Active Management: If a fund is actively managed, it means a fund’s manager deliberately chooses specific investments for the fund’s portfolio that he or she believes will perform better or be less risky than other investments.
Accumulation: The phase of an investor’s financial journey (typically their working years), where they are accumulating assets to prepare for retirement and investment objectives are focused on maximizing returns over long time horizons.
Alpha: Alpha measures a mutual fund manager’s or strategy's effectiveness. It shows the difference between a fund's actual returns and its expected performance, given its level of risk as measured by beta.
Alpha gauges how well a manager can pick stocks. It takes the fund’s return and subtracts the return expected from its beta to uncover any excess. A positive alpha indicates the fund has performed better than its beta would predict. In contrast, a negative alpha means the fund performed worse than expected given its beta. Alpha is also after fees, meaning the fund must overcome its management fees as well as its beta to have positive alpha.
Ask Price: The price at which a security is offered for sale on a market exchange. Also called the asked price or offering price.
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Basis Point: A basis point is one-one hundredth of a percentage point. In other words, 0.01% is 1 basis point. One hundred basis points is 1%. Basis points help easily explain tiny percentage changes. For instance, if the Federal Reserve lowered interest rates by a quarter of a percent, you could express that as 25 basis points.
Benchmark: Benchmark is a measure to what you compare your fund’s returns with to judge its performance. A benchmark can be the average performance of funds similar to yours or a broad index of the investments your fund usually picks from.
Beta: A fund’s beta is a measure of its sensitivity to market movements.
The beta of the market is 1.00 by definition. Morningstar calculates beta by comparing a fund's excess return over Treasury bills to the market's excess return over Treasury bills, so a beta of 1.10 shows that the fund has performed 10% better than its benchmark index in up markets and 10% worse in down markets, assuming all other factors remain constant.
Conversely, a beta of 0.85 indicates that the fund's excess return is expected to perform 15% worse than the market's excess return during up markets and 15% better during down markets.
Beta can be a useful tool when at least some of a fund's performance history can be explained by the market as a whole. Beta is particularly appropriate when used to measure the risk of a combined portfolio of mutual funds.
It is important to note that a low beta for a fund does not necessarily imply that the fund has a low level of volatility. A low beta signifies only that the fund's market-related risk is low. (Standard deviation is a measure of a fund's absolute volatility.)
Bid Price: The highest price a buyer will pay for a given security at a given time.
Bid/Ask Spread: The bid is the price that someone is willing to pay for a security at a specific point in time, whereas the ask is the price at which someone is willing to sell. The difference between the two prices is called the bid-ask spread.
Bond: At their most basic, bonds are loans. When you buy a bond, you become a lender to an institution. Your loan lasts a certain period of time—until the date when the bond reaches maturity—and you get a certain dividend payment each month (commonly known as a coupon) as interest on the loan.
As long as the institution does not go bankrupt, it will also pay back the principal on the bond, but no more than the principal.
There are two basic types of bonds: government bonds and corporate bonds. U.S. government bonds (otherwise known as T-bills or Treasuries) are issued and guaranteed by Uncle Sam. They typically offer a modest return with low risk. Corporate bonds are issued by companies and carry a higher degree of risk (should the company default) as well as return.
Two forces govern the performance of bonds and bond funds: interest rate sensitivity and credit risk.
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Call Option: An option contract that gives the owner of a security the right to buy a specific number of shares at a specific price, within a specified period of time. Buyers use call options when they think a stock will go up in value.
Closed-End Funds: A closed-end fund, or CEF, is an investment structure (not an asset class), organized under the regulations of the Investment Company Act of 1940. It's often confused for a traditional open-end mutual fund that is closed to new investors, but this is not true. A CEF is a type of investment company whose shares are traded on the open market, like a stock or an ETF. Like a traditional mutual fund, a CEF invests in a portfolio of securities and is typically managed by an investment management firm.
Collar Strategy: A collar is an options strategy where a trader creates a collar position by purchasing the underlying stock, an out-of-the-money put option while simultaneously writing and selling an out-of-the-money call option on the underlying stock. The put protects the trader in case the price of the stock drops. Writing the call option produces income (which ideally should offset the cost of buying the put) and allows the trader to profit on the increase in the stock up to the strike price of the call, but not higher.
Correlation: Correlation is a statistic that measures the degree to which two variables move in relation to each other.
Coupon: A small, detachable mini-certificate that is literally attached to a bond certificate and is clipped and presented for payment when interest is due.
The certificate entitles the holder to an interest payment on a specified date. It usually represents the six month interest payment on the face value of the bond certificate. For example, a bond with a 10% coupon will pay $10 per $100 of the face value per year, usually in installments paid every six months. Coupons can be sold individually separate from the bond principal.
Coupon Rate: The annual interest rate of a debt/bond security that the issuer promises to pay to the holder until maturity.
Covered Call Option: A covered call refers to a financial transaction in which the investor writing and selling call options owns an equivalent amount of the underlying security. To execute this an investor holding a long position in an asset then writes (sells) call options on that same asset to generate an income stream.
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Decumulation: The phase of an investor’s financial journey (typically in retirement), where they are now drawing down on assets to maintain their lifestyle and investment objectives are focused on generating income and mitigating downside risks.
Distribution: A distribution is a payout from an investment account such as a retirement plan or an IRA. Distributions can be all at once (lump-sum), or spread out over time (periodic). Many rules apply to when you can (or must) take a distribution, how much is distributed and whether a distribution is taxed. Mutual funds must pass any investment income, including capital gains, interest, and dividend income, to the fund’s investors. If the investment is held in a taxable account, these distributions are subject to taxation when it's paid.
Dividend: The trailing one- and three-year annualized growth rates in dividends per share. Increasing dividends is usually a signal that management has confidence in the company's continued earnings power. Dividend growth—especially growth that has been steady from year to year—is a good sign for those investing for income.
Dividend Yield Percentage: The dividends per share of the company over the trailing one-year period as a percentage of the current stock price.
Dividend Yield (12 Mo Yield): 12 Month Yield is the sum of a fund's total trailing 12-month interest and dividend payments divided by the last month's ending share price (NAV) plus any capital gains distributed over the same period. 12 Month Yield gives you a good idea of the yield (interest and dividend payments) your fund is currently paying. Dividend Yield (Equity Style Factor Div Yld): Expected dividend-per-share divided by the current share price. The estimate is determined by either an internal estimate of the growth rate, or a third-party estimate. If the third-party estimate is negative, or if there is no third-party estimate and the current value is negative, no value is calculated.
Downside Risk: Downside risk is an estimation of a security's potential loss in value if market conditions precipitate a decline in that security's price.
Drawdowns (or Market Drawdowns): A drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund. A drawdown is usually quoted as the percentage between the peak and the subsequent trough.
Duration: Duration is a measure of a bond's interest-rate sensitivity. Like a bond's maturity, a bond's duration is expressed in years. But unlike maturity, which is the length of time until a bond's interest payments cease and its principal is paid back, duration also incorporates a bond’s yield, coupon, maturity, and call features.
You could think of duration as the number of years required to recover the true cost of a bond. The duration of an interest-paying bond will always be shorter than its maturity because the payments allow you to recoup some of the cost of the bond before its maturity. The higher the bond’s yield, the shorter the duration--this makes sense because the individual payouts are higher and the investor is recouping the original cost of the bond faster.
Duration can help investors anticipate and understand price fluctuations that are due to interest-rate movements. (Bond prices have an inverse relationship with interest rates.) In simple terms, a bond's duration will estimate how its price will be affected by interest-rate changes. The longer a fund's duration, the more sensitive the fund is to shifts in interest rates. In other words, if rates move up by 1 percentage point, the price of a bond with a duration of 5 years will move down by around 5%, while a bond with a duration of 10 years will move down by about 10%.
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Earnings per share (EPS): How much profit a company has made per share within a given period. EPS is a fairly arbitrary number by itself, because the company can control the number of shares outstanding through splits and buybacks. But comparing a company’s most recent EPS to its EPS in previous years and quarters (adjusted for any splits) is one of the most common ways of telling how fast the company’s profits are growing.
ETF (Exchange-Traded Fund): ETFs (or exchange-traded funds) are hybrid investment vehicles that can offer relatively low-cost and tax-efficient exposure to a variety of asset classes and investment strategies. Like traditional mutual funds, most ETFs invest in a diversified portfolio of stocks and bonds. Unlike traditional mutual funds, ETFs trade on a stock exchange.
The majority of ETFs are passively managed, which means they track an index. That said, a growing minority of them are actively managed. Irrespective of whether they are tracking an index or delivering an active strategy, ETFs tend to have lower annual expenses relative to mutual funds. That said, because they trade like stocks, investors should account for transaction costs (commissions, bid-ask spreads, and so on).
ETFs are often lauded for their tax efficiency compared with traditional mutual funds. There are two main reasons ETFs are often more tax-efficient. First, most ETFs are index funds. And index funds, especially large-cap index funds or total-market index funds that are weighted by market cap, have fairly low turnover. Low turnover means fewer opportunities to realize gains when securities are sold from the portfolio. ETFs' structure is the second, more important driver of their tax efficiency. ETF shares are created and destroyed via in-kind transactions between ETFs' sponsors and a special kind of market maker known as an authorized participant. As such, ETFs tend not to have to directly sell positions from their portfolios to meet redemptions, which protects investors from taxable capital gains distributions.
Investors should be aware that tax-efficient doesn't mean tax-free, though. The primary benefit of ETFs from a tax perspective is that they can allow investors to defer the realization of capital gains taxes. Investors in ETFs will still pay taxes on regular distributions of income, and they will also pay capital gains taxes when they sell an ETF for more than they paid for it. Also, some ETFs will distribute capital gains, though they tend to be less frequent and of lesser magnitude than those their mutual fund counterparts generate.
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Forward P/E: A stock’s current price divided by the mean EPS estimate for the next fiscal year. This ratio can give you an idea of the relative cheapness of a stock when compared to an industry average, the entire market or even the firm’s historical level.
Fund of Funds: Funds that specializes in buying shares in other mutual funds rather than individual securities. Quite often this type of fund is not discernible from its name alone, but rather through prospectus wording (i.e: the fund's charter).
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Hedge: An investment strategy to reduce risk of loss from price fluctuations of securities. Investors often try to hedge against inflation by purchasing assets such as gold or real estate that will rise faster than inflation. Mutual fund managers and pension fund managers often hedge their exposure to currency or interest rate risk by buying or selling futures or options contracts.
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Implied Volatility Risk Premium: Implied Volatility Risk Premium represents the compensation that investors earn for providing protection against unexpected market volatility.
Information Ratio: Information ratio is a risk-adjusted performance measure. The information ratio is a special version of the Sharpe Ratio in that the benchmark doesn't have to be the risk-free rate. The Israelson method is an adjustment of the Information Ratio to take into account the inconsistency of the IR when excess returns are negative.
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Leverage: Seeking profit on an investment by using borrowed funds, margin accounts, or buying securities through rights, warrants or options.
Liquidity: The ability to buy or sell securities quickly and easily without substantially affecting the asset's price. Large volume, blue-chip stocks like the banks are highly liquid securities. Shares in small companies with low volume activity are not considered liquid. High-level liquidity is considered a good feature for a security or a commodity.
Liquidity also refers to the ability of investors to convert securities into cash. Examples of liquid accounts include bank chequing accounts, passbook accounts, investment certificates, and treasury bills.
Limit Order: A client's order to buy or sell a security at a specific price or a better price offer. It represents the maximum price a client is willing to buy a security, and the minimum price a client is willing to accept as a seller.
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Management fee: Taken from the fund's prospectus, this area qualifies the management and administrative fees listed under Management Fees. The actual fees listing most commonly represents the costs shareholders paid for management and administrative services over the fund's prior fiscal year.
If fee levels have changed since the end of the most recent fiscal year, the actual fees will most commonly be presented as a recalculation based on the prior year's average monthly net assets using the new, current expenses.
Although contract-type management costs are listed in a fund's prospectus, these are maximum amounts and funds may waive a portion, or possibly all, of those fees. Actual fees thus represent a closer approximation of the true costs to shareholders.
Market Order: An order to buy or sell a security immediately, at the best available price. The majority of orders executed on the exchanges are market orders.
Mutual fund: When you invest in a mutual fund, your money is pooled with that of other investors, and then it is managed by a group of professionals who try to earn a return by selecting stocks for the pool.
One key advantage of funds is that they can be less volatile. Simple statistics says that a portfolio is going to experience less volatility than the individual components of the portfolio. After all, individual stocks can and sometimes do go to zero, but if a mutual fund held 50 stocks, it would be very unlikely that all 50 of those stocks become worthless.
The flipside of this reduced volatility is that fund returns can be muted relative to individual stocks. In investing, risk and return are intimately correlated—reduce one, and odds are you will reduce the other. Mutual fund investors must also consider expenses. The professionals running mutual funds do not do so for free. They charge fees, and fees eat into returns.
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NAV: A fund's net asset value (NAV) represents its per-share price. NAV is calculated by dividing a fund's total net assets by its number of shares outstanding. Shares in regular open-end mutual funds are bought and sold at NAV, but shares in ETFs (with the exception of creation units) are bought and sold at the market price, which can differ from NAV.
NAV Return: The total return of an ETF, based on its NAV at the beginning and end of the holding period. This may be different from the ETF's market return. The market return, not the NAV return, is the return actually earned by ETF investors, except for those who hold creation units.
Net assets: This figure is recorded in millions of dollars and represents the fund's total asset base, net of fees and expenses.
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Open-end Fund: An open-end mutual fund continuously issues and redeems units, so the number of units outstanding varies from day to day. The value of the fund's shares, or units, changes with the underlying value of the securities in the fund, but each share or unit represents only a portion of the underlying portfolio.
Option: This is the right, but not the obligation, to buy or sell a specified amount of security, at a specified price within a specified time frame. An option represents a right acquired by the purchaser. A put option gives the holder the right to sell the security. A call option gives the right to buy the security.
Option Premium: An option premium is the current market price of an option contract.
OTC: The term refers to transactions made over-the-counter in unlisted securities, or for a transaction involving securities not completed on a recognized stock exchange.
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Premium to NAV: Unlike regular open-end mutual funds, which are bought and sold directly from the fund company at the net asset value (NAV) of their portfolio securities, ETFs and closed-end funds trade at prices determined by the market forces of supply and demand. A fund that trades at a price higher than its NAV is said to trade at a premium to its NAV.
Price/Book Ratio: The price/book (P/B) ratio of a fund is the weighted average of the price/book ratios of all the stocks in a fund's portfolio. Book value is the total assets of a company, less total liabilities (sometimes referred to as carrying value). A company's book value is calculated by dividing the market price of its outstanding stock by the company's book value, and then adjusting for the number of shares outstanding (Stocks with negative book values are excluded from this calculation.).
In computing a fund's average P/B, Morningstar weights each portfolio holding by the percentage of equity assets it represents, so that larger positions have proportionately greater influence on the final P/B.
The price/book ratio can tell investors approximately how much they're paying for a company's assets, based on historical, rather than current, valuations. Historical valuations generally do not reflect a company's current market value. Value investors frequently look for companies that have low price/book ratios.
Price/Cash Flow Ratio: Price/cash-flow represents the amount an investor is willing to pay for a dollar generated from a particular company's operations. Price/cash-flow shows the ability of a business to generate cash and acts as a gauge of liquidity and solvency. Because accounting conventions differ among nations, reported earnings (and P/E ratios) may not be comparable across national boundaries. Price/cash-flow attempts to provide an internationally standard measure of a firm's stock price relative to its financial performance.
Price/Earnings Ratio: The Price/Earnings Ratio or P/E Ratio is a valuation metric that assesses how many dollars investors are willing to pay for one dollar of a company’s earnings. It’s calculated by dividing a stock’s price by the company’s trailing 12-month earnings per share from continuous operations.
A high P/E usually indicates that the market will pay more to obtain the company's earnings because it believes in the firm's ability to increase its earnings. Companies in industries enjoying a surge of popularity tend to have high P/E ratios, reflecting a growth orientation. (P/Es can also be artificially inflated if a company has very weak trailing earnings, and thus a very small number in this equation's denominator.)
A low P/E indicates the market has less confidence that the company's earnings will increase; however, a fund manager or an individual with a 'value investing' approach may believe such stocks have an overlooked or undervalued potential for appreciation. More staid industries, such as utilities and mining, tend to have low P/E ratios, reflecting a value orientation.
At the fund portfolio level, price/earnings ratio can act as a gauge of the fund's investment strategy in the current market climate, and whether it has a value or growth orientation.
The (P/E) ratio of a fund is the weighted average of the price/earnings ratios of the stocks in a fund's portfolio. At Morningstar, in computing the average, each portfolio holding is weighted by the percentage of equity assets it represents, so that larger positions have proportionately greater influence on the fund's final P/E.
Price/Sales Ratio: A stock's current price divided by the company's trailing 12-month sales per share. This represents the weighted average of the price/sales ratios of the stocks in a fund's portfolio. Price/sales represents the amount an investor is willing to pay for a dollar generated from a particular company's operations.
Protective Put Option: A protective put is a risk-management strategy using options contracts that investors employ to limit the loss in a stock or other asset if and when its price drops.
Put Option: Contract that gives the holder the right, but not the obligation, to sell a fixed amount of stock at a specified price by a certain date. Buying a put option provides protection on the downside since its value increases as the underlying stock declines.
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ROA %: This figure is the percentage a company earns on its assets in a given year (Year 1, 2, etc.).
The calculation is net income divided by average total assets. The resulting figure is then multiplied by 100. ROA shows how much profit a company generates on its asset base. The better the company, the more profit it generates as a percentage of its assets. The company's net income is found in the annual income statement. The company's total assets are found in the annual balance sheet. For example, a major software company was earning more than 20% on its assets-an incredible level of profitability. For every $1 of assets, the company was able to produce more than $0.20 of profits.
ROE %: This is the percentage a company earns on its total equity in a given year (Year 1, 2, etc.). The calculation is return on assets times financial leverage.
Return on equity shows how much profit a company generates on the money shareholders have invested in the firm. The mission of any company is to earn a high return on equity. The company's net income is found in the annual income statement. The company's net worth is taken from the company's annual balance sheet. For example, a major pharmaceutical company earned an incredible 37% on its shareholders' equity. For every $1 shareholders had invested in the company, the company produced $0.37 worth of profit.
ROIC: This figure is the percentage a company earns on its invested capital in a given year (Year 1, 2, etc.).
The calculation is net operating profit after tax divided by average invested capital. The resulting figure is then multiplied by 100. Invested capital equals the sum of total stockholders’ equity, long-term debt and capital lease obligation, and short-term debt and capital lease obligation. ROIC shows how much profit a company generates on its capital base. The better the company, the more profit it generates as a percentage of its invested capital. The company’s net income is found in the income statement. The components of the company’s invested capital are found in the balance sheet.
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Sequence of Returns: Sequence of return risk is the risk that market declines in the early years of retirement, paired with ongoing withdrawals, could significantly reduce the longevity of a portfolio.
Sharpe Ratio: The Sharpe ratio is a way to measure a fund’s risk-adjusted returns. It is calculated for the trailing three-year period by dividing a fund's annualized excess returns over the risk-free rate by its annualized standard deviation. The higher the Sharpe ratio, the better the fund's historical risk-adjusted performance has been.
Because the Sharpe ratio uses standard deviation as its risk measure, it is more appropriately used to analyze a single fund rather than a portfolio. You can use Sharpe ratios to directly compare two similar funds to see which delivered more reward per unit of risk taken, or to see how a fund’s risk-adjusted return compares with the average fund in the category or its benchmark.
Sortino Ratio: The Sortino ratio, a variation of the Sharpe ratio, differentiates harmful volatility from volatility in general by using a value for downside deviation.
The Sortino ratio is the excess return over the risk-free rate divided by the downside semi-variance, and so it measures the return to "bad" volatility. (Volatility caused by negative returns is considered bad or undesirable by an investor, while volatility caused by positive returns is good or acceptable.) In this way, the Sortino ratio can help an investor assess risk in a better manner than simply looking at excess returns to total volatility, as such a measure does not consider how often returns are positive as opposed to how often they're negative.
Standard Deviation: Standard deviation measures the dispersion around an average. For a mutual fund, it represents return variability. Investors can use standard deviation to predict a fund’s volatility. A higher standard deviation implies a wider predicted performance range and greater volatility.
If a fund's return pattern follows a normal distribution, the returns will fall within one standard deviation of the mean approximately 68% of the time and two standard deviations roughly 95% of the time. For example, suppose a fund’s mean annual return is 10%, and it has a standard deviation of 2%. In 100 samples, its return should lie between nine and 11 percent 68 times, and eight to 12 percent roughly 95 times. Standard deviation is more complex when calculated for a portfolio because it’s not a simple average. The figure must incorporate how each investment’s return correlates with each other.
Style Factors for Investing: Style Factor Investing involves restricting the investable universe using criteria specific to the Style Factor an investor is seeking. While some of the most common Style Factors include Growth, Quality, and Value, there are many others. We present some criteria for each Style Factor below.
- Growth: Growth style investing aims to identify companies likely to grow at above average rates relative to their industry or the broad index.
- Quality: Quality style investing aims to identify companies exhibiting characteristics that may include: a strong or growing competitive advantage in their chosen industry, benefiting from long-term growth tailwinds, strong management teams, low leverage and high returns on investments.
- Value: Value style investing aims to identify companies trading at discounts relative to their perceived intrinsic values relative to the industry or broad index average.
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Tracking Error: Tracking error assesses how closely a fund tracks a benchmark by comparing the performance of the fund to that of the benchmark. Passive strategies, which aim to replicate a benchmark’s return, often use tracking error to measure their success. Low tracking error means a passive fund’s performance closely followed the benchmark.
Turnover: This is how often a fund manager sells all the stocks in the mutual fund in a given year. If a fund has a 100% Turnover Rate, that means the fund manager, in theory, has sold every single stock position once. In other words, he or she has turned over 100% of the stock positions. In practice, however, this is not entirely accurate. The manager might have held 50% of all positions for the past five years and turned over the other 50% twice throughout the year. This is a 100% Turnover Rate by calculation.
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Unit Investment Trust: A structure used by some ETFs. One important difference between this format and the open-end fund format is that the latter allows ETFs to reinvest dividends immediately, while the former does not. This could result in ETFs that use the unit investment trust structure having a slight cash drag on their performance.
Upside/Downside Capture Ratio: Upside/downside capture ratio show you whether a given fund has outperformed--gained more or lost less than--a broad market benchmark during periods of market strength and weakness, and if so, by how much.
Upside capture ratios for funds are calculated by taking the fund's monthly return during months when the benchmark had a positive return and dividing it by the benchmark return during that same month. Downside capture ratios are calculated by taking the fund's monthly return during the periods of negative benchmark performance and dividing it by the benchmark return. Morningstar.com displays the upside and downside capture ratios over one-, three-, five-, 10-, and 15-year periods by calculating the geometric average for both the fund and index returns during the up and down months, respectively, over each time period.
An upside capture ratio over 100 indicates a fund has generally outperformed the benchmark during periods of positive returns for the benchmark. Meanwhile, a downside capture ratio of less than 100 indicates that a fund has lost less than its benchmark in periods when the benchmark has been in the red. If a fund generates positive returns, however, while the benchmark declines, the fund’s downside capture ratio will be negative (meaning it has moved in the opposite direction of the benchmark). All stock funds' upside and downside capture ratios are calculated versus the S&P 500, whereas bond and international funds' ratios are calculated relative to the Barclays Capital U.S. Aggregate Bond Index and MSCI EAFE Index, respectively. For some context, we also show the category average upside/downside capture ratios for those same time periods.
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Weighted Average Coupon: This figure is calculated by weighting each bond's coupon by its relative size in the portfolio. It indicates whether the underlying fund owns more high- or low-coupon bonds. There can be advantages to holding higher coupon bonds, but many funds buy them simply to tempt investors with a high payout. This can be damaging to investors for two reasons. The first is that higher-coupon bonds often carry greater risk than lower-coupon issues. The second is that when these bonds don't carry extra risk, they are old issues that the fund has paid up for and if the offering doesn't amortize the extra yield, investors are likely to find that their principal erodes over time.
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Yield: Yield measures how much income you’ll get from a security. It’s the annual dividend per share divided by the current stock price and displayed as a percentage.
Yield to maturity: The term used to describe the rate of return an investor will receive if a long-term, interest-bearing security, such as a bond, is held to its maturity date. Yield to maturity (YTM) can be determined by using a bond yield table or a calculator equipped for bond calculations. It is greater than the coupon rate if the bond is selling at a discount and less than the coupon rate if it is selling at a premium.
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*Some of the content has been reproduced, with permission, from Morningstar, Inc.
Please read the prospectus before investing. Important information about each Guardian Capital mutual fund and exchange traded fund (“ETF”) is contained in its respective prospectus. Commissions, trailing commissions, management fees and expenses all may be associated with investments in mutual funds and ETFs. You will usually pay brokerage fees to your dealer if you purchase or sell units of an ETF on the Toronto Stock Exchange ("TSX"). If the units are purchased or sold on the TSX, investors may pay more than the current net asset value when buying units of the ETF and may receive less than the current net asset value when selling them. The indicated rate(s) of return is/are the historical annual compounded total return(s) including changes in unit value and reinvestment of all distributions and does/do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds and ETFs are not guaranteed, their values change frequently and past performance may not be repeated.