The Morningstar Dictionary

A glossary of useful terms to help you understand your investments

Ruth Saldanha 6 May, 2020 | 9:54AM
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Dictionary opened to the word "Focus"

The Morningstar Dictionary: Real returns
When looking at returns in the context of what investments will be worth over time, it's essential to consider inflation

The Morningstar Dictionary: R-Squared
This TMP measure helps gauge the relevance of the benchmark used to calculate Alpha and Beta

The Morningstar Dictionary: Alpha
A risk-adjusted performance statistic used to evaluate how good a job an investment manager has done

The Morningstar Dictionary: Beta
Beta gives you a sense of how volatile an investment has been, compared to a benchmark

The Morningstar Dictionary: Economic cycle
Explaining the delicate balancing act between economic growth and inflation

The Morningstar Dictionary: Market cap weighting
The traditional method of passive investing is the least expensive to implement. How does it work?

The Morningstar Dictionary - Sharpe ratio
The most widely used method for calculating a fund's historical risk-adjusted performance

The Morningstar Dictionary: Standard Deviation
This popular measure gives investors a sense of how volatile a fund's performance has been

The Morningstar Dictionary: Currency hedging
Eliminating currency effects from returns exposes you to the pure performance of your fund's holdings

The Morningstar Dictionary - Correlation
This key measure helps you find investments that don't move in lock-step, allowing you to build a diversified portfolio

The Morningstar Dictionary: Stock price
Analysts assess the value of a stock based on what they expect it will earn in the future

The Morningstar Dictionary: Active and passive
The differences between the two investment approaches have blurred recently

The Morningstar Dictionary: Strategic vs. tactical
Whether portfolio moves are temporary or long-term can help clarify the issue

The Morningstar Dictionary: Market capitalization
It's a fancy way to describe the market value of a company, but what does it really mean?

The Morningstar Dictionary: Growth and value
These two investment styles can complement each other in a portfolio

The Morningstar Dictionary: Top-down vs. bottom-up
Morningstar's Ben Johnson breaks down the often-misunderstood difference between top-down and bottom-up approaches to investing

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About Author

Ruth Saldanha

Ruth Saldanha  is Editorial Manager at Follow her on Twitter @KarishmaRuth.


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