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Glossary

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  • Annual Return

    The simple rate of return earned by an investment for each year. Altamira publishes the funds' annual returns in the Fund Report.

  • Average Annual Compound Return

    The annual rates of return, including reinvestment of distributions, averaged over a specified time frame. Altamira publishes the funds' average annual compound returns in the Fund Report.

  • Blue Chip

    Usually a large capitalization, well known and actively traded common stock with a record of continuous dividend payments and other desirable investment attributes.

  • Bear Market

    A declining stock market over a prolonged period, usually lasting at least six months and normally not more than 18 months. Usually caused by a strong conviction that a weak economy will produce depressed corporate profits.

  • Bull Market

    A rising stock market over a prolonged period, usually lasting at least six months and normally not more than 18 months. Usually caused by a strong conviction that a strong economy will produce increased corporate profits.

  • Bond

    A certificate of debt on which the issuer (corporation or government) promises to pay the holder a specific rate of interest over the life of the bond. At maturity, the principal is repaid in full to the holder.

  • Basis Point

    Often called a 'beep', it is used to describe the differences in bond yields. One basis point is one one hundredth of a percentage point i.e. 100 basis points = 1%.

  • Bank Rate

    The minimum rate at which the Bank of Canada makes short term advances to the chartered banks and other deposit taking institution. The bank rate is set each week at 25 basis points above the average 3-month treasury bill rate (T-Bill).

  • Book Value of an account

    Total book value of all holdings

  • Book Value of a mutual fund

    The Book Value is the sum of all purchases and distributions into the fund minus the book value of any redemptions from the fund.  It can be calculated by taking the Unit Cost of those purchases or distributions multiplied by the number of units and subtracting the book cost of any redemptions.

  • Currency Futures Contract

    An agreement between a buyer or seller and a futures exchange in which the buyer or seller agrees to take or make delivery of a specified amount of currency at a specified price at a designated time.

  • Currency Forward Contract

    An agreement for the future delivery of some amount of currency at a specified price and time. These contracts are traded over-the-counter by direct contact between a buyer and a seller.

  • Current Account

    The record of all transactions with foreign nations that involve the exchange of goods and services or unilateral gifts.

  • Currency Options Contract

    A contract which gives the holder the right, but not the obligation, to buy or sell currency for a specified price for a stated period of time. These contracts are traded over-the-counter or on exchanges.

  • Correction

    A market correction is usually a sudden temporary decline in stock or bond prices after a period of market strength. A 10% movement on the downside that lasts no longer than six months is a normal correction.

  • Cyclical Companies

    Those companies that tend to follow overall economic cycles. They report strong earnings when the overall economy is doing well and weaker earnings when the economy is in a recession.

  • Capital Gains

    A capital gain arises when an investment is sold at a higher price than originally paid. In a mutual fund, capital gains are created when the fund buys and sells securities. These gains are then distributed to unitholders at least annually. Unitholders can also earn capital gains by redeeming their units at higher prices than they originally paid.

  • CPI Consumer Price Index

    Is used to measure inflation. It monitors the price of a basket of goods to establish the general direction of prices in an economy.

  • Convertible Bond

    A bond that may be exchanged, usually for the common stock of the same company as stipulated by the terms of the conversion privilege.

  • Call Option

    An investment product that gives you the right to purchase shares at a predetermined price for a limited period of time.

  • Currency Risk

    This refers to the possibility that the domestic currency will appreciate relative to the foreign currency in which investments are denominated and a loss will be incurred on exchange back into the domestic currency.

  • Capacity Utilization Rate

    Is the percentage of total available industrial capacity in the economy (plant and equipment) that is being used to produce goods.

  • Deflationary

    A term used to describe a situation where the general price level of goods and services is declining.

  • Distributions

    Payments to unitholders of income realized by the Fund. Distributions can comprise interest, dividends or capital gains. The type and frequency of the distribution is dependent on the fund. Generally, distributions comprise only the "taxable income" of the fund.

  • Diversification

    The allocation of investment assets within an asset class, among different asset classes – such as bonds, stocks and real estate, or among geographical areas, to reduce risk.

  • Dividend

    An amount distributed from a company's net profits to its shareholders. This amount is announced before it is paid and is distributed to shareholders of record on a per share basis.

  • Duration

    A measurement of the price volatility of bonds. Bonds with a longer duration are more sensitive to interest rate changes and are therefore more volatile than bonds with short durations.

  • Dow Jones Industrial Average (DJIA)

    A key U.S. market indicator, the weighted average price of thirty blue chip U.S. stocks listed on the New York Stock Exchange.

  • Derivatives

    Derivatives are financial instruments whose value is based on the market value of an underlying asset such as stocks, bonds or a commodity. Examples of derivatives are futures contracts, options and forward contracts. Only certain "permitted derivatives" may be used by mutual funds in accordance with policies of the Canadian securities regulatory authorities.

  • Ex-Dividend

    This is the opposite of Cum Dividend. If shares are quoted ex-dividend (without dividend) you are not entitled to the declared dividend. If you buy shares quoted cum dividend ie. before the ex-dividend date, you will receive an upcoming already declared dividend.

  • Emerging Markets

    Defined as any country that the International Bank for Reconstructions and Development, otherwise known as the World Bank, has determined to have a low or middle-income economy.

  • Fluctuation

    A variation in the market price of a security.

  • Fiscal Drag

    A term used to describe a situation where there is little government spending to encourage growth in an economy. This usually occurs as a result of high deficits that require a reduction in government spending.

  • Fiscal Policy

    Federal government policy of directing the economy through taxation and government spending.

  • Free Floating Currency

    Not fixed or tied to any other currency. It is valued in open markets based on that country's economic and political outlook.

  • Fixed Income Security

    A preferred stock or debt instrument that has a stipulated interest or dividend rate, e.g. a bond or GIC . This term is often used in reference to an overall investment policy, e.g., fixed income portion of a portfolio.

  • GIC

    Guaranteed Investment Certificate.

  • GDP Gross Domestic Product

    Measures a country's total output of goods and services.

  • Hedge

    A term used to describe protective manoeuvering by an investment manager. It is intended to reduce the risk of a loss from a specified event; e.g., hedging a currency to protect against detrimental currency movements that would reduce the portfolio return. In a currency hedge, for example, the fund manager who held Yen-denominated stock would buy the Canadian Dollar and sell the Yen exposure (through a forward exchange contract) if he/she favoured the outlook for the Canadian Dollar against the Yen. This in effect protects or "hedges" the currency, while maintaining the Japanese stock market exposure.

  • Inverted Yield Curve

    A situation where short term interest rates are higher than long term rates. Normally, lenders earn higher yields when committing money for longer periods; this is a positive yield curve. Inverted yield curves occur when surging demand for short term credit drives up short term rates. Usually a sign of increased inflation accompanied by low levels of confidence in the economy. Historically, this has preceded a recessionary period.

  • Inflation

    Increases in the general price level of goods and services; i.e., your dollar won't buy as much as it used to. Inflation is commonly reported using the Consumer Price Index (CPI) as a measure. Inflation is one of the major risks to investors over the long term as savings may actually buy less in the future if they are not invested with inflation as a consideration.

  • LIRA : Locked-In Retirement Account

    The LIRA is a retirement savings instrument in which you can transfer the value of your lock-in rights accumulated in a registered pension plan (RPP) or life income fund (LIF) of provincial jurisdiction.

  • Leveraging

    A strategy that uses borrowed monies to purchase financial assets with the objective of increasing returns.

  • LIF : Life Income Fund

    A life income fund (LIF) acts as an extension of a locked-in retirement account (LIRA).Alt allows to withdraw from the accumulated savings in pension fund and receive retirement income. A LIF is similar to a registered retirement income fund (RRIF), except for the source of the funds. Also, unlike a RRIF, a LIF provides for the payment of a maximum annual income.

  • Liquidity

    The ability to sell securities at a reasonable price with relative ease in order to raise cash. This is a major and often overlooked aspect of an individual's investment strategy. Liquidity is a concern for any monies that may be required on short notice, whether for emergencies or for planned purchases.

  • Local Currency Terms

    Refers to market or currency returns expressed in the denomination of that country.

  • Long Term Bond

    A bond maturing in 10 or more years.

  • Load

    Term used in the mutual fund industry to identify the sales charge or commission on a particular fund. Common types of loads are front-end loads, or back-end loads (deferred sales charges).

  • Management Fee

    The fee paid to the manager for its services. Usually paid by the mutual fund itself, the management fee is generally stated as a percentage of the Net Asset Value of the fund.

  • Morgan Stanley Capital International Index (MSCI)

    Provides a list of indices measuring international performance (such as the World Index, Far East) and national performance (including Australia, Canada and US) based on the share prices of over 1600 companies. It also provides performance measurement for emerging markets and international industry groups.

  • Moving Averages

    As the name implies, the Moving Average is the average of a given amount of data. For example, a 14 day average of closing prices is calculated by adding the last 14 closes and dividing by 14. The result is noted on a chart. The next day the same calculations are performed with the new result being connected (using a solid or dotted line) to yesterday's. And so forth. Variations of the basic Moving Average are the Weighted and Exponential moving averages. The Moving Average is probably the best known, and most versatile, indicator in the analysts tool chest. It can be used with the price of your choice (highs, closes or whatever) and can also be applied to other indicators, helping to smooth out volatility.

  • Monetary Policy

    Federal government policy pursued by the Bank of Canada to control interest rates and the supply of money.

  • Market Weighted

    When a portfolio sector – or stock – weighting matches the weighting held by a market index, we say that the Fund is "market weighted" in that sector or stock.

  • Mutual Fund Prospectus

    A legal document which describes the investment objective of the fund, the manner in which the fund is administered and operated, the fees and other pertinent information. The prospectus should be read thoroughly before making an investment decision.

  • Management Expense Ratio (MER)

    This figure comprises the management fee plus all other expenses (excluding government taxes) that are charged directly to the mutual fund (as set out in each fund's prospectus), stated as a percentage of the Net Asset Value of the Fund.

  • Marginal Tax Rate

    The highest tax rate applied to your last dollar of income.

  • Mortgage Backed Securities

    Like a bond, $5,000 units with five year maturities backed by a share in a pool of home mortgages insured under the National Housing Act. The securities pay interest and a small portion of principal on a monthly basis.

  • Money Market Instruments

    Debt instruments such as Treasury bills or corporate paper with a maturity of less than one year, that are easily converted to cash.

  • Market Value of a mutual fund

    Current market price per unit multiplied by the number of units.

  • Market Value of an account

    Total market value of all holdings.

  • Nesbitt Burns Small Cap Index

    This is an equal-weighted total return index measurement. It includes 400 stocks representing the common shares of Canadian companies traded on the Toronto Stock Exchange and Montreal Exchange whose market capitalization does not exceed 0.1% of the total capitalization of the TSE 300 Index calculated at the beginning of each month.

  • NASDAQ

    The National Association of Security Dealers Automated Quotation System, an index of US Over The Counter issues.

  • New Issue

    An offering of stocks or bonds sold by a company for the first time.

  • Net Asset Value per Share (NAVPS)

    The market value of the securities and assets held by the mutual fund less its current liabilities, divided by the total number of shares outstanding.

  • OECD

    Organization for Economic Cooperation and Development.

  • Preferred Shares

    Shares that carry a fixed dividend rate which the company is obliged to pay before it distributes dividends to common shareholders. Such shares rank ahead of common stock, and after the debenture holders, on the dissolution of a company.

  • Put Option

    An investment product that gives you the right to sell shares at a predetermined price for a limited period of time.

  • Private Placement

    The underwriting of a security and its sale to a few buyers, usually institutional, and in larger amounts.

  • Portfolio

    A collection of investments owned by an investor, an institution or a mutual fund.

  • Prime Rate

    The interest rate charged by a chartered bank to its most creditworthy borrowers.

  • Record Date

    This is the date, that all unitholders on a companies books are entitled to receive the dividend to be declared. If you become a unitholder after the record date, you are not entitled to the recent dividend.

  • Rights Issues

    A security which allows the owner to purchase additional units of that security directly from the company concerned.

  • RRIF : Registered Retirement Income Fund

    A registered retirement income fund (RRIF) acts as an extension of a registered retirement savings plan (RRSP). It allows you to advantageously utilize the amounts you accumulated throughout your working life: you periodically withdraw a portion of your savings and continue to accumulate tax-sheltered income.

  • Russell 2000 Index

    An index of 2,000 of the smallest securities in the Russell 3000 Index, as measured by market capitalization.

  • Recession

    Two consecutive quarters with a decrease in economic output.

  • RSP - Retirement Savings Plan

    An RRSP is an investment vehicle that allows an individual to defer some income tax on invested money. No tax is payable on the invested money or on the capital gains until time of withdrawal—usually at retirement. An RRSP is an excellent way to save for your retirement.

  • Return

    The income earned by an investment. This income may consist of interest, dividends or capital gains.

  • Real Yield

    The nominal yield received minus the percentage change in the Consumer Price Index (i.e., the rate of inflation).

  • Short Term Investment Horizon

    An investment period of one year or less. An investor in this time frame should be most concerned about capital preservation as the monies will be required shortly.

  • Scotia Capital Markets (SCM) Universe Bond Index (SMU)

    An index of approximately 750 bonds with a term to maturity of one to thirty years, designed to reflect the Canadian bond market.

  • S&P/TSX 60 Index

    The S&P/TSX 60 Index tracks the performance of 60 of Canada's largest companies.

  • Standard and Poors 500 (S&P 500)

    A benchmark of U.S. common stock performance, it includes 500 of the largest stocks (by market value) listed in the U.S.

  • Secondary Offering

     The redistribution of a block of stock sometime after it has been sold by the issuing company.

  • Simple Rates of Return

    The percentage change in the net asset value of a fund over a certain period of time, usually in terms of 1 month to 1 year periods.

  • Treasury Bills

    Short term government debt, issued in large denominations by the Bank of Canada usually to institutional investors.

  • Total Return Index

    Measures the performance of a stated index assuming reinvestment of all dividends and distributions over a period of time.

  • Tax-Loss Carry-Forward

    Any losses incurred on a security transaction may be carried forward indefinitely and be used to offset any future capital gains.

  • Tokyo Stock Exchange Second Section Index (TS2)

    Tokyo Stock Exchange Second Section Index is the smaller company index for Japan.

  • Volatility

    Volatility is the relative rate at which the price or value of an investment asset tends to rise and fall. The more rapid the rate, the more volatile the investment asset.

  • Warrant

    A certificate that allows the owner to purchase securities at a set price within a specified time frame. Warrants are usually attached to a new issue of securities as an inducement to investors to buy the new issue.

  • Weighted Average Market Capitalization

    The figure included in Altamira's Fund Report gives the average size of companies that are held in each portfolio, expressed in millions.

  • Wood Gundy Small Cap Total Return Index

    An index prepared by Wood Gundy, that reflects the overall stock price movements of smaller capitalized Canadian companies.

  • Yield Curve

    A curve on a graph that plots the interest rate (yield) of a bond on the vertical axis and the length of time until maturity on the horizontal axis. Their relationship is frequently referred to as the yield curve. Three basic types of curves exist. A normal curve is when interest yields are higher for longer term bonds and lower for shorter term bonds. A flat curve is when yields are about the same for longer term and shorter term bonds. Finally, an inverted curve is when the short term yields are higher than the yields on longer term bonds.