Glossary

Allocation :
Way of which the total components of a portfolio is distributed.
Alpha :
The premium an investment portfolio earns above a certain benchmark. A positive alpha indicates that the investor earned a premium over that index. The better the management of the portfolio, the more positive the alpha.
Beta:
The measure of an asset's risk in relation to the market (for example, the S&P500) or to an alternative benchmark or factors. Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return.
Bond :
Bonds are debt and are issued for a period of more than one year. National governments, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically.
Correlation :
Statistical measure of the degree to which the movements of two variables are related.
Derivatives:
A financial contract whose value is based on, or ?derived¨ from, a traditional security (such as a stock or bond), an asset (such as a commodity), or a market index.
Determination Coefficient (R2) :
The proportion of the variability in one series that can be explained by the variability of one or more other series. 100% R-square means perfect predictability.
Drawdown
A measure of a losing period during an investment record. It is calculated as the percent change from a price peak to trough. This used as a measure of risk.
Foundation :
A private, non-profit, tax-free organization that collects and distributes money for charitable purposesA private, non-profit, tax-free organization that collects and distributes money for charitable purposes.
Hedge Fund :
An investment fund that employs a multitude of skill-based investment strategies with a broad range of risk and return objectives. A common element is the use of investment and risk management skills to seek positive returns regardless of market direction.
Partnership :
Shared ownership among two or more individuals, some of whom may, but do not necessarily, have limited liability with respect to obligations of the group.
Philanthropy :
Practical benevolence, especially charity on a large scale.
Portfolio :
A collection of investments held by an investor, investment company or financial institution.
Private equity :
Capital to enterprises not quoted on a stock market.
Retrocession :
Part of or all fees collected paid to a third party.
Risk :
Degree of uncertainty of return on an asset.
Royalties:
Payments for the right to use intellectual property or natural resources.
Sharpe Ratio:
A measure of a portfolio's excess return relative to the total variability of the portfolio.
Stock :
Ownership of a corporation indicated by shares, which represent a piece of the corporation's assets and earnings.
Trust :
A legal relationship created - inter vivos or on death - by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.
Value at Risk (VaR):
Procedure for estimating the probability of portfolio losses exceeding some specified proportion based on a statistical analysis of historical market price trends, correlations, and volatilities.
Venture Capital:
Investments in start-up or early stage companies projecting high growth rates.
Volatility :
A measure of price changes of an asset over a certain period of time. A measure of risk based on the standard deviation of the asset return

Sources: Bloomberg, Harrap's Dictionary, Campbell R. Harvey Glossary, Goldman Sachs and The Law of trusts and equitable remedies by DJ Hayton.