GLOSSARY

Relative earnings momentum

When corporate earnings per share (EPS) is increasing from either the prior period or versus market expectations compared to the average stock in the market. Earnings momentum typically coincides with increasing revenues and/or expanding margins caused by increased sales, cost improvements or overall market expansion.

Retirement income

The amount of money an individual earns or receives after retiring based on retirement savings assets, Social Security allowances, pensions, stocks, mutual funds, savings accounts, CDs, home equity funds, annuities, insurance, rental income, royalties, or inheritances.

Risk management

In the financial world, risk management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions. Essentially, risk management occurs any time an investor or fund manager analyses and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given his investment […]

Risk model

Financial risk modeling refers to the use of formal econometric techniques to determine the aggregate risk in a financial portfolio.

S&P/ASX 200 Franking Credit Adjusted Daily Total Return Index (Tax-Exempt)

The S&P/ASX 200 provides broad exposure to the Australian share market and is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalization. This index adjusts the total return of the S&P/ASX 200, one of the most widely followed Australian equity benchmarks, for the tax effect […]

S&P/ASX300 Accumulation Index

The S&P/ASX 300 is designed to provide investors with broader exposure to the Australian equity market. The index is liquid and float-adjusted, and it measures up to 300 of Australia’s largest securities by float-adjusted market capitalization. The S&P/ASX 300 index covers the large-cap, mid-cap, and small-cap components of the S&P/ASX Index Series.

Sector bias

A sector bias occurs when a portfolio has a significantly different weight to a given sector than its benchmark.  High income funds often have a bias towards the high-yielding sectors such as financials and telecoms.

Share buyback

A share buyback is when companies repurchase their own shares, thereby returning capital to investors.  Shares can be repurchased on-market (and then cancelled) or off-market which enables companies to distribute the franking credits on their balance sheets to the investors that most value them.

Short positions

Short positions occur when you borrow a security from an existing holder (with their permission, usually paying them a fee for the privilege) and sell it, hoping the price of that security will fall, allowing you to buy back the security at a cheaper price.

SMSF

Self managed super fund