Glossary

Accrued Interest

The interest accumulated on a bond since the issue date of the last coupon payment. The buyer of the bond pays the market price and accrued interest, which is payable to the seller.

Active Management

A method of portfolio management based on the assumption that security prices do not always reflect their true, or intrinsic, value and that this disparity will be corrected over time.

Agency Obligation

The debt of an agency of the U.S. Government, which may guarantee the payment of principal and interest.

Alpha

An estimate of risk-adjusted investment performance, where beta is used as a measure of risk. It is an indicator of the rate of return attributable to the investment manager after adjusting for the portfolio’s level of market risk. A positive alpha indicates the investment manager has earned a higher rate of return than expected given the portfolio’s level of risk, while a negative alpha indicates the investment manager has earned a lower rate of return than expected given the portfolio’s level of risk.

Alternative Investments

Alternative investments are assets that fall outside of traditional categories like stocks and bonds. This includes private equity, private credit, hedge funds, real estate, and infrastructure. At ACG, alternative investments may be recommended to enhance portfolio diversification, manage risk, or generate potential returns that aren’t as directly tied to public markets.

American Depositary Receipt (ADR)

A negotiable receipt for shares of a foreign corporation, held in trust by a financial institution, which entitles the holder to dividends and capital gains and trades on U.S. markets.

Asset Allocation

The way in which the assets of an investment portfolio are split among asset classes. Studies suggest that asset allocation accounts for more than 90% of the variability in portfolio return outcomes.

Asset Allocation Modeling

The use of data and forecasting tools to simulate and build investment mixes. ACG uses models such as Black-Litterman and Morningstar Direct to help tailor portfolios.

Barbell

A portfolio structuring technique using a mix of short and long-term securities in an effort to achieve a targeted average maturity or duration.

Basis Point

One one-hundredth of one percent (0.01%). One hundred basis points equals one percent.

Benchmark

An investment index used as a standard by which to measure the relative performance of an overall portfolio or an individual money manager. Benchmarks are typically selected based on their similarity to a portfolio or to the style of the individual money manager being measured.

Beta

Beta is a measure of systematic risk or a security or portfolio’s sensitivity to the market. Understanding beta can help ACG and its clients better manage market-related risk.

Bloomberg US Aggregate Bond Index

The Bloomberg US 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).

Bond Characteristics

• Par value: Principal value at maturity. Not necessarily the current market price.
• Coupon: Annual yield, generally paid semi-annually, and stated as a percentage of par.
• Maturity: The date on which the principal of a loan or bond must be repaid.
• Yield to Maturity: Implicit rate of return assuming no change in market interest rates.
• Quality: Rating assigned to the issue based upon the issuer’s creditworthiness. Investment-grade issues are Aaa to Baa (Moody’s) or AAA to BBB (S&P and Fitch).
• Call Provisions: Most corporate bonds can be called, or redeemed, prior to maturity. This shortens the maturity and affects pricing.
• Prepayment Terms: Mortgages can generally be prepaid. Like call provisions, prepayments shorten maturity and affect pricing.
• Collateral: Mortgages and other asset-backed securities have houses, cars, airplanes, receivables, or other assets collateralizing them.

Bottom Up

An approach of equity management generally referred to as stock picking. Using this approach, a manager focuses less on industry or economic variables and more on the characteristics of individual companies.

Bullet

A fixed-income portfolio structuring technique focused on a particular maturity or duration.

Capital Market Assumptions (CMAs)

Proprietary forecasts of long-term expected returns, volatility, and correlations across asset classes that are used to guide strategic asset allocation decisions.

Collateralized Mortgage Obligation (CMO)

CMOs are bonds that are collateralized by whole loan mortgages or mortgage pass-through securities. A key difference between traditional pass-throughs and CMOs is the mechanics of the principal payment process. In a pass-through, each investor receives a pro rata distribution of any principal and interest payments made by the homeowner. Because mortgages are self-amortizing assets, the pass-through holder receives a return of principal each month. Complete return of principal and the final maturity of the pass-through do not occur until the final mortgage in the pool is retired.   

Commercial Paper

Financial instruments that can be bought and settled on the same day with minimal complication, have a short-term maturity, and pay interest at maturity. They are cash equivalents.

Convertible Bond

A bond which, at the option of the holder, is convertible into other securities of the corporation, usually common equity. Occasionally, convertible bonds are issued by one corporation that are convertible into the equity of another corporation. Certain securities are convertible into underlying commodities.

Corporate Bonds

A debt instrument issued by a private corporation.

Correlation

Correlation measures the direction and the degree of association between the returns of two assets. It ranges in value from -1 to +1. A correlation of -1 indicates that the assets have historically moved in opposite directions.

Coupon

The annual rate of interest to be paid on a bond, expressed as a percentage of its face value (par). It is typically split into semi-annual payments.

Credit Quality

A measure of the creditworthiness of an issuing company or agency as reflected by a grade given to an interest-bearing security. Credit quality is rated on a scale of AAA to D (S&P and Fitch)/Aaa to C (Moody’s) and measures the ability of the borrowing entity to make both interest and principal payments as outlined in the bond indenture or contract.

Current Yield

Amount of annual income (interest or dividends) received, expressed as a percentage of the current market value of the bond or portfolio.

Deep Discount Bond

A bond issued at a very low issue price. Deep discount bonds have low coupons, offering investors potentially high principal return and low interest income, but they may also raise concerns about the issuer’s creditworthiness. An extreme example is a zero-coupon bond, which pays all of its return in principal on the redemption date.

Defined Benefit Plan

A retirement plan in which an employer promises a specific benefit (often a monthly payout) upon retirement, based on factors like salary and years of service.

Derivative

A financial instrument whose characteristics and value depend upon the characteristics and value of an underlying asset, typically a commodity, bond, equity, or currency. The price of a derivative will move in a direct relationship to the price of the underlying instrument. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives in an effort to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline. These techniques can be quite complicated and risky. 

Discount Rate

The interest rate, fixed by the Federal Reserve, that a financial institution must pay when it borrows from its regional Federal Reserve Bank.

Diversification

The practice of selecting several asset classes with differing return characteristics in an effort to reduce overall portfolio volatility.

Downgrade

1. The changing of a rating by a rating agency to a lower (less creditworthy) rating.
2. The sale of one block of bonds and the purchase of another block with a lower rating.

Downside Risk

A measure of risk that shows the average size of the deviation from the mean when the returns are negative. Also referred to as downside standard deviation. It differs from standard deviation in that it uses only negative returns.

Due Diligence

Due diligence refers to the comprehensive review and analysis of investment opportunities, managers, or portfolio strategies. At ACG, due diligence includes both quantitative and qualitative assessments, with a focus on risk management, performance consistency, and alignment with client objectives.

Duration

A measure of average maturity that incorporates a bond’s yield, coupon, final maturity, and call features into one measurement. Duration measures the sensitivity of a bond’s or portfolio’s price to changes in interest rates. The price of a two-year duration portfolio will rise/fall by 2% if interest rates fall/rise by 1%. The price of a five-year duration portfolio will rise/fall by 5% if interest rates fall/rise by 1%. If the outlook on bonds is “bullish” (i.e., interest rates are expected to fall), the duration is lengthened. If the outlook on bonds is “bearish” (i.e., interest rates are expected to rise), the duration is shortened.

Emerging Markets

Securities markets in less developed countries. Emerging markets are typically characterized by market inefficiencies, lack of information, lack of price continuity, little liquidity, and lack of adequate rules and regulations.

Endowment Investment

A long-term investment approach designed to support the financial health of institutions such as universities, foundations, or nonprofits. Typically focuses on capital preservation and growth. ACG helps endowments develop investment policies, implement diversified portfolios, and manage performance to support sustainability and mission alignment over time.

Environmental, Social, and Governance (ESG) Investing

A framework that evaluates investments based on environmental sustainability, social responsibility, and ethical governance practices.

Estate Planning

The process of organizing how assets will be managed and distributed during a person’s lifetime and after death.

Federal Funds Rate

The interest rate at which depository institutions trade federal funds with each other overnight. It is monitored by the Federal Reserve through its process of regulating the growth of bank reserves and money supply in the execution of its monetary policy. Changes in the federal funds rate are sometimes studied by economists and investors for clues to the Federal Reserve’s intentions.

Federal Home Loan Mortgage Corporation (FHLMC)

A corporate instrumentality of the United States, created by an act of Congress on July 24, 1970, to increase the availability of mortgage credit for the financing of housing. FHLMC raises funds by issuing securities backed by pools of conventional mortgages, either Participation Certificates (PCs) or Guaranteed Mortgage Certificates (GMCs). Known as Freddie Mac.

Federal National Mortgage Association (FNMA)

A government-sponsored corporation owned entirely by private stockholders. It is subject to regulation by the Secretary of Housing and Urban Development. It purchases and sells residential mortgages insured by FHA or guaranteed by VA, as well as conventional home mortgages. Purchases of mortgages are financed by the sale of corporate obligations to private investors. Known as Fannie Mae.

Fiduciary Duty / Fiduciary Responsibility

A legal and ethical obligation that an investment adviser owes to its clients. It is comprised of the duty of care and the duty of loyalty. Fiduciary duty requires that investment advisers serve the best interest of its client, making full and fair disclosure of all material conflicts of interest that could affect the advisory relationship.

Financial Analysts

Professionals who support investment decision-making by researching market trends, developing financial projections, and building portfolio models. At ACG, our in-house analysts also produce proprietary capital market assumptions and contribute to ongoing Investment Research Education—helping clients stay better informed and more confident in their financial strategies.

Financial Management

The oversight and coordination of financial assets to help clients meet their investment goals. This approach helps to ensure that strategies are both aligned with each client’s objectives and managed with care and accountability.

Floating Rate Note (FRN)

A fixed income security with a variable coupon rate that periodically changes according to the rise and fall of a benchmark interest rate index or a specific fixed income security. Also known as a “floater.”

Futures and Forward Contracts

Derivative contracts that allow parties to buy or sell an asset at a predetermined price on a specified date. Contracts can be based on a wide range of assets such as financial instruments, bonds, stock indexes, currencies, gold, silver, oil, agricultural products, cattle, or hogs.

Government National Mortgage Association (GNMA)

A federal agency that backs home loan mortgages. A wholly-owned U.S. Government corporation within the Department of Housing and Urban Development, established in 1968 as a spin-off from the Federal National Mortgage Association (FNMA). GNMA can raise funds by issuing securities backed by pools of mortgages. Primary functions of GNMA are the purchase and sale of certain FHA and VA mortgages pursuant to various programs for support of the housing market, and the guaranteeing of mortgage-backed securities issued against pools of FHA and VA mortgages. Known as Ginnie Mae.

Government Bonds

Bonds backed by the federal government, whether issued by the Treasury or one of the government agencies.

Gross Return

A measure of an investment portfolio’s performance that includes the impact of trading costs and other account-related expenses, but not investment management or investment consulting fees.

Growth Manager

Refers to one style of equity manager. A growth manager typically seeks capital appreciation by choosing stocks that are expected to grow at a faster rate than their peers or the market as a whole.

High-Yield Bond

A bond that has a rating of BB (S&P and Fitch)/Ba (Moody’s) or lower that pays a higher yield in an effort to compensate for risk. Also known as non-investment grade or “junk” bonds.

Impact Investments

Investments made with the intention of generating measurable social or environmental benefits alongside financial returns. At ACG, impact investing strategies are developed using Environmental, Social, and Governance (ESG) and Socially Responsible Investing (SRI) frameworks designed to align with an organization’s values. These strategies may focus on areas such as environmental sustainability, human rights, corporate governance, and mission-driven outcomes.

Index

Statistical composites that are used for comparison purposes to measure changes in the performance of similar classes of investments. Indexes can indicate how a broad category of securities, such as stocks or bonds, responded to economic conditions over a given period of time. Examples include the Standard & Poor’s (S&P) 500 and the Bloomberg US Aggregate Bond.

Institutional Investment Management

Customized investment oversight and strategy development for institutions such as educational or religious organizations, hospitals, municipalities, endowments, foundations, and retirement plans.

Interest Rate

The fee paid as a fee for the use of money, expressed as an annual percentage of the principal amount. Influenced by a variety of factors, including economic growth, inflation, supply/demand, and international conditions.

Interest Rate Risk

When interest rates rise, the market value of fixed-income securities (such as bonds) declines. Similarly, when interest rates decline, the market value of fixed income securities increases.

Intermediate

A bond with a maturity of intermediate length. Depending on the particular market, the range for this length may vary. In the corporate bond market, an intermediate bond would have a maturity between 1 and 12 years.

Investment Consultant

A professional or firm that provides advice and guidance on investment policy, strategy, manager selection, and performance evaluation, often for institutional or nonprofit clients.

Investment Education

Educational programs designed to help individuals and organizations build financial knowledge and make more informed decisions. At ACG, investment education often supports foundation board members by providing training on fiduciary responsibilities, nonprofit governance, budgeting, saving, investing, financial literacy, and risk awareness. These sessions are designed to empower clients to confidently oversee and guide their financial strategies.

Investment Grade

Bonds rated in the top four rating categories (AAA/Aaa, AA/Aa, A, BBB/Baa) are commonly known as investment grade securities and are considered eligible for bank investment under present commercial bank regulations issued by the Comptroller of the Currency.

Investment Management/Advisory Fees

Fees that are paid as compensation for the provision of investment management and/or investment advisory services to the portfolio.

 

Investment Policy Statement (IPS)

A formal document that outlines an organization’s investment objectives, risk tolerance, asset allocation strategy, and guidelines for evaluating performance.

 

Investment Research

Investment research is the process of sourcing, analyzing, and developing investment ideas. It involves analyzing historical performance and risk and risk-adjusted returns produced by a security relative to its peer group, as well as analyzing financial statements.

 

Investment Risk Management

The process of identifying, analyzing, and mitigating potential losses in an investment portfolio.

Large Capitalization Stocks

Also referred to as large-cap stocks, these are securities of companies whose overall market capitalization is roughly greater than $7 billion.

Leverage

The use of debt or borrowed funds in an effort to enhance returns or portfolio value. Buying securities on margin is an example of leverage using borrowed money.

Long position

This is ownership of a particular security.

Manager Selection

Manager selection is the process of identifying, evaluating, and monitoring third-party investment managers who oversee specific asset classes within a portfolio. At ACG, we conduct ongoing research and due diligence to help ensure managers align with clients’ investment objectives, philosophy, and risk tolerance.

Market Analysis

The process of evaluating financial markets to better understand potential risks, opportunities, and performance across different asset classes. At ACG, market analysis is supported by proprietary capital market assumptions developed by our in-house analysts. This analysis, combined with ongoing Investment Research Education, is designed to help clients stay informed about emerging trends and make confident investment decisions.

Market Capitalization

Total value of all outstanding shares of a corporation’s stock (outstanding shares times the current price).

Market Risk

That portion of a portfolio’s total risk that is related to moves in the market benchmark and, therefore, cannot be diversified away.

Maturity

The date on which a loan, bond, mortgage, or other debt security becomes due and is to be paid off.

Medium Capitalization Stocks

Also referred to as mid-cap stocks, these are securities of companies whose overall market capitalization is roughly between $2 billion and $7 billion.

 

Mortgage-Backed Securities

Bonds that are a general obligation of the issuing institution but are collateralized by a pool of mortgages.

MSCI EAFE (Europe, Australia, and the Far East) Index

A market capitalization-weighted index designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia, and the Far East, excluding the U.S. and Canada.

NAV

Net asset value per share is calculated by taking the total value of a fund’s holdings at current market prices, plus other assets (including cash), subtracting all liabilities, and dividing by the number of outstanding shares.

Net Return

The portfolio’s return after deducting investment management fees and/or investment advisory fees, in addition to trading costs and other account-related expenses.

Non-Systematic Risk 

Non-market or firm-specific risk factors that can be mitigated through diversification. Systematic risk refers to risk factors common to the entire economy.

OCIO (Outsourced Chief Investment Officer)

A third-party advisor that assumes day-to-day investment management responsibility, including asset allocation, manager selection, and performance monitoring—while aligning with an organization’s long-term objectives.

Option

A contract that gives its owner the right, but not the obligation, to buy or sell some asset at a fixed price on or before a given date.

Ordinary Shares

Shares of foreign corporations traded on their local exchange.

Par Value

1. The value of a security as expressed on its face without consideration to any premium or discount. Also signifies the dollar value on which bond interest is figured.
2. A price of 100 percent of face value.
3. The principal amount or denomination at which the obligor (issuing corporation) contracts to redeem the bond at maturity. This amount is stated on the face of the bond.

Passive Management

A method of portfolio management that is based on the belief that all securities are fairly priced and that there are no additional returns to be made from security selection. Often referred to as indexing, portfolios are invested in securities that replicate an underlying index, such as the S&P 500.

Pass-Through

A mortgage-backed security for which the payments on the underlying mortgages are passed from the mortgage holder through the servicing agent (who usually keeps a portion as a fee) to the security holder. There are three types of pass-through securities:

• Straight Pass-Through: the security holder receives principal and interest actually collected by the servicing agent.
• Modified Pass-Through: the security holder receives interest due, whether or not it has been collected, and principal as collected.
• Fully Modified Pass-Through: The security holder receives principal and interest due, whether or not they have been collected.

Pay Down

The portion of a mortgage that is applied toward the reduction of the principal amount, as opposed to the interest due. Includes all pass-through principal payments.

Percentile (Performance)

A value on a scale of 0 to 100 that indicates the percentage of funds in the comparative universe whose returns are equal to or above the fund’s return for the selected period. A portfolio at the 5th percentile ranks in the top 5% of the comparative universe and has outperformed 95% of portfolios in the comparative universe for the selected period.

Performance Measurement / Reporting

The tracking and evaluation of investment returns, benchmark comparisons, and adherence to investment policy.

Philanthropic Giving

Philanthropic giving encompasses various forms of giving, such as donating money, time, skills, or even goods, to organizations or initiatives that aim to improve society. 

Policy Development

The creation of investment policy statements that guide how a portfolio should be managed in alignment with an organization’s goals. At ACG, policy development involves outlining long-term growth objectives, asset allocation targets, manager oversight criteria, cash management guidelines, communication protocols, and reporting expectations.

Portfolio Construction

The selection and allocation of investments within a portfolio based on return expectations, risk tolerance, and strategic objectives.

Portfolio Development

The process of designing investment portfolios that align with a client’s goals, risk tolerance, and long-term strategy. At ACG, portfolio development includes evaluating a range of asset allocation options and using capital market projections to help clients and investment committees “pre-experience” potential outcomes. This approach supports informed decision-making and results in portfolio recommendations tailored to each client’s needs.

Private Wealth Management

Comprehensive financial services tailored to high-net-worth individuals and families, which can include estate planning, tax strategies, risk management, and multi-generational wealth transfer.

Price/Earnings Ratio

Share price of a company’s stock divided by its earnings per share. This ratio can indicate how much investors are willing to pay for each dollar of earnings and assists investors in assessing a stock’s valuation.

Prime Rate

The rate of interest at which a commercial bank offers to lend money to its most creditworthy customers.

Quartile (Performance)

When used in conjunction with universe comparisons, quartiles are the percentile points that divide a ranked list of comparative fund returns into 4 groupings. The first quartile represents the top 25% of the universe. The second quartile represents the 26th to 50th percentiles. The third quartile represents the 51st to 75th percentile, and the fourth quartile represents the bottom 25% of the universe.

Retirement Income Planning

The process of creating a long-term financial strategy to provide income throughout retirement. At ACG, retirement income planning includes evaluating risk and return, managing investments, and can incorporate broader financial considerations such as wealth transfer, philanthropic giving, and tax strategies. As fiduciaries, we assist clients seeking financial security in retirement by developing long-term strategies with their best interest in mind.

R-Squared

That portion of the total variability in portfolio returns that is explained by variability in the market benchmark returns.

RFP (Request for Proposal)

A Request for Proposal (RFP) is a formal process that institutions use to evaluate and select investment consultants or other service providers. ACG regularly responds to RFPs from endowments, foundations, retirement plans, and other institutions seeking long-term advisory partnerships.

Russell 1000

The largest 1000 U.S.-domiciled stocks as ranked by total market capitalization.

Russell 1000 Growth

Comprised of the stocks in the Russell 1000 that have the higher price to book ratios and higher forecasted growth.

Russell 1000 Value

An equity index representing the subset of companies within the Russell 1000 Index that exhibit lower price-to-book ratios and lower forecasted growth rates, characteristics commonly associated with value stocks.

Russell 2000

Consists of the 2000 smallest companies in the Russell 3000 Index. Popular benchmark for small-cap stocks.

S&P 500 Index

A broad measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. This index does not contain the 500 largest companies nor the most expensive stocks traded in the U.S. While many of the stocks are among the largest, this index also includes many relatively small companies.

Sector (Bonds)

A group of securities with similarities (for example, industry type, coupon rate, maturity date, and/or rating). Typically, the four sectors of the bond market are: Treasuries, Mortgages, Corporates, and International.

• Treasuries: All U.S. Treasury issues. Highest quality (AAA) and liquidity.
• Mortgages: Agency and other pass-throughs (e.g., FNMA, FHLMC, FHA), plus derivatives (CMOs, POs, etc.) Mostly AA-AAA rated and prepayable at any time.
• Corporates: All industrial, financial, utility, and other corporate issuers. Terms and quality vary. Generally callable prior to maturity.
• International: Includes U.S. issuers in foreign markets (also referred to as “Euros” or “Eurobonds”), foreign issues in the U.S. market (Yankees), and foreign issues in foreign markets.

Sharpe Ratio

A risk-adjusted measure of return that uses standard deviation to represent risk. It is calculated using the annualized return in excess of the return of the cash equivalent divided by the annualized standard deviation of the portfolio or benchmark. The higher the Sharpe ratio, the better the fund’s risk-adjusted performance.

Short position

A position resulting from short selling that has not been covered.

Short selling

The sale of shares not owned by the investor but borrowed through a broker, with the obligation to later repurchase and return them. A profit is earned if the stock price declines between the sale and repurchase.

Small Capitalization Stocks

Also referred to as small-cap stocks, these are securities of companies whose overall market capitalization is roughly between $50 million and $2 billion.

Socially Responsible Investing (SRI)

An investment approach that aims to generate both financial return and positive social impact by supporting causes that align with the investor’s values or avoiding certain companies/industries that do not.

Strategic Asset Allocation

A long-term investment strategy that defines fixed proportions of asset classes in a portfolio, periodically rebalanced to maintain the target mix.

Spread

The yield or price differential between two different securities.

Standard Deviation

A statistical measure of risk reflecting the total variability (risk) of the portfolio or benchmark. It measures the extent to which the returns for a portfolio have varied from period to period and represents the dispersion of the periodic returns around the average return.

STRIPS

STRIPS stands for Separate Trading of Registered Interest and Principal of Securities. The process by which a bond is separated so that the principal and each interest payment become separate securities that are treated individually. Each piece is a zero-coupon security that matures separately and has only one payment.

Systematic risk

Also called market risk, systematic risk is the part of a security’s risk that is common to all securities of a general class and thus cannot be eliminated by diversification.

Tactical Asset Allocation

A flexible investment strategy that allows for temporary adjustments in asset allocations to take advantage of short-term market opportunities.

Taft-Hartley Plans

Jointly managed retirement or health plans for union workers, typically involving both employer and employee representation. ACG provides fiduciary oversight and investment consulting for these plans.

Tax Planning

Tax-efficient planning aims to minimize client tax responsibility. Considerations and options include insurance, college savings, portfolio management, debt, small business financial plans, and more. Related services include investment management, retirement planning, and estate planning.

Top Down

An approach to equity management whereby the manager first forms an opinion on the direction of the economy as a whole. Next, the manager determines how their economic forecast may affect certain industries and finally how the industry effect might apply to individual companies within those industries.

Total Return

A measure of the total performance of an asset over a designated time period. It is comprised of income return and capital appreciation return.

Treasury Bill

A non-interest-bearing obligation, fully guaranteed by the U.S. Government, payable to the bearer. Bills are sold on a discount basis so that the income is the difference between the purchase price and the face value.

Treasury Bond

A coupon security of the U.S. Treasury, which may be issued with any maturity but is generally more than ten years.

Treasury Note

A coupon security issued by the U.S. Treasury with a maturity of not less than one year and not more than ten years.

Trustee Responsibilities

Trustees are legally and ethically responsible for overseeing an organization’s assets and acting in its best interest. This includes setting investment policy, reviewing performance, ensuring compliance with fiduciary standards, and making decisions that align with the organization’s mission and financial goals.

Universe

Also called a peer group, a universe is a group of comparable portfolios chosen based on characteristics such as investment objective, investment style, asset size, level of risk, asset mix, or type of fund. The returns for the group of selected portfolios are usually presented in rank order (via percentiles) for various time periods.

Value Manager

Refers to one style of equity manager. A value manager seeks to create returns by purchasing stocks they believe are selling at a discount to their true, or intrinsic, value.

Wealth Transfer Strategies

Planning techniques designed to pass assets to beneficiaries in a tax-efficient manner while aligning with personal or philanthropic goals.

Yankee Securities

Dollar-denominated bonds issued in the U.S. by foreign banks and corporations for trade in U.S. markets.

Yield

The rate of annual income return on an investment, expressed as a percentage. Income yield is obtained by dividing a security’s annual income by its current market value (or cost).

Yield Curve

A graphic depiction that plots the yields or interest rates of bonds that have similar credit qualities but different maturities (e.g., zero to thirty years). The shape of the curve is largely influenced by the Federal Reserve Policy as well as factors listed under “Interest Rate” above.

Yield Curve Risk

Price exposure that a security or portfolio has in the event of nonparallel shifts in the yield curve.

Yield to Maturity

The return a bond earns on the price at which it was purchased if it were held to maturity. It assumes that coupon payments can be reinvested at the yield to maturity.

Zero-Coupon Bond

Security that makes no interest payments but is sold at a discount from its face value. Also refers to a bond created by stripping off the coupon and selling the principal and coupons separately.