Portfolio weight is the percentage of the total value of a portfolio that is attributed to a particular asset. The weight of an asset is determined by its market value relative to the total value of the portfolio. For example, if a portfolio has a total value of $100,000 and one asset has a market … Read more
A permutation is an arrangement of items in which the order is important. For example, the permutations of the letters A, B, and C are ABC, ACB, BAC, BCA, CAB, and CBA. The number of permutations of n items is n factorial, which is written as n! and pronounced “n factorial”. For example, there are … Read more
A constant ratio plan is an investment strategy in which the investor maintains a constant ratio of investment between two asset classes. For example, an investor may keep a 60/40 split between stocks and bonds. The advantage of this strategy is that it is easy to follow and rebalance. The downside is that it may … Read more
Bottom-up investing is an investment strategy that focuses on the analysis of individual stocks, rather than on the overall market or macroeconomic conditions. The goal of bottom-up investing is to find companies that are undervalued by the market and that have the potential to generate strong returns. bottom-up investors will typically conduct a detailed analysis … Read more
An investment philosophy is a set of beliefs or principles that guide an investor’s decision-making. It can be as simple as a rule of thumb, or it can be a detailed, formalized system. An investment philosophy should be based on an understanding of how markets work and on a careful analysis of an investor’s goals, … Read more
Enhanced indexing is an investment strategy that seeks to produce returns that exceed those of a benchmark index, while still providing some of the benefits of indexing, such as low costs and diversification. Enhanced indexing typically involves active management of a portfolio of stocks, using techniques such as market timing, sector rotation, and security selection. … Read more
Commingling (Commingled) refers to the mixing of different types of assets in a portfolio. This can happen intentionally, to achieve a desired mix of assets, or unintentionally, if different types of assets are purchased through different channels and then held in the same account. What is another word for commingled? There is no one definitive … Read more
Tactical Asset Allocation (TAA) is a portfolio management strategy that attempts to beat the market by actively managing a portfolio’s asset mix in response to market conditions. The goal of TAA is to outperform a buy-and-hold strategy or a passive asset allocation strategy by making small, frequent adjustments to the portfolio in an effort to … Read more
A separate account is an investment account in which each investor has a dedicated portfolio of assets managed specifically for them. This type of account is often used by high net worth individuals and large institutions. The main advantage of a separate account is that it allows the portfolio manager to tailor the investments to … Read more
The up-market capture ratio is a performance metric that measures the percentage of an investment’s positive returns relative to the overall market. For example, if an investment has an up-market capture ratio of 80%, it means that the investment has gained 80% of the market’s gains and lost 20% of the market’s losses. The up-market … Read more
