MINOR STYLES

130/30
A strategy also known as short extension where the portfolio is 30% short and 130% long. The percentages can be different (for example 150/50) but 130/30 has established itself as the most talked about.
Back to Top

Absolute Return
Investment strategies targeting a positive return in absolute terms rather than relative to an index, or other benchmark, usually associated with hedge funds. Also referred to as “cash plus” funds.
Back to Top

ADR (American Depository Receipt)
A negotiable certificate issued by a U.S. bank representing a specific number of shares of a foreign stock traded on a U.S. stock exchange.
Back to Top

Aggressive Growth
A hedge fund strategy that involves investing in equities that are expected to experience a rise in earnings per share and hedges by shorting equities that are expected to fall in value or by shorting stock indexes.
Back to Top

All-Cap
Investments in stocks of companies across all sizes of market capitalization, such as small-cap, mid-cap and large-cap.
Back to Top

Asset Backed Securities
Bonds or notes backed by loan paper or accounts receivable originated by banks, or other providers of credit, but not mortgages.
Back to Top

Bank Loans
Investments in bank loans to companies, with a fixed maturity and often featuring amortization of principal.
Back to Top

Benchmark
Parameter to assess degrees of comparative performance, such as S&P 500 and FTSE All Share Indexes.
Back to Top

Bundled
Investment across all asset classes.
Back to Top

CDO (Collateralised Debt Obligation)
One of a series of bond-type investments, backed by a pool of assets, which can be tailored to match one or more investor’s requirements in terms of credit rating, risk, duration, and timing of payments.
Back to Top

Commercial
Real Estate investment in land and buildings used for a commercial purpose, such as retail, hotels and offices.
Back to Top

Commission recapture
A process whereby pension plans receive a rebate resulting from brokerage transactions incurred through the pension plans' investment managers. This rebate represents a portion of commissions (equity trades) or spreads (fixed income trades) charged on these investment transactions.
Back to Top

Commodities
Any bulk good traded on an exchange or in the cash market.
Back to Top

Consumer Goods
Investments in firms involved in the production and/or marketing of consumer goods.
Back to Top

Convertible-Arbitrage
A hedge fund strategy involving the purchase of a portfolio of convertible securities and, in some instances, a short position in that portfolio.
Back to Top

Convertibles
Investments in bonds that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.
Back to Top

Core
A substantial long-term holding in a portfolio or fund. A core holding is bought with the express purpose of being held for a long time, and is often a security with a history of fairly steady performance.
Back to Top

Core-plus
A fixed-income investment management style that permits managers to add instruments with greater risk and potentially greater return – such as high-yield, global and emerging market debt – to core portfolios of investment-grade bonds.
Back to Top

Corporate Bonds
Investment in a bond issued by a corporation.
Back to Top

Derivatives/Futures
Investment in securities, such as an option or futures contract, whose value depends on the performance of an underlying security or asset.

Investors sometimes purchase or sell derivatives 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 quite risky.

Futures are a standardized, transferable, exchange-traded contract that requires delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date. Futures convey an obligation to buy, which options do not.
Back to Top

Distressed Debt
A hedge fund strategy involving short selling securities of companies where the price of securities is expected to fall because of a distressed situation.
Back to Top

Enhanced Index
A fund that aims to track an index, but also attempts to boost returns by taking advantage of market timing, specific stock selections, and/or leverage.
Back to Top

Equity Non-Hedge
A hedge fund strategy buying stocks or stock index options which are expected to rise in value due to market appreciation.
Back to Top

Fixed Income Arbitrage
An investment strategy that uses leverage to profit from pricing inefficiencies in the fixed income markets.
Back to Top

FTSE
The Financial Times Stock Exchange 100 stock index, a market cap weighted index of stocks traded on the London Stock Exchange.
Back to Top

GIC (Guaranteed Investment Contract)
Debt instrument issued by an insurance company, usually in a large denomination, and often bought for retirement plans. The interest rate paid is guaranteed, but the principal is not. Also called a guaranteed interest contract.
Back to Top

Global Macro
A hedge fund strategy that makes leveraged bets based on anticipated price movements of stock markets, interest rates, foreign exchange rates and commodity prices.
Back to Top

Government Bonds
Investments in bonds sold by governments, such as US Treasury Bills.
Back to Top

Growth
An investment style that seeks stocks with strong earnings and/or revenue growth or growth potential.
Back to Top

Hedge Fund-of-Funds
Pooled investments in several unregistered hedge funds.
Back to Top

High-Yield
Description of investments with high rates of return. Generally, a high yield bond will be ranked very low by a rating agency, because these are bonds which have a relatively high chance of default, and therefore have to offer higher returns. Similarly, a stock will offer a high dividend yield in order to compensate for lower expected capital gains, for example a large company in a mature industry which is no longer growing.
Back to Top

Income
A stock with a history of regular dividend payments that constitute the largest portion of the stock's overall return.
Back to Top

Index Arbitrage
An investment strategy that attempts to profit from the temporary differences between actual and theoretical futures prices of the same stock index. This is done by simultaneously buying (or selling) a stock index future while selling (or buying) the stocks in that index.
Back to Top

Inflation-Linked Bonds
Government-issued debt securities similar to regular savings bonds, except they offer an investor inflationary protection, as their yields are tied to the inflation rate.
Back to Top

Infrastructure
A capital investment in constructed facilities, equipment, land and natural resources, such as transportation, water supply, energy supply, and waste removal.
Back to Top

Investment Grade
A bond with a high bond rating, such as BBB or above, and which is therefore considered relatively safe.
Back to Top

Investment products
Usually a mandate for a variety of funds across asset classes, or a plan to offer both record-keeping and funds.
Back to Top

Large-Cap
Stocks of companies that have the largest market capitalization. Definitions vary, but are usually either $5 billion and above or $10 billion and above.
Back to Top

LBO (Leveraged Buy Out)
Takeover of a company, or a controlling interest in a company, using a significant amount of borrowed money, usually 70% or more of the total purchase price.
Back to Top

Lehman Aggregate
A bond Index from Lehman Brothers used as a benchmark to measure relative performance of bond funds. The index comprises government securities, mortgage-backed securities, asset-backed securities and corporate securities to simulate the universe of bonds in the market.
Back to Top

Long/Short
A hedge fund strategy which involves holding long equities which are consistently hedged by short sales of stock or stock index options.
Back to Top

Market Neutral Arbitrage
A hedge fund strategy which attempts to hedge out market risk by taking offsetting positions, often investing in different securities from the same issuer to take advantage of pricing inefficiencies. Returns have little or no correlation to the equity and bond markets.
Back to Top

Market Neutral Securities Hedging
A hedge fund strategy with investment equally in long and short portfolios, generally in the same sectors. Leverage may be used to increase returns. There is little or no correlation to market indexes. Benchmark is usually T-bills.
Back to Top

Merger Arbitrage
A hedge fund strategy based on event driven situations such as leveraged buy-outs, mergers and hostile takeovers. Strategy may include purchasing stock of the company being acquired and short-selling stock of the acquiring company.
Back to Top

Mezzanine Finance
Venture capital investment in a company which is somewhere between start-up and an Initial Public Offering (IPO). Venture capital committed at this level usually has less risk but less potential appreciation than at the start-up level, and more risk but more potential appreciation than in an initial public offering (IPO).
Back to Top

Micro- to Small-Cap
Stocks of companies that have a small market capitalization. Definitions vary, but are usually either between from $50 million to $1 billion.
Back to Top

Micro-Cap
Stocks of companies that have the smallest market capitalization. Definitions vary, but are usually from $50 million to up to $250 million or up to $300 million.
Back to Top

Mid- to Large-Cap
Stock with middle to large market capitalisation within a market. Definitions vary but mid cap generally refers to stocks with a market capitalization of between $1 billion-to $10 billion and above.
Back to Top

Mid-Cap
Stock with a middle-ranking market capitalisation within a market. Definitions vary but mid cap generally refers to stocks with a market capitalization of between either $1 billion-$2 billion up to either $5 billion or $10 billion.
Back to Top

Mid-Term
Investments in assets for an intermediate duration.
Back to Top

Mortgage-Backed Securities (MBS)
An investment instrument that represents ownership of an undivided interest in a pool of mortgages, such as those issued by Ginnie Mae and Freddie Mac. Principal and interest from the individual mortgages are used to pay investors' principal and interest on the MBS.
Back to Top

Multiple Arbitrage
A hedge fund strategy investing in more than one arbitrage strategy that attempts to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.
Back to Top

Multi-Strategy
A hedge fund style using various investment strategies to simultaneously attain short and long-term gains. Allows manager to overweight or underweight strategies depending on current investment opportunities.
Back to Top

Opportunistic
A hedge fund investment style that is not restricted and changes strategy to take advantage of opportunities that arise from events such as IPO’s, sudden price changes, hostile bids, etc. Not restricted by asset class or strategy.
Back to Top

Other Relative Value
A hedge fund investment style covering investments option that results from pricing inefficiency due to a specific market, corporate or corporate event.
Back to Top

Portable Alpha
Investment strategy investing in securities that have little or no correlation with the beta of an existing portfolio. Alpha is the return achieved by a manager’s ability to invest in a portfolio that performs better than the market on which the portfolio is derived (beta). Portable Alpha implies that the extra returns (alpha) can be separated by actively trading in stocks which do not change the same way as the rest of the market.

For example, this might be achieved by investing in index futures contracts to obtain exposure to the beta risk and return of an asset class. Because futures contracts are leveraged instruments (they are purchased for less than their face value) the difference is invested with an active manager providing alpha. An active manager might eliminate exposure to beta risk (and beta return), leaving just alpha risk and return by selling short the relevant index futures contract, or by holding offsetting long and short positions in different stocks.
Back to Top

Private Equity
Investments in private companies.
Back to Top

For example, this might be achieved by investing in index futures contracts to obtain exposure to the beta risk and return of an asset class. Because futures contracts are leveraged instruments (they are purchased for less than their face value) the difference is invested with an active manager providing alpha. An active manager might eliminate exposure to beta risk (and beta return), leaving just alpha risk and return by selling short the relevant index futures contract, or by holding offsetting long and short positions in different stocks.
Back to Top

Private Equity
Investments in private companies.
Back to Top

Private Equity Buy Out
A private equity investment in companies where the management is leading a buy-out from the previous owners backed by private equity finance.
Back to Top

Private Equity Fund-of-Funds
Pooled investments in several private equity funds.
Back to Top

Real Estate Fund of Funds
Pooled investments in several real estate funds.
Back to Top

REIT (Real Estate Investment Trust)
A pooled investment vehicle, a corporation or trust , to purchase and manage real estate. REITs are traded on major exchanges just like stocks, so they are liquid, and they often benefit from tax advantages.
Back to Top

Residential
A real estate investment in family homes, such as apartments and townhouses.
Back to Top

Rexiter
Rexiter Global Emerging Markets Sustainability Strategy was developed by State Street Global Advisors in conjunction with the International Finance Corporation, Rexiter Capital Management, and Innovest Strategic Value Advisors. The strategy seeks to systematically integrate environmental, social and governance factors into its portfolio construction process and aims to outperform the return of the MSCI Emerging Markets IndexSM by four percent per annum over the course of a full market cycle.
Back to Top

Risk Arbitrage
A hedge fund strategy that attempts to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.
Back to Top

Russell 1000 Growth
An index published by the Frank Russell Company. The Russell 1000 Growth Index offers investors access to the large-cap growth segment of U.S. equity.
Back to Top

Russell 1000 Index
An index published by the Frank Russell Company. The Russell 1000 Index offers investors access to the extensive large-cap segment of the U.S. equity universe representing approximately 92% of the U.S. market. It includes the largest 1000 securities in the Russell 3000.
Back to Top

Russell 1000 Value
An index published by the Frank Russell Company. The Russell 1000 Value Index offers investors access to the large-cap value segment of the U.S. equity universe.
Back to Top

Russell 2000 Index
An index published by the Frank Russell Company. The Russell 2000 Index offers investors access to the small-cap segment of the U.S. equity universe. The Russell 2000 includes the smallest 2000 securities in the Russell 3000.
Back to Top

Russell 3000 Growth
An index published by the Frank Russell Company. The Russell 3000 Growth Index offers investors access to the broad growth segment of the U.S. equity universe.
Back to Top

Russell 3000 Index
An index published by the Frank Russell Company. The Russell 3000 Index offers investors access to the broad U.S. equity universe representing approximately 98% of the U.S. market.
Back to Top

S&P 1000 Index
An index published by Standard & Poor’s. The S&P 1000 is a combination of the S&P MidCap 400 and S&P SmallCap 600 indices, where the S&P MidCap 400 represents approximately 70% of the index and the S&P SmallCap 600 represents 30%.
Back to Top

S&P 400 Index
An index published by Standard & Poor’s. The S&P MidCap 400 covers approximately 7% of the U.S. equities market.
Back to Top

S&P 500 Index
An index published by Standard & Poor’s. It includes a sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 focuses on the large-cap segment of the market it is often considered to be representative of the US equity market and is frequently used as a benchmark.
Back to Top

Sector-Specific Categories
Investment of 50% or more of hedge fund assets in one sector.
Back to Top

Short Selling
Selling securities short with the expectation that they can be purchased later at a lesser price. This is due to an expected over-valuation of the securities.
Back to Top

Short Term
Investments in assets for a short duration.
Back to Top

Small- to Mid-Cap
Refers to stocks with a small to medium sized market capitalization. The definition can vary, but generally includes companies with a market capitalization of more than $300 million up to $10 billion.
Back to Top

Small-Cap
Refers to stocks with a relatively small market capitalization. The definition of small cap can vary, but generally it is a company with a market capitalization of between $300 million to $2 billion.
Back to Top

Statistical Arbitrage
A hedge fund strategy which uses computer models to determine and profit from pricing discrepancies in markets. Investment is usually trend-following or counter-trend modelling and attempts to profit from the likelihood that prices will trend toward a historical norm.
Back to Top

Style Rotator
An active asset management strategy which over-weights in some asset classes and under-weights in others based on expected performance.
Back to Top

Timberland/Vineyards
A real estate investment in forestry and vineyards.
Back to Top

Total Return
Fund that usually employs a variety of asset classes to balance capital appreciation and low risk.
Back to Top

Unbundled
When referring to defined contribution plans, when services are separate and a plan employs multiple providers.
Back to Top

Value
An investment style which seeks securities that are believed to be undervalued in the market and that trade for less than their intrinsic worth. It uses valuation measures such as price to book ratio, price/earnings ratio and yield.
Back to Top

Venture Capital
Pooled investment in funds made available for start-up firms and small businesses with strong growth potential. Also called risk capital and known as VC.
Back to Top

Wilshire 4500 Index
An index published by Dow Jones. It measures the performance of all small and mid-cap stocks. It is constructed using the Dow Jones Wilshire 5000 securities with the companies in the Standard & Poor's 500 Index removed.
Back to Top

Yankee Bonds
Dollar-denominated bonds issued in the United States by foreign corporations, banks and governments.
Back to Top