Backwardation: If the futures market is in backwardation, an investor would be buying a next month future contracts at a lower price than the current near month futures contract.
Basis Points (BPS): A common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001, and is used to denote the percentage change in a financial instrument.
Contango: If the futures market is in contango, an investor would be buying a next month futures contract for a higher price than the current near month futures contract.
Dispersion: Describes a range of possible returns for an investment.
Diversification: The process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
Forward Curves: Define the prices at which a contract for future delivery or payment can be concluded today. The forward curve represents a term structure of prices.
Good Til Cancelled Order: A good 'til canceled (GTC) order can be placed by an investor to buy or sell a security at a specified price that remains active until it is either rescinded by the investor or the trade is executed.
Gross Domestic Product (GDP): The monetary value of all the finished goods and services produced within a country's borders in a specific time period.
Limit Order: A limit order is a take-profit order placed with a bank or brokerage to buy or sell a set amount of a financial instrument at a specified price or better; because a limit order is not a market order, it may not be executed if the price set by the investor cannot be met during the period of time in which the order is left open. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled.
Liquidity: Is defined as the number of shares traded of the stock or ETF on a daily basis.
Market Order: A market order is a buy or sell order to be executed immediately at current market prices. As long as there are willing sellers and buyers, market orders are filled. Market orders are therefore used when certainty of execution is a priority over price of execution.
Momentum: The tendency of a security to continue movement in a single direction.
Non-Correlated Assets: If two assets are considered to be non-correlated, the price movement of one asset has no effect on the price movement of the other asset.
Return on Capital: A profitability ratio. It measures the return that an investment generates for capital contributors, i.e. bondholders and stockholders. Return on capital indicates how effective a company is at turning capital into profits.
Russell 1000: The Russell 1000 Index is a stock market index that tracks the highest-ranking 1,000 stocks in the Russell 3000 Index, which represent about 90% of the total market capitalization of that index.
Sharpe Ratio: The Sharpe ratio is a measure of volatility-adjusted performance and is calculated by dividing excess return by the standard deviation of excess return.
Smart Beta: Defines a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization based indices. Smart beta emphasizes capturing investment factors or market inefficiencies in a rules-based and transparent way.
Stop Order: A stop order is an order to buy or sell a security when its price surpasses a particular point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the investor’s loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the stop order becomes a market order.
Stop-Limit Order: A stop-limit order is an order placed with a broker that combines the features of a stop order with those of a limit order. A stop-limit order will be executed at a specified price, or better, after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy or sell at the limit price or better.
S&P 500: The Standard & Poor’s 500, often abbreviated as the S&P 500, or just the S&P, is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.
S&P Goldman Sachs Commodity Index Total Return® (SPGSCI TR): Is a composite index representing the unleveraged, long-only performance of a diversified group of commodity futures contracts. The returns are calculated on a fully collateralized basis with full reinvestment.
The New York Mercantile Exchange (NYMEX): A commodity futures exchange owned and operated by CME Group of Chicago.
Total Net Assets (TNA): The total of all investor dollars invested in the fund.
Transparency: Refers to the extent to which investors have ready access to any required financial information about a company such as price levels, market depth and audited financial reports.
T+2: Trade Date + 2 business days. This rule means that when you buy securities, the brokerage firm must receive your payment no later than three business days after the trade is executed.