Glossary

The glossary has been created to clarify some of the more common terms used in our investment literature. We have made every effort to ensure that the terms are accurately described. The descriptions are, however, not definitive and may differ from other interpretations used.

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  • Alpha measures the excess return generated by the fund compared to  the return of its benchmark.  An alpha of 1.0 indicates that the fund has outperformed its benchmark by 1%.
  • Average Coupon is the average of the interest rates (coupon) stated upon the issuance of the underlying securities.
  • Average Credit Rating measures the underlying securities’ credit quality, a rating assigned by credit rating agencies such as Fitch, Moody’s and/or Standard & Poor’s. The ratings typically range from AAA/Aaa (highest) to D (lowest). The higher the rating, the lower the perceived risk of a security.
  • Average Duration represents the average interest-rate sensitivity of the fund’s underlying securities.
  • Average Yield to Maturity is the average annual total return anticipated on a portfolio if the fixed income securities in the portfolio are held to maturity. The expected total return includes the coupon payments received during the term of a bond and its principal repayment upon maturity.
  • Beta measures the risk (volatility) of a fund compared to the market as a whole.  A beta of 1.05 suggests that the fund could perform 5% better than the market in up market and 5% worse in down market, assuming all other factors remain constant.
  • Bloomberg [Bloomberg Global Identifier (BBGID)] is a unique 12-digit alphanumerical code assigned to a Sub-Fund’s share class as a way to identify it on a Bloomberg Terminal.
  • Current Yield is the return an investor would expect if they purchased a fixed income security and held it for a year. It measures against the current price of the bond, instead of its face value.
  • Debt-to-Equity Ratio measures the proportion of debt and equity the company is using to finance assets. It is a measure of a company’s financial leverage and is calculated by dividing its total liabilities by shareholders equity.
  • Information Ratio measures the funds returns above the benchmark returns relative to the risk (volatility) of the returns. It is a measure that identifies the consistency of the manager to outperform the benchmark.  A manager who outperforms a benchmark by 3% p.a. will have a higher Information Ratio than a manager with the same outperformance but who takes more risk.
  • ISIN (International Securities Identification Number)  is a 12 digit code consisting of numbers and letters that distinctly identifies securities.
  • Modified Duration measures the interest-rate sensitivity by determining the change in a bond’s duration and price for each percentage change in the yield to maturity.
  • Net Asset Value (NAV) is the value of an entity/fund’s assets minus the value of its liabilities.
  • No. of Securities is a measure of the number of instruments the fund invests in.
  • Price-to-Earnings Ratio (P/E Ratio) is a ratio of a company’s current share price compare (EPS). A high PE will be considered a growth stock while a low PE will be considered a value stock. The P/E is sometimes referred to as the “multiple”, because it shows how much investors are willing to pay per unit of earnings.
  • Price-to-Book Ratio (P/B Ratio) is a ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share.
  • R Squared is a measure that represents the percentage of a fund returns that can be explained by movements in the benchmark. A high R-squared (>85) indicates the fund’s performance has been in line with the benchmark. A low R-squared (<75) indicates the fund’s performance has not been in line with the benchmark.
  • Return on Equity Ratio (ROE) measures a company’s profitability by revealing how much profit a company generates with the money shareholders have invested. It is calculated as the amount of net income as a percentage of shareholders equity.
  • Sharpe Ratio is the most common measure for calculating risk-adjusted return for a fund. The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of risk (volatility).  The higher the Sharpe Ratio the better the returns compared to the risk taken.
  • Standard deviation is a basic measure of the fund risk, i.e. the volatility of the fund’s returns in relation to its average.  The higher the standard deviation, the more volatile is the fund’s returns.
  • Tracking Error is a measure of how closely a fund’s returns follows the benchmark returns.  The lower the number the closer the fund’s historic performance has followed its benchmark.
  • Weighted Average Life is the weighted average time of when an amortizing bond repays its principal.
  • Weighted Average Market Capitalization is a measure of the weighted average market capitalization of the company stock held in the portfolio.

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