This guide has been created for you to help make investment literature easier to understand and to clarify some of the more common terms.
Emphasis has been placed on clarity and brevity rather than attempting to cover every single complex detail. We hope you find the guide useful and simple to digest. We have made every effort to ensure that the terms are accurately described, however, the descriptions are not definitive and they may differ from other interpretations used.
Disclaimer: The investment glossary is provided for informational purposes only and under no circumstances may any information contained herein be construed as investment advice. It is meant to provide investors with quick clarification on a particular financial term. While we have made every effort to ensure that the terms are accurately described, the descriptions are not definitive and they may differ from other interpretations used.
An investment management approach where a manager aims to beat the market through research, analysis and their own judgement. See also Passive management.
The use of the rights and position of ownership to influence the activities or behaviour of investee companies.
Risks taken by an actively managed fund as it attempts to beat the returns of its benchmark.
The return on an asset in excess of the asset’s required rate of return.
Investments outside of the traditional asset classes of equities, bonds and cash. Alternative investments include property, hedge funds, commodities, private equity, and infrastructure.
The compounded average annual returns for periods greater than one year.
Apportioning a portfolio's assets based on investment objectives.
Assets Under Management
Amount of funds (value) managed by the firm.
A standard, (usually an index or a market average) that an investment fund's performance can be measured against. Many funds are managed with reference to a stated benchmark.
A measure of the sensitivity of the portfolio to the overall market.
The price at which a buyer is willing to pay.
The original cost of an investment.
Bottom up investing
An investment strategy that focuses on picking stocks by analysing the fundamentals of the individual stocks.
The annual interest paid on a bond.
A score given to assess the creditworthiness of the borrower.
A dealer is an entity or firm who trades securities for their own account. A dealer acts to trade for their own account as opposed to a broker who executs orders on behalf of clients.
Refers to the market of a developed nation in terms of its economy and capital markets.
Appointed partners that are authorized to sell units of LGI funds.
Process of allocating capital to reduce exposure to a limited number of stocks or asset class.
Distribution of profits to shareholders.
Duration measures the sensitivity of a debt instrument to interest rate changes. The price of a bond with a longer time to maturity will be more sensitive to interest rate.
Refers to the market of a developing nation.
Enhanced Liqudity (context of funds)
High liquidity, income focused products offered by LGI. Achieved by investing in high quality debt instruments.
Exhange Traded Funds. A basket of securities that is traded on an exchange.
Expense deducted from your fund measured as a percentage of the fund.
A document containing essential information about our products.
An investment fund that funnels it's capital into a master fund via a master-feeder relationship.
Diversified equity portfolio with the main goal of capital appreciation.
Hedged Class (funds)
Share classes that seek to minimize an investor's currency exposure.
Subtracting the benchmark's rate of return from the portfolio's rate of return before dividing by the tracking error. A general indicator of the fund manager's performance.
Fee payable upon the initial purchase of the product.
Investment grade bond
Bonds that are rated as low risks by credit agencies.
Bonds that are rated as risky by credit agencies.
A fee charged by the asset/investment manager for managing the fund.
The total value of all the shares outstanding of a company.
Refers to short term debt instruments with maturity of one year or less.
Multi Asset Strategy
Portfolio that is managed using a combination of asset classes like stocks, bonds, real estate or even commodities to generate returns.
Net asset value. Total value of a fund's assets minus it's liabilities.
The price at which a buyer is willing to sell.
Using separate accounts, which when combined, aims to achieve the objective of the mandate.
Overweight refers to having a greater position that the benchmark weight. The opposite applies for underweight.
The ratio of the company's share price to its book value per share. A commonly used valuation metrics.
The ratio of the company's share price to its earnings per share. A commonly used valuation metrics.
The face value of a bond.
An investment strategy that seeks to track the performance of an index. See also Active Management.
PRI (Principles for Responsible Investing)
Principles for Responsible Investment is a United Nations-supported international network of investors working together to implement its six aspirational principles. A signatory is a member of the network of investors. More information is available at www.unpri.org.
A prospectus is a formal document that provides details on an investment offering.
The process for an entity to vote on behalf of a corporate shareholder who cannot attend the shareholders' meeting.
Adjusting the weightings of the components in a portfolio to its required weighting.
When an investor sells the units of his/her fund. See also Subscription.
Real estate investment trusts.
Individual investors that trade for themselves, usually at smaller volumes than institutional clients.
There are various risk-adjusted return ratios used like commonly used Sharpe Ratio. It is a measure of the return on an investment while taking into consideration the degree of risk associated with it.
Certain funds may offer different share classes, which offer varying sales charges, expense ratios and minimum investment requirements. Some share classes may also be denoted in different currencies or offered as currency hedged securities.
Subtracting the risk-free rate from the portfolio's rate of return and divide by the standard deviation of the portfolio's return. A general indicator of the fund manager's performance.
Smart Beta Strategy
Smart Beta Strategies seek to enhance returns by using predetermined factors.
A statistical measure of the dispersion of the data set from its mean.
When an investor buys units in a fund. See also Redemption.
The charge levied for switching from one fund to another fund managed by the same manager.
Tactical asset allocation
A short term shift in the asset allocation to take advantage of short term market opportunities.
A fund that targets a specific return that could be a variable rate like inflation or a fixed percentage.
Top down investing
An investment strategy where investment decisions are focused on macro views.
The deviation of portfolio returns from benchmark returns.
The percentage of a portfolio's holding's that has been replaced in a year.
The range of price change for a security. It applies to upward and downward moves.
Weighted average credit rating
The weighted average credit rating reflects the holdings of the underlying issues, based on the size of each holding and ratings assigned to each based on rating agency assessments of its creditworthiness.
The weighted average duration of a fund reflects the effective duration of the underlying issues, based on the size of each holding.
Weighted Yield to Maturity
The weighted average of individual constituents' yield to maturity with the weight of each constituent's fair value.
The percentage return of an investment over a period of time.
Yield to Maturity (bonds)
The percentage return of holding the bond until its maturity date.