INDEXES

Bloomberg Barclays US Aggregate Bond TR Index: a component of the US Universal Index and covers the USD‐denominated, investment‐grade, fixed‐rate, taxable bond market of SEC‐registered securities.

Bloomberg Barclays Global Aggregate TR Index: multi-currency benchmark that includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.

Bloomberg Barclays U.S. Corporate High Yield TR Index: measures the high yield, fixed-rate U.S. corporate bond market.

Bloomberg Barclays Municipal Bond Index: measures the long-term tax-exempt bond market in four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds.

Russell 1000 TR Index: measures the performance of 1,000 largest U.S. companies where dividends are reinvested automatically.

Russell 1000 PR Index: measures the performance of 1,000 largest U.S. companies.

Russell 1000 Value TR Index: comprised of Russell 1000 companies with lower predicted and historical growth rates.

Russell 1000 Growth TR Index: comprised of Russell 1000 companies with higher predicted and historical growth rates.

Russell 2000 TR Index: measures the performance of 2,000 small-cap U.S. companies where dividends are reinvested automatically.

Russell 2000 PR Index: measures the performance of 2,000 small-cap U.S. companies.

Russell 2000 Value TR Index: comprised of Russell 2000 companies with lower predicted and historical growth rates.

Russell 2000 Growth TR Index: comprised of Russell 2000 companies with higher predicted and historical growth rates.

Russell 2500 Value TR Index: comprised of Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values.

Russell 3000 TR Index: a market-capitalization weighted index that measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

Russell 3000 Value TR Index: comprised of Russell 3000 companies with lower predicted and historical growth rates.

Russell 3000 Growth TR Index: comprised of Russell 3000 companies with higher predicted and historical growth rates.

Russell Global TR Index: measures the performance of the global equity market based on all investable equity securities.

Solactive Power Factor High Dividend TR Index: constructed by scoring each ordinary dividend paying, common stock constituent from the 3,000 largest U.S. companies both directly and relative to industry peers using the three Power Factors and ranking those securities in descending order according to their dividend indicated yield. The 50 companies with the largest dividend indicated yield are chosen as Index components.

S&P 500 TR Index: includes a representative sample of large-cap U.S. companies in leading industries where all cash payouts (dividends) are reinvested automatically.

S&P 500 Value TR Index: measures value stocks using three factors: the ratios of book value, earnings, and sales to price, within the constituents of the S&P 500 Index.

S&P 500 Growth TR Index: measures growth stocks using three factors: sales growth, the ratio of earnings change to price, and momentum, within the constituents of the S&P 500 Index.

MSCI EAFE Index: captures large- and mid-cap representation across developed market countries around the world, excluding the U.S. and Canada.

Dow Jones Industrial Index: comprised of 30 large, publicly owned, U.S. based companies.

HFRX Equity Hedge Index: includes various equity hedge strategies with a wide variety of investment processes ‐ typically at least 50% invested in both long and short equals and can range in levels of net exposure, leverage employed, holding period, concentrations of market capitalizations, and valuation.

NASDAQ Composite Index: a market value weighted index of all common stocks listed on NASDAQ.

CAC 40 Index: a capitalization-weighted measure of the 40 most significant values among the 100 highest market caps on the Euronext Paris.

Hang Seng Index: freefloat-adjusted market capitalization-weighted stock market index in Hong Kong.

Nikkei Index: (Nikkei 225) price-weighted stock market index for the Tokyo Stock Exchange.

Shanghai Composite Index: (SSE Composite) a stock market index of all stocks that are traded on the Shanghai Stock Exchange.

SPDR Gold Shares: State Street Global Advisors exchange-traded fund designed to reflect the performance of gold bullion price.

Ibovespa Brasil Sao Paulo Stock Exchange Index: free-float market cap comprised of the stock traded on the Sao Paulo Stock Exchange.

FTSE 100 Index (UKX): capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock Exchange.

Bloomberg West Texas Intermediate (WTI) Cushing Crude Oil Spot Index: a single commodity index composed of futures contracts on crude oil.

Deutsche Boerse AGE German Stock Index (DAX): 30 selected German blue chip stocks traded on the Frankfurt Stock Exchange.

METRICS

Alpha: measure of risk-adjusted non-excess return; positive Alpha indicates performance better than the given Beta (volatility) of the investment.

Beta: measure of volatility relative to a given index; Beta above 1 is more volatile than the index; Beta less than 1 is less volatile.

Up and Down Capture Ratios: used to evaluate how well a manager performed relative to an index during periods when the index is up or down. 

Maximum Drawdown: measures the peak‐to‐trough loss of an investment, indicating capital preservation.

Worst Quarter: average annualized return for the worst performing quarter.

Best Quarter: average annualized return for the best performing quarter.

Standard Deviation: measure of volatility; greater STD indicates a more volatile strategy or index during a given time period.

TERMS

Smart Beta strategies: attempt to deliver a better risk and return trade-off than conventional market cap weighted indices by using alternative weighting schemes based on measures such as volatility or dividends.

Power Factor: proprietary factor-based security selection models that evaluate U.S. and international stocks for high-yield dividend, dividend growers, value, yield, and quality.

Price return: The price return is the rate of return on an index, where the return measure takes into account only the capital appreciation of the index and does not include dividends.

Real GDP: inflation-adjusted gross domestic product.

Seasonally Adjusted: removes fluctuations that normally occur at the same time and magnitude each year.

Annual Rates: BEA publishes estimates at annual rates for ease of comparisons with related and historical data.

Populist: a member of a political party that represents the interests of ordinary people.

Protectionism: economic policy of limiting/restricting trade between countries with government regulation.

Standard Deduction: a dollar amount that non-itemizers may subtract from their income and is based on filing status.

Wealth Effect: the idea that when the value of stock portfolios rises due to escalating stock prices, investors feel more comfortable and secure about their wealth, causing them to spend more.

Compounding: as defined by Investopedia, is the process where the value of an investment increase because the earnings on an investment (both capital gains and interest) earn interest as time passes.

Gross domestic product (GDP) by state: the market value of goods and services produced by the labor and property located in a state. GDP by state is the state counterpart of the Nation’s GDP, the Bureau’s featured and most comprehensive measure of U.S. economic activity.

Real values: inflation-adjusted statistics—that is, these exclude the effects of price changes.

Seasonal adjustment and annual rates: Quarterly values are expressed at seasonally-adjusted annual rates (SAAR).

Earnings Growth vs. Revenue Growth revenue: is the total amount received from sales while earnings is what is left after deducting costs, also known as net income.

Trailing P/E: calculated by dividing the current stock price by its earnings per share for the past 12 months.

Zombie Economy: the term used by Don Schreiber to describe U.S. and global market conditions since the 2008 Financial Crisis. His white paper published on the topic can be found by clicking here.

Risk-Reward Ratio: measures the amount an investor stands to lose if the investment moves in an unexpected direction divided by the amount they expect to gain.

Liquidity Trap: When a market dislocation occurs due to emotional investor behavior during periods of overvaluation and volatility causing less liquidity and significant disruptions to price continuity.

Flash Crashes: excessively wild price movements over just a few days or even minutes.

Modern Portfolio Theory: based on the idea that investors can utilize diversification to construct portfolios that maximize expected return based on market level risk. Harry Markowitz, “Portfolio Selection,” Journal of Finance, 1952.

Tulip Bulb Mania: Holland 1593-1634. Tulips and their bulbs were a highly valued commodity that people traded for land, homes, and other valuables until the market crash from 1634-1637 when the value equated to a common vegetable.

Style box allocation: a tool investors may use to determine the asset allocation and risk-return structures of their portfolios and/or how a security fits into their investing criteria.

Lehman Moment: Financial services firm Lehman Brothers filed for the largest Chapter 11 bankruptcy protection in U.S. history on September 15, 2008.

Stagflation: persistent high inflation combined with high unemployment and stagnant demand in a country’s economy.

Structural unemployment: a form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers (also known as the skills gap).

Price return: The price return is the rate of return on an index, where the return measure takes into account only the capital appreciation of the index and does not include dividends.

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