active investing: An investing approach that seeks to exceed the returns of the financial markets. Active managers rely on research, market forecasts, judgment, and experience in making investment decisions.

advisor: The organization employed by a mutual fund to manage assets and provide research and related services. Advisors must register with the Securities and Exchange Commission and state securities commissions as Registered Investment Advisors.

all-weather fund: A fund that long-term investors can hold with relative safety throughout a complete market cycle. Market timing, low volatility, and asset allocation funds may be all-weather.

alpha: A portfolio's performance minus the performance of a hypothetical benchmark portfolio of equivalent risk. A positive alpha is considered a measure of management's ability. In Wall Street vernacular, “searching for alpha” means an advisor is seeking above average returns relative to a benchmark.

asset allocation: The process of dividing up one's securities among broad asset classes such as stocks and bonds.

asset class: A group of securities that share common characteristics and tend to trade in similar patterns. Stocks, bonds, cash, and real estate are common asset classes.

average maturity: A measure of the risk in a bond or bond fund. In the case of a fund, it's the dollar-weighted average of all the current maturities of individual bonds in the fund. Generally, the longer the maturity, the greater the volatility, and thus ...

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