BOGEY

Today's word: BOGEY
Theme for this fortnight: MUTUAL FUNDS

 

The benchmark return that a portfolio or fund manager is compared against, such as the S&P 500. More generally, the target return than an investor is aiming for.

 

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FOUL WEATHER FUND

Today's word: FOUL WEATHER FUND
Theme for this fortnight: MUTUAL FUNDS

 

A type of mutual fund that performs well or even better than the market as a whole in weak market conditions. The goal of these types of funds is to limit or benefit from downward market effects. Often these funds invest in stocks with lower volatility.

 

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DISTRIBUTION WATERFALL

Today's word: DISTRIBUTION WATERFALL
Theme for this fortnight: MUTUAL FUNDS

Hierarchy of distribution of an equity fund. This specifies the order of distribution to investors when their investments are sold. For instance, general investors can only receive their share of the fund after preferred investors are given their corresponding shares.

 

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COUNTRY BASKET

Today's word: COUNTRY BASKET
Theme for this fortnight: MUTUAL FUNDS

Exchange traded fund composed of stocks in foreign countries combined into one security. A country basket allows an investor to own multiple stocks in his or her portfolio without being subject to multiple transaction costs and/or multiple securities.

 

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ELEPHANT

Today's word: ELEPHANT
Theme for this fortnight: MUTUAL FUNDS

 

Slang for a large institutional investor such as a mutual fund or pension fund. The term comes from the idea that these investors move huge amounts of money into and out of assets and sectors in a herd-like fashion, having a large impact on security prices when they move.

 

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CLONE FUND

Today's word: CLONE FUND
Theme for this fortnight: MUTUAL FUNDS

 

A mutual fund started by another mutual fund as a result of the parent fund's large growth and management's assessment that the parent is limited as to the investments it can make. For example, a very large fund would generally be unable to establish investment positions in small or new corporations. Thus, a new, smaller fund with the same goals as the older, bigger fund is started. Although the parent fund and clone fund have the same investment objectives, they purchase different securities and generally operate under different managements.

 

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DELTA ONE

Today's word: DELTA ONE
Theme for this fortnight: MUTUAL FUNDS

 

A category of derivatives for which a change in the value of the underlying asset results in a change of the same, or nearly the same, proportion in the value of the derivative. Some examples of delta one derivatives include equity swaps, forwards, futures, and exchange-traded funds (ETF's).

 

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BEAR FUNDS

Today's word: BEAR FUNDS
Theme for this fortnight: MUTUAL FUNDS

Funds that utilize short-selling methods to quickly make profits during a bear or declining market. These funds are usually made up of hedge funds and mutual funds. They are actively managed, and short individual stocks or inverse-index funds that short entire indexes. Bear funds revolve around the idea of playing with both sides of the market so that gains in the bear fund offset losses elsewhere in an investor's portfolio. Bear funds are considered tactical investments, but usually end up being lousy long-term investments for investors.

 

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