Index Descriptions:
The Standard & Poor’s (S&P) 500® Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. Indices are not managed and do not incur fees or expenses.
The S&P Small Cap 600® Index is an unmanaged index that tracks the performance of 600 widely held, small-capitalization U.S. stocks.
The Standard & Poor’s (S&P) Global 1200 Index is an unmanaged index that tracks the performance of 1200 of the largest, most liquid global stocks that make up 70% of the global stock market capitalization.
The Standard & Poor’s (S&P) Global ex-U.S. BMI® Index is an unmanaged index that tracks the performance of all companies that have at least US $100 million in float adjusted market capitalization and a value traded of at least US $50 million for the last 12 months at the time of annual reconstitution.
The Standard & Poor’s (S&P) Global ex-U.S. BMI® Index is an unmanaged index that tracks the performance of 8000 all-capitalizations international stocks.
The Standard & Poor’s (S&P) Mid-Cap 400® Index is a market capitalization-weighted benchmark index made up of 400 securities with market values between $200 million and $5 billion.
The Bloomberg UK Homebuilder Index is comprised of homebuilders in the United Kingdom. This index is a modified market cap-weighted index, whose equities are capped at 15%.
The Bloomberg Barclays US 7-10 Year Treasury Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury. Treasury bills are excluded by the maturity constraint but are part of a separate Short Treasury Index.
The Bloomberg Barclay’s U.S. Aggregate Bond Index, is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS (agency and non-agency).
The Barclays Capital U.S. Aggregate Bond Index is a market capitalization-weighted index of public, investment-grade, taxable, fixed income securities in the United States–including government, corporate, and international dollar-denominated bonds, as well as mortgage-backed and asset-backed securities, all with maturities of more than 1 year.
The Barclays Capital Global Aggregate ex-U.S. Index is a market capitalization-weighted index, meaning the securities in the index are weighted according to the market size of each bond type. Most U.S. traded investment grade bonds are represented. Municipal bonds and Treasury Inflation-Protected Securities are excluded, due to tax treatment issues. The index includes Treasury securities, government agency bonds, mortgage-backed bonds, corporate bonds, and a small amount of foreign bonds traded in the U.S.
The Barclays Capital U.S Corporate High-Yield Index is composed of fixed-rate, publicly issued, non-investment grade debt.
The Bloomberg Commodity Total Return Index is composed of futures contracts and reflects the returns on a fully collateralized investment in the BCOM. Bloomberg’s spot Crude Oil price indications use benchmark WTI crude at Cushing, OK. The Gold Spot price is quoted as US Dollars per Troy Ounce. Delivery of Grade 1 electrolytic Copper conforming to the specification B115 for Grade 1 electrolytic copper as adopted by the American Society for Testing and Materials, and of a brand approved and listed by COMEX. London Metal Exchange Primary Aluminum 3 Month Rolling Forward. The Corn No. 2 Yellow at par and substitutions at differentials established by the exchange. The Sugar No. 11 contract is the world benchmark contract for raw sugar trading. Raw centrifugal cane sugar based on 96 degrees average polarization.
The CBOE Volatility Index® (VIX)® is based on the S&P 500® Index (SPX), the core index for U.S. equities, and estimates expected volatility by averaging the weighted prices of SPX puts and calls over a wide range of strike prices.
Dow Jones Relative Risk Indices are total-portfolio indices that allow investors to evaluate the returns on their portfolios considering the amount of risk they have taken. The family includes global and U.S. indices for five risk profiles—aggressive, moderately aggressive, moderate, moderately conservative and conservative. These profiles are defined based on incremental levels of potential risk relative to the risk of an all-stock index. Each Dow Jones Relative Risk Index is made up of composite indices representing the three major asset classes: stocks, bonds and cash and will vary depending on the risk profile. The asset class indices are weighted differently within each relative risk index to achieve the targeted risk level. The weightings are rebalanced monthly to maintain these levels.
The Dow Jones Relative Risk Indices are total-portfolio indices that are defined based on incremental levels of potential risk relative to the risk of an all-stock index. Each index tracks three Composite Major Asset Classes (CMACs): stocks, bonds and cash. The CMACs are reweighted each month to reflect a risk profile that is set at the start of the month based on the current risk level of the stock CMAC. The risk level of the Dow Jones Aggressive Portfolio Index is set monthly to 100% of current risk of the stock CMAC (which is calculated as 36-month semi-variance). Then, the risk levels of the Dow Jones Moderately Aggressive, Moderate, Moderately Conservative and Conservative Portfolio Indices are assigned based on the efficient frontier. Once the risk levels have been determined each month, the three CMACs are reweighted within each index to maximize the allocation to the CMAC with the greatest expected return at that risk level. To prevent the complete exclusion of any asset class, the minimum weighting of each CMAC is 5%.
The Dow Jones Transportation Average (DJTA, also called the “Dow Jones Transports”) is a U.S. stock market index from S&P Dow Jones Indices of the transportation sector and is the most widely recognized gauge of the American transportation sector.
The Dow Jones Utility Average (also known as the “Dow Jones Utilities”) is a stock index from Dow Jones Indexes that keeps track of the performance of 15 prominent utility companies.
The FTSE All World Ex-U.S. Small Cap Index includes approximately 3,300 stocks of companies in more than 46 countries, from both developed and emerging markets around the world.
FTSE Global Small Cap ex U.S. Index is a market-capitalization weighted index representing the performance of small cap stocks in Developed and Emerging markets excluding the U.S.
The FTSE 100 Index (FTSE 100) is a share index of the 100 companies listed on the London Stock Exchange (LSE) with the highest market capitalization.
The MSCI ACWI Investable Market Index (IMI) captures large, mid and small cap representation across 23 Developed Markets and 23 Emerging Markets countries; and covers approximately 99% of the global equity investment opportunity set.
The MSCI All-Country World Index (ACWI) captures large and mid-cap representation across 23 Developed Markets (DM) and 26 Emerging Markets (EM) countries, covering approximately 85% of the global investable equity opportunity set.
The MSCI AC Asia Pacific Index captures large and mid-cap representation across 5 Developed Markets countries and 8 Emerging Markets countries in the Asia Pacific region. With 1,003 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
The MSCI EAFE Index is an equity index which captures large- and mid-cap representation across 21 Developed Markets (Europe, Australasia, Far East) countries around the world, excluding the U.S. and Canada. The index covers approximately 85% of the free float-adjusted market capitalization in each country.
The MSCI Emerging Markets Index captures large- and mid-cap representation across 26 Emerging Markets (EM) countries, covering approximately 85% of the free float-adjusted market capitalization in each country.
The MSCI Europe Index captures large and mid-cap representation across 15 Developed Markets (DM) countries in Europe. With 442 constituents, the index covers approximately 85% of the free float- adjusted market capitalization across the European Developed Markets equity universe.
The MSCI Europe (ex UK) Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe excluding the United Kingdom.
The MSCI Europe Financials Index captures large- and mid-cap representation across 15 Developed Markets countries in Europe. All securities in the index are classified as members of the GICS financials sector.
The MSCI USA Index is designed to measure the performance of the large- and mid-cap segments of the U.S. market, covering approximately 85% of the free float-adjusted market capitalization in the U.S.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. As of September 2016 the MSCI World Index consisted of the following 23 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.
The MSCI World ex-U.S. Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States. As of September 2016 the MSCI World ex US Index consisted of the following 22 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the United Kingdom. The index was started on 12/31/1987.
The MSCI World® and MSCI World Ex-US® Indices track developed equity markets including or excluding the United States.
The NASDAQ Composite is a stock market index of the common stocks and similar securities (e.g. ADRs, tracking stocks, limited partnership interests) listed on the NASDAQ stock market.
The Nikkei Index (Nikkei 225 or Nikkei) is a stock market index for the Tokyo Stock Exchange calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1950. It is a price-weighted index (the unit is yen), and the components are reviewed once a year.
The Russell 1000® Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. market. The Russell 1000 Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected.
The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
The WisdomTree Bloomberg U.S. Dollar British Funds (USDU) is a basket of ETF currencies that seeks to provide total returns, before expenses, that exceed the performance of the Bloomberg Dollar Total Return Index.
The JP Morgan Emerging Market Bond was formed in the early 1990s after the issuance of the first Brady bond and has become the most widely published and referenced index of its kind.
The London Interbank Offered Rate is the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks.
The SSE Composite Index is a stock market index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.
The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK.
The U.S. Dollar Index is a measure of the value of the United States dollar relative to a basket of foreign currencies. It is a weighted geometric mean of the dollar’s value relative to other select currencies (Euro, Japanese Yen, Pound sterling, Canadian dollar, Swedish krona (SEK) & Swiss franc).
The U.K. Pound, Euro, Japanese Yen, Australian Dollar, Canadian Dollar, and Chinese Yuan were measured against the U.S. Dollar Index.
The Global Financial Centres Index (GFCI) was first published by the Z/Yen Group in March 2007. The aim of the GFCI is to examine the major financial centers globally in terms of competitiveness.
Dow Jones Industrial Average – an indicator of stock market prices; based on the share values of 30 blue-chip stocks listed on the New York Stock Exchange.
The MSCI ACWI ex USA Index captures large- and mid-cap representation across 22 of 23 Developed Markets countries (excluding the U.S.) and 26 Emerging Markets countries, covering approximately 85% of the global equity opportunity set outside the U.S.
Bloomberg Commodity Index (BCOM) is calculated on an excess return basis and reflects commodity futures price movements. The index rebalances annually weighted 2/3 by trading volume and 1/3 by world production and weight-caps are applied at the commodity, sector and group level for diversification.
Definitions:
Alpha: a risk-adjusted return in excess of that received by a benchmark.
Beta: a number describing the relation of its returns with those of the financial market as a whole. A positive beta means that the asset’s returns generally follow the market’s returns. A negative beta means that the asset’s returns generally move opposite the market’s returns.
Max Drawdown: the maximum peak to trough decline in monthly returns of the strategy over the given time period.
R2 represents the percentage of a fund or security’s movements that can be explained by movements in a benchmark index.
Sharpe ratio: a measure of the excess return per unit of deviation in an investment asset or a trading strategy.
Standard deviation: a measure of variability used in statistics. A low standard deviation indicates that the data points tend to be very close to the mean, whereas high standard deviation indicates that the data points are spread out over a large range of values.
Volatility: A statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index. Commonly, the higher the volatility, the riskier the security.
Stock: a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings. There are two main types of stock: common and preferred.
Common stock usually entitles the owner to vote at shareholders’ meetings and to receive dividends. Preferred stock generally does not have voting rights but has a higher claim on assets and earnings than the common shares.
Bond: a debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.
Exchange Traded Funds (ETFs) trade like stocks and are subject to investment volatility and the potential for loss. ETFs are securities that track an index, a commodity or a basket of assets like an index fund, but trade like a stock on an exchange; ETFs experience price changes throughout the day as they are bought and sold.
Telecom: The telecom sector is treated differently by the indices of the underlying ETFs and within our strategies. It may be included as part of the technology or utilities sector or may be treated as its own sector.
Principal Investment Risks: As with all investments, there is the risk that you could lose money by investing in any strategies or individual holding. Many factors affect the value and performance of investments.
Management Risk: The adviser’s dependence on its dividend growth and sector rotation strategies and judgments about the attractiveness, value and potential appreciation of particular securities in which the Fund invests may prove incorrect and may not produce the desired results.
Market Risk: Overall securities market risks may affect the value of individual securities which the ETFs include. Factors such as foreign and domestic economic growth and market conditions, interest rate levels, and political events affect the securities markets.
Credit risk: risk of default on a debt arising from a borrower failing to make a required payment.
Duration risk is a measure of the sensitivity of the price of a fixed-income investment to a change in interest rates.
Turnover Risk: A higher portfolio turnover will result in higher transactional and brokerage costs. Active trading of securities may also increase the realized capital gains or losses, which may increase the taxes paid by an investor and reduces after-tax returns if Fund shares are held in a taxable account.
Fundamental analysis is a method of evaluating a security in an attempt to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors.
Fundamental analysts study anything that can affect the security’s value, including macroeconomic factors such as the overall economy, and microeconomic factors such as company management.
Quantitative analysis refers to economic, business or financial analysis that aims to understand or predict behavior or events through the use of mathematical measurements and calculations, statistical modeling and research.
Strategic asset allocation can be an active or passive style of management. Typically, the portfolio is seldom rebalanced and will remain fully invested throughout the market cycle.
Tactical asset allocation is an active management portfolio that buys and sells various assets to take advantage of strong, or protect from weak, market sectors or asset classes. Tactical strategies may also be able to allocate a portion of, or the entire portfolio, to cash or similar lower risk asset classes if insufficient (or no) market sectors are deemed favorable.
Dynamic asset allocation is an active management portfolio that employs both Strategic and Tactical components.
Chartered Financial Analyst: This designation is offered by the CFA Institute. To obtain the CFA charter, candidates must successfully complete three exams and gain at least three (3) years of qualifying work experience, among other requirements. In passing these exams, candidates demonstrate their competence, integrity and extensive knowledge in accounting, ethical and professional standards, economics, portfolio management and security analysis.
The CIMA (Certified Investment Management Analyst) certification, administered through Investment Management Consultants Association (IMCA), signifies that an individual has met initial and on-going experience, ethical, education, and examination requirements for investment management consulting, including advanced investment management theory and application. Prerequisites for the CIMA certification are three years of financial services experience and an acceptable regulatory history. CIMA designees must adhere to a code of standards and meet continuing education requirements.