Glossary of investment terms

is an estimated dividend yield based on the sum of income distributions paid over the trailing 12 months divided by the product’s price on the period end date.

is a yield calculation that is similar to the 30-day SEC yield but shows what a fund’s yield would be without any fee waivers or expense reimbursements.

is a standardized yield calculation developed by the Securities and Exchange Commission (SEC). It captures the net investment income earned by a fund over a 30-day period, after the deduction of a fund’s expenses. It’s an annualized percentage, based on a fund's share price on the last day of the period. Since share prices and yields are subject to fluctuation, current yields should not be considered an indication of future results.

is a measure of an investment’s performance compared to a benchmark. A positive alpha suggests better performance.

is the average length of time, in days, until the holdings in the portfolio repay the principal.

is a measure of the volatility or market risk of an investment compared to a broad index. A beta greater than 1.00 suggests price volatility greater than the market.

is a performance metric used to evaluate how well an investment strategy or fund performs in up and down markets relative to a benchmark over a period of time. An upside ratio greater than 100% indicates higher returns than the benchmark over that period. A downside ratio less than 100% means the investment lost less than the benchmark during down markets over that period.

is the yield paid by a fixed-income security.

is a measure of a portfolio’s sensitivity to changes in interest rates; the longer the portfolio’s duration, the more sensitive it is.

measures the risk-adjusted returns of a financial asset or portfolio relative to a certain benchmark. It is used to measure the consistency of a fund’s outperformance. A higher information ratio is indicative of better consistency and risk-adjusted performance.

is a measure of the size of the companies held in the portfolio, calculated by multiplying a company’s total outstanding shares by the stock price.

is when the principal of the security is due and payable to the investor.

reveals a fund’s investment strategy. For equity funds, the vertical axis of the Equity Style Map shows the market capitalization of the stocks owned (large, medium, or small) and the horizontal axis shows investment style (value, blend, or growth).

is a valuation ratio of a company’s current share price compared to its earnings per-share, calculated by dividing the market value per share by its trailing 12-month earnings.

R-Squared (or correlation squared) is used to indicate what percentage, from 0% to 100%, of the variation in a fund’s return can be explained by the benchmark returns. It is used to help measure how similar a fund is to the benchmark and how appropriate the benchmark is for other statistical comparisons. The lower the R2, the less meaningful statistics such as Beta will be.

is a measure of corporate profitability that shows how much net income the companies in the portfolio have generated as a percentage of shareholder equity.

is a measure of risk-adjusted return, comparing the returns of an investment to the risk it has taken. A higher Sharpe ratio suggests better returns given the risk.

measures risk by showing how much a fund fluctuates relative to its average return over a period of time.

is a measure of trading activity calculated by dividing the lesser of long-term purchases/sales by average long-term market value.

is the market-value weighted average of the time remaining until the bonds in the portfolio will repay principal.