performance of the 50 least-volatile high dividend-yielding
Satellite Around:A reference to a “core-satellite” strategy, where a main fund or ETF represents the bulk of the allocation, while other smaller holdings act as satellites around it.
Securities:A security is a fungible, negotiable financial instrument that holds some type of monetary value..
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.
Smart Beta: A term for rules-based investment strategies that don’t use conventional market-cap weightings.
Sovereign Debt: Bonds issued by a national government in a foreign currency, in order to finance the issuing country’s growth.
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.
“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.
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.
U.K. 10-Year Government Yields:The yield on the 10-year U.K. government security.
Underlying Securities:The security on which a derivative derives its value..
U.S. Treasury (UST) Yield: The return on investment, expressed as a percentage, on the debt obligations of the U.S. government.
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 time.
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.
Volatility: A measure of the dispersion of actual returns around a particular average level.
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.