Understanding Asset Allocation: An Intuitive Approach to Maximizing Your Portfolio

Glossary

absolute return strategy

The objective of the absolute return strategy is to provide investment returns higher than the Consumer Price Index (CPI) in addition to some prespecified returns amount (for example, 6 percent). These strategies are expected to produce positive absolute returns in excess of the inflation rate with low volatility. The managers’ investment objective is to seek positive returns in both up and down markets. This contrasts with the relative return, which measures a fund manager’s performance as compared to a market benchmark.

active management

A money-management approach based on informed, independent investment judgment. This is opposed to passive management.

alpha

A coefficient that measures risk-adjusted performance, ...