Archives

Fund of Funds

Investment strategy that seeks to diversify risk exposure and manager style among various fund managers. Potential pitfalls include a lack of transparency and an added layer of fees. This strategy is popular with hedge fund investors looking to diversify risk among various fund groups. (Source: ETF Guide)

Futures

A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled...

GNMA (See Government National Mortgage Association)

Government National Mortgage Association (GNMA)

A U.S. government corporation within the U.S. Department of Housing and Urban Development (HUD). Known as Ginnie May, it aims to: Ensure liquidity for government-insured mortgages, including those insured by the Federal Housing Administration (FHA), the Veterans Administration (VA) and the Rural Housing Administration (RHA). Bring investors’ capital into the market for these types of loans, so that the issuers have the means to issue more. Most of the...

Hedge Funds

Hedge Funds are private investment partnerships open to institutions and wealthy individual investors. These funds pursue returns through a number of alternative investment strategies. Those might include holding both long and short positions, investing in derivatives, using arbitrage, and speculating on mergers and acquisitions. Some hedge funds use leverage, which means investing borrowed money to boost returns. Because of the substantial risks associated with hedge funds, securities laws limit...

HFRX Hedge Fund Index

HFRX Hedge Fund Indices are the global industry standard for performance measurement across all aspects of the hedge fund industry. Hedge Fund Research, Inc. utilizes a UCITS-compliant methodology to construct the HFRX Hedge Fund Indices. The methodology is based on defined and predetermined rules and objective criteria to select and rebalance components to maximize representation of the Hedge Fund Universe. (Source: Hedge Fund Research, Inc.)

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...

High Yield Bonds

A high paying bond with a lower credit rating than investment-grade corporate bonds, Treasury bonds and municipal bonds. Because of the higher risk of default, these bonds pay a higher yield than investment grade bonds. Based on the two main credit rating agencies, high-yield bonds carry a rating below ‘BBB’ from S&P, and below ‘Baa’ from Moody’s. Bonds with ratings at or above these levels are considered investment grade....

Indices

Plural form of index.

Inflation Protected

Inflation Protected are types of investments that provide protection against inflation or the rise in prices of goods and services. Most hard assets are typically protected against inflation. This is because commodities tend to appreciate during times of high inflation. Certain funds are also created to protect investors from the negative effects of inflation. These funds focus on investing in securities that bring a real return, which is the...