Pursuing Lasting Progress in Emerging Markets®


Active Share

a measure of a portfolio’s deviation from a benchmark index, where a value of 0% indicates that a portfolio is a perfect replica of the index, and a value of 100% indicates that a portfolio is entirely different than the index. More specifically, this statistic adds up the difference in weight of every security in the index versus the portfolio, and divides the total by 2 to arrive at a value. Cash and debt securities with a maturity of less than two years are excluded from the calculation.

Active Share is calculated as follows:

½ N i=1 | wfund,i windex,i |

where w = security weight.


the excess return of a security or portfolio after controlling for systematic (market-based) risk, where risk is defined as the variance in returns of the overall market, or a proxy index. The formula that describes alpha is

Ri = a + b (Rm) + ε

where Ri = the return of the security or portfolio in question, a = alpha, b = beta, Rm = return of the market (or proxy index), and ε = an error term.

American Depositary Receipt (ADR)
receipt for the shares of a foreign-based corporation held by a U.S. bank. The receipt usually entitles the shareholder to all dividends (excluding withholding) and capital gains. ADRs are denominated in U.S. dollars. Instead of buying shares of a foreign-based company in an overseas market, Americans can buy shares in the U.S. in the form of an ADR. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction.
Animal Spirits
the term British economist John Maynard Keynes used in his 1936 book The General Theory of Employment, Interest and Money to describe the human spirit and drive that prompt individuals to engage in certain (sometimes irrational) economic activities and behaviors.
Annualized Change in Consumer Price Index (CPI)
the annualized change of the monthly consumer price index. Consumer Price Index is defined as a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. (Source: Bureau of Labor Statistics)
ASEAN (Association of Southeast Asian Nations)
a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on August 8, 1967 by Indonesia, Malaysia, Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Myanmar, Cambodia, Laos, and Vietnam. The purpose of ASEAN is to accelerate economic growth, social progress, and cultural development in the region and to promote regional peace and stability. (Source: ASEAN)
Chinese A-Shares

a class of securitized common stock in Chinese companies, traded exclusively on Chinese stock exchanges (i.e., Shanghai and Shenzhen), and denominated in renminbi, China’s currency. Historically, the renminbi was subject to strict controls, such that foreign (i.e., non-Chinese) investors were not able to obtain or use the currency for financial purposes (i.e. savings or investment). Because of this constraint on the currency, A-shares were historically inaccessible to foreign investors, de facto: foreigners could not legally obtain renminbi for portfolio investment purposes, and therefore they could not fund any purchase of A-shares. Beginning in 2002, China liberalized the use of the renminbi for investment purposes, allowing selected, large foreign institutions to apply for Qualified Foreign Institutional Investor (QFII) status. Foreign institutions granted QFII status can legally purchase renminbi under a quota scheme, and that renminbi can be used to fund the purchase of A-shares and other financial assets within China. Beginning in 2014, China launched a second program known as the Stock Connect; this program allows foreign investors to purchase selected A-shares on the Shanghai or Shenzhen exchanges.

A-shares are not to be confused with H-shares (Chinese companies incorporated in China, but listed in Hong Kong) and ordinary Hong Kong-listed companies of Chinese origin (Hong Kong incorporated, and Hong Kong-listed, but with substantial economic ties to mainland China).

If a Seafarer Fund is invested in Chinese A-Shares, please note the following: 1) any reduction or elimination of access to A-Shares could have a material adverse effect on the ability of the Fund to achieve its investment objective; and 2) uncertainties regarding China’s laws governing taxation of income and gains from investments in A-Shares could result in unexpected tax liabilities for the Fund, which could adversely impact Fund returns.

Asian Financial Crisis
a period of economic turmoil in East Asia that began in 1997. The crisis started when Thailand devalued its currency relative to the U.S. dollar, setting off a plunge in regional currencies. Many countries in the region experienced significant financial market volatility and sharp declines in economic growth.
Asian Infrastructure Investment Bank (AIIB)
a multilateral development bank, headquartered in Beijing, that invests in sustainable infrastructure and other productive sectors. The bank commenced operations in January 2016.
Asset Intensity
a measure of the investment required in operating assets (e.g., capital expenditure) to produce a dollar of revenue.
Asset Turnover
a measure of the value of a company's revenues relative to the value of its assets. Asset turnover is calculated as total revenues divided by total assets.  The asset turnover ratio can be used as an indicator of the efficiency with which a company is using its assets to generate revenue.
Balance Sheet Liquidity
a company’s assets that can be readily converted into cash within a reasonable amount of time and under normal market conditions.
Bankers’ Acceptance
a short-term debt instrument issued by a company that is guaranteed by a commercial bank.
Bank for International Settlements (BIS)
an international financial institution established in 1930 that fosters international monetary and financial cooperation and serves as a bank for central banks.
state of insolvency by an individual or organization, i.e. an inability to pay debt. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Basis Point
a basis point is one-hundredth of one percent, or 0.01%. One percent = 100 basis points and likewise, one half of 1 percent = 50 basis points. Bond traders and brokers regularly use basis points (commonly referred to as “bps”) to state concise differences in bond yields.
Bell Curve
a graph of a normal (Gaussian) distribution, with a large rounded peak tapering away at each end.
Belt and Road Initiative
an international program to spur investment and trade links between China, central Asia, and Europe. The initiative was announced by China’s President Xi Jinping in 2013. The official name for the initiative is the “Silk Road Economic Belt and the 21st Century Maritime Silk Road.”
the systematic risk (variance) of a security or portfolio measured relative to the market as a whole (or a proxy index). A beta of 1 indicates the security or portfolio co-varied directly with the overall market (or the proxy index).
Bin Intervals
a method of sorting data in a histogram. Bin intervals divide a range of values into a series of intervals.
Bloomberg Barclays Global Aggregate Bond Index
an index of global investment grade debt securities from local currency markets. This multi-currency benchmark includes treasury, government-related, corporate and securitized fixed-rate bonds from both developed and emerging markets issuers.  Index code LEGATRUU. It is not possible to invest directly in an index.
Bloomberg Composite Rating
a composite of bond ratings from four ratings agencies: DBRS, Fitch, Moody’s and Standard & Poor’s. (Source: Bloomberg)
Bloomberg United States Exchange Market Capitalization USD Index
a total capitalization index representing actively traded, primary securities on U.S. exchanges. Index code: WCAUUS. It is not possible to invest directly in an index.
Bond Connect
a trading link that allows certain investors from Mainland China and overseas to trade in each other's bond markets through a special mechanism that was designed and implemented by the Hong Kong Stock Exchange. Currently, only Northbound trading is allowed, meaning that foreign investors are able to buy and sell Chinese bonds. Chinese investors are not yet able to trade Hong Kong and overseas bonds, known as Southbound trading.
Book Value
the value of an asset as represented in the accounts of a balance sheet. An asset’s book value is typically determined by the original cost of the asset, less any depreciation, amortization or impairment costs applied against the asset. The book value of a firm is typically determined by the value of the firm’s assets, less its liabilities. In theory, shareholders would be entitled to the firm’s book value if the company’s balance sheet was liquidated.
Brazilian Real (BRL)
the official currency of Brazil.
Breakup Value
the aggregate value of a company if each of its parts operated independently, less net liabilities.
an acronym that refers to the four largest emerging market countries – Brazil, Russia, India, and China.
a public-private partnership model in which a private organization designs, finances and builds a facility on leased public land. The private organization operates the facility for the duration of the lease and then transfers ownership to a public organization.
Business Processing Outsourcing (BPO)
a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider.
Call Option
an agreement that gives the option buyer the right, but not the obligation, to buy an underlying asset – a stock, bond, commodity, or other instrument – at a specified price within a specific time period.
Capital Account
the net change in physical or financial asset ownership for a nation. The capital account, together with the current account, constitutes a nation's balance of payments. The capital account includes foreign direct investment (FDI), portfolio and other investments, plus changes in the reserve account.
Capital Adequacy Ratio (CAR)

a measurement of a bank’s available capital expressed as a percentage of a bank’s risk-weighted credit exposures. Two types of capital are measured: Tier 1 Capital, which is the capital that is permanently and easily available to cushion losses suffered by a bank without it being required to stop operation; and Tier 2 Capital, which can absorb losses in the event of a bank winding up and provides a lesser degree of protection to depositors and creditors. Capital Adequacy Ratio is calculated as follows:

CAR = ( Tier 1 Capital + Tier 2 Capital ) / Risk-weighted Assets
Capital Expenditure (CAPEX)
the outlay of money to acquire or improve capital assets such as buildings and machinery. Unlike ordinary expenses, which are typically expensed in the period in which they are incurred, capital expenditures do not pass through the income statement on a real-time basis. Instead, expenditures to purchase or maintain a given asset are “capitalized” as assets on the balance sheet; then those same assets are “depreciated” over time, according to accounting standards that dictate the useful life of said assets.
Cash Flow Yield
cash flow generated by an asset during an accounting period divided by the price of said asset.
Cboe China ETF Volatility Index
an index that aggregates the weighted price of puts and calls over a range of strike prices for the iShares Trust FTSE China 25 Index, which tracks the performance of large-cap Chinese companies. Index code: VXFXI. It is not possible to invest directly in an index.
business conglomerate structures that originated in South Korea in the 1960s, creating global multinationals with huge international operations. The word "chaebol" means "business family" or "monopoly" in Korean. The chaebol structure can encompass a single large company or several groups of companies. Each chaebol is owned, controlled or managed by the same family dynasty, generally that of the group's founder.
a computer program designed to simulate conversation with human users over on the internet.
China Exchange Traded Market
a bond market that trades bonds via the Shenzhen and Shanghai stock exchanges. It is smaller in size than the China Interbank Bond Market and trades mostly corporate bonds.
China Interbank Bond Market (CIBM)
an OTC market outside the Shanghai and Shenzhen stock exchanges. The major instruments traded in the CIBM are Chinese government bonds, PBOC bills, Policy Bank bonds and others.
China Securities Regulatory Commission (CSRC)
the national regulatory body that oversees the securities and futures exchanges of the country. It is the functional equivalent of the Securities and Exchange Commission (SEC) of the U.S.
China’s Five-Year Plans
a series of five-year social and economic development initiatives established by the Communist Party of China through the plenary sessions of the Central Committee and national congresses. The Communist Party plays a leading role in establishing the foundations and principles of Chinese socialism, mapping strategies for economic development, setting growth targets, and launching reforms.
Chinese City Tier System
an unofficial hierarchical classification of cities in mainland China reflecting population size, political administration, and development level. Tier 1 cities – the largest – commonly include Beijing, Shanghai, Guangzhou, and Shenzhen. Tier 2 cities are wealthy provincial capitals and special administrative cities. Tier 3 cities generally refer to less developed provincial capitals, county-level capitals, and other cities with more than one million residents.
Chinese State Council
the chief administrative authority of the People's Republic of China. The State Council is chaired by the premier and includes the heads of each of the cabinet-level executive departments.
Compound Annual Growth Rate (CAGR)
the mean annual growth rate of an investment over a specified period of time longer than one year.
right, usually granted by a government entity, to use property for a specific purpose over a specific time horizon. (Source: Seafarer and Barron’s Dictionary of Finance and Investment Terms, 1995)
Consumer Price Index (CPI)
a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. (Source: Bureau of Labor Statistics)
Conversion Price
the dollar value at which convertible bonds, debentures, or preferred stock can be converted into common stock, as announced when the convertible is issued. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
statistical measure of the degree to which the movements of two variables are related.
Cost Curve
a standard microeconomic graph that maps the quantity of production versus the cost of production.
Cost of Capital
the rate of return that a business could earn if it chose another investment with equivalent risk – in other words, the opportunity cost of the funds employed in the context of a given investment decision. (Source: Seafarer and Barron’s Dictionary of Finance and Investment Terms, 1995)
Cost of Funding
the cost an entity must incur to obtain capital.
a digital asset designed to work as a medium of exchange that uses cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems.
CSI 300 Index
a free-float capitalization-weighted index designed to replicate the performance of the top 300 Chinese A-Shares traded on the Shanghai and Shenzhen stock exchanges. Index code: SHSZ300. It is not possible to invest directly in an index.
Currency Board
a monetary authority that is required to maintain a fixed exchange rate with a foreign currency. This requires the conventional objectives of a central bank to be subordinated to the exchange rate target.
Currency Peg
an exchange rate that is fixed, or pegged, to another single currency or to a basket of currencies.
Currency Risk
the risk that currency depreciation will negatively affect the value of one's assets, investments, and the related interest and dividend payment streams. In particular, this risk applies to securities denominated in a foreign currency.
Current Account
the difference between a nation’s savings and its investment. The current account is an important indicator of an economy's health. It is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad, and net current transfers. A positive current account balance indicates that the nation is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower from the rest of the world. A current account surplus increases a nation’s net foreign assets by the amount of the surplus, and a current account deficit decreases it by that amount.
Current Account Surplus
a positive difference between a nation’s savings and investment. A current account surplus indicates that a nation is a net lender to the rest of the world, in contrast to a current account deficit, which indicates that it is a net borrower.
Current Yield
a security’s annual income (interest or dividends) divided by its current price.
Cyclical Downturn
in economics, a regularly occurring cycle of economic contraction.
Cyclical Expansion
in economics, a regularly occurring cycle of economic expansion.
Cyclically Adjusted Price to Earnings Ratio (CAPE)
a valuation measure defined as price divided by average inflation-adjusted earnings from the previous ten years. CAPE is calculated using a long-term earnings average in order to reduce the volatility of short-term earnings and medium-term business cycles, and therefore provide a more accurate measure of long-term earning power. CAPE is also known as Shiller P/E.
Dead Cat Bounce
a brief recovery in the price of a security that has been declining and is poised to decline further.
Debt/Equity Swap
a refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the debt. A debt/equity swap is generally done to help a struggling company continue to operate.
the divergence of asset class returns from their expected or normal pattern of correlation.
the act of repaying debt, or the act of becoming less reliant on debt. (Sources: Seafarer and Barron’s Dictionary of Finance and Investment Terms, 1995)
a securities industry settlement protocol in which the buyer’s payment for a security or securities is due at the same time as delivery.
Depositary Receipt (DR)
receipt for the shares of a foreign-based corporation held by a bank. The receipt usually entitles the shareholder to all dividends (excluding withholding) and capital gains. Depositary receipts (DRs) can be offered in many countries and are labeled according to the country where trading occurs, such as American Depositary Receipts (ADRs). DRs make it easier for investors to purchase the shares of foreign companies by reducing the administration and duty costs that would otherwise be levied on a cross-border transaction.
a method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes.
a contract whose value is based on the performance of an underlying financial asset, index, or other investment.
the effect on earnings per share and book value per share of the issuance of new shares, conversion of convertible securities, or exercise of warrants and stock options. Normally, dilution results in reduced earnings per share and book value.
Discount Rate
a financing rate that measures the prospective time value of money; it can also account for the risk or uncertainty associated with future cash flows. The discount rate is typically used in a discounted cash flow analysis to determine the present value of future cash flows: one dollar of cash flow further in the future (i.e., five years hence) is deemed to be worth less, in present-day terms, than one dollar of cash flow that is nearer in the future (i.e., three years hence); both of these future cash flows are deemed to be worth less still than one dollar of cash flows at the present time. The discount rate is applied to each future cash flow in order to make it comparable (financially equivalent) to a present-day cash flow, controlling for time, risk and uncertainty.
the withdrawal of funds from intermediary financial institutions, such as banks, to invest them directly and usually yield a higher return. This removal of the middleman connects borrower and lender directly.
Distribution Yield
a measure of the sum of the Fund's income distributions during the trailing 380 days divided by the previous month's NAV (adjusted upward for any capital gains distributed over the same time period).
Dividend Payout Ratio
the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company.
Dividend Yield (Trailing 12-Mo)
a measure of the sum of the dividends paid per share during the trailing 12 months divided by the current share price.
Dow Jones Industrial Average
a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the U.S. Index code: DJIA. It is not possible to invest directly in an index.
Downside Capture Ratio
a measure of the average extent to which a fund declined with its benchmark index, conditional upon months during which the index declined. A measurement of 100% indicates the fund declined in perfect tandem with the index.
Earnings Per Share (EPS)
the portion of a company’s profit allocated to each outstanding share of common stock. The figure is calculated after paying taxes and after paying preferred shareholders and bondholders. Earnings per share serves as an indicator of a company's profitability.
Earnings Per Share Growth (EPS Growth)
forecast growth rate of earnings per common share, based on consensus earnings estimates, expressed as a percentage.

an acronym that refers to “Earnings Before Interest and Taxes.” It is calculated as follows:

EBIT = Operating Revenues Operating Expenses (excluding interest and taxes).

EBIT is sometimes referred to as “operating earnings” or “operating profit,” and it is often used as a basic measure of a company’s “core” profitability. EBIT cancels the effect of different capital structures on profitability: differing capital structures can give rise to differing levels of financial income and expense, and taxation. By referring to EBIT in lieu of net profits, investors might be in better position to gauge a firm’s “core” profitability, and to make cross-company comparisons.


an acronym that refers to “Earnings Before Interest, Taxes, Depreciation and Amortization.” It is calculated as follows:

EBITDA = Operating Revenues Operating Expenses (excluding interest, taxes, depreciation and amortization).

EBITDA is used as a very rough proxy for a company’s ability to produce gross cash flow (cash flow itself being a proxy for a company’s profitability). Analysts often utilize EBITDA because it is easy to calculate, and because it is fairly comparable from one company to another. EBITDA is a very superficial, basic measure, and consequently it might not always serve as an accurate guide to a company’s long-term profitability; however, one of its chief benefits is that it precludes many of the accounting and financial decisions that a company’s management might utilize to influence (or even distort) ordinary operating profits.

EBIT Margin
a measurement of a company's operating profitability. It is calculated as EBIT (Earnings Before Interest and Taxes) divided by operating revenues.
Enterprise Value (EV)
the aggregate value of a company as an enterprise. Enterprise value is equivalent to the sum of the capitalization of the company’s debt and its equity, less cash and cash equivalents. Enterprise value measures how much a potential acquirer would pay to take over the company.
Entity List
a U.S. Department of Commerce list of names of foreign persons – including businesses, research institutions, government and private organizations, individuals, and other types of legal persons – that are subject to specific license requirements for the export, reexport, and/or transfer (in-country) of specified items.
Entrusted Loan
a lending arrangement organized by an agent bank between borrowers and lenders. The agent bank is considered the trustee and the company providing the funds is considered the trustor. The trustee collects the principal and interest, but is not supposed to assume any of the loan risks. Entrusted loans have been most commonly issued in the People’s Republic of China.
Environment, Society, and Governance (ESG)
evaluation criteria applied to a company’s operations that focuses on environmental stewardship, social impact, and corporate governance.
Equity Float
the number of shares of a company that are outstanding and available for trading by the public. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Europe, Middle East, and Africa (EMEA)
the geopolitical area encompassing mainland countries of Europe, the Middle East, and Africa. This region is generally accepted as including Iran on the eastern front as well as Russia and the countries of the Caucasus.
Excess Return
investment returns from a security or portfolio that exceed a benchmark or index after controlling for systemic risk (beta). Excess returns are often used as a measure of the value added by a portfolio or investment manager, or the manager's ability to "beat the market.” Also known as alpha.
Exchange-traded Fund (ETF)
a basket of securities that tracks an underlying index. An exchange-traded fund (ETF) is listed on an exchange. An ETF’s share price changes throughout the trading day as shares are bought and sold on the market.
External Debt
the portion of a country’s debt that is borrowed from overseas entities. External debt is often denominated in a foreign currency. In contrast, locally held debt is classified as internal debt and is usually based in the local currency.
an acronym that refers to four prominent technology stocks in the U.S. market – Facebook, Amazon, Netflix, and Google (now Alphabet, Inc.) – that represent the growth and gains of the internet industry.
Federal Funds Rate
the interest rate at which U.S. depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis.
Financial Technology (Fintech)
new technology and innovation that aims to improve the delivery of financial services. Fintech includes a variety of innovations across personal and commercial finance, including mobile banking, investment and lending services, blockchain technology, and financial literacy and education.
Financial Theory
the study of the various ways by which businesses raise capital and deploy it in various economic projects, how individuals and entities invest capital, and the risks associated with such activities.
Fitch National Credit Rating
an assessment of creditworthiness for sovereign-level issuers. (Source: Fitch Ratings)
Fixed Asset Investment
a measure of investment in long-term physical assets such as plants, buildings, equipment, machinery and land.
Foreign Direct Investment (FDI)
investment in domestic businesses by foreign citizens.
Foreign Exchange (FX)
the exchange of one currency for another, or the conversion of one currency into another currency.
Foreign Exchange Reserves
money or other assets held on reserve by a central bank in foreign currencies.
Foreign Ownership Limits (FOL)
the percentage share of companies’ equity capital that non-residents are allowed to hold. These limits are typically set by a regulator or arm of the government.
Foreign Portfolio Investment (FPI)
investment in securities and other financial assets by foreign investors that does not result in a controlling ownership interest.
Fragile Five
a phrase used to describe the currencies of Brazil, India, Indonesia, South Africa and Turkey. The five were deemed susceptible to currency weakness for various reasons, mainly due to presumed dependency on foreign funding for their economic growth. The phrase was first coined by a currency analyst at Morgan Stanley in August of 2013. (Source: FX Pulse, Morgan Stanley Global Currency Research Team, August 1, 2013)
Free Cash Flow
operating cash flow minus capital expenditures.
Free Cash Flow Yield
a basic evaluation measure for a stock that examines the ratio of free cash flow per share to the share price. Some investors regard free cash flow (which takes into account capital expenditures and other ongoing costs a business incurs to keep itself running) as a more accurate representation of the returns shareholders receive from owning a business, and thus prefer free cash flow yield as a valuation metric over earnings yield.
Free Float
a company’s free float refers to the outstanding shares held by investors, excluding restricted shares held by company insiders. Stocks with small free floats are generally more volatile because there are a limited number of shares available for trading in the event of major market news.
Frontier Markets
countries with investable stock markets that are less established than those in the emerging markets. Frontier markets generally have lower market capitalizations and liquidity than the more developed emerging markets.
FTSE Emerging Markets All Cap China A Inclusion Index
a market capitalization weighted index representing the performance of large-, mid- and small-capitalization stocks in emerging markets. Index code: FQEACR. It is not possible to invest directly in an index.
FTSE Russell Global Index
a free float-adjusted market capitalization index designed to include all companies around the world that meet certain size and investability standards. It is not possible to invest directly in an index.
Fundamental Research
analysis of a company’s operations, financial condition and competitive status in order to estimate its market value, or in order to forecast its future financial or operating performance.
Fungible Operating Assets
operating assets that are mutually interchangeable.
a privately held investment management company founded by British investor, Jeremy Grantham.
Gordon Growth Model
the Gordon growth model relates the value of a stock to its expected dividends in the next time period, using the cost of equity and the expected growth rate in dividends.
Government Bond, Medium/Long-term
a debt security issued by a national government with a date of maturity or principal repayment that will occur in more than three years.
Government Bond, Short-term
a debt security issued by a national government with a date of maturity or principal repayment that will occur in three years or less.
Gross Domestic Product (GDP)
a macroeconomic measure of the value of a country’s economic output. GDP includes only those goods and services produced domestically; it excludes goods and services produced abroad, even if such goods and services are produced by factors of production (i.e. companies) owned by the country in question.
Gross Domestic Product (GDP) Per Capita
a macroeconomic measure of the value of a country’s economic output, divided by the population of the same country. See “Gross Domestic Product (GDP)” for additional information.
Gross Portfolio Yield
gross yield for the underlying portfolio, estimated based on the dividend yield for common and preferred stocks and yield to maturity for bonds. This measure of yield does not account for offsetting Fund expenses and other costs, and consequently it should not be construed as the yield that an investor in the Fund would receive.
a Chinese term used to describe business or social relationships that may result in the exchange of favors or connections that are beneficial for the parties involved.
Gulf Cooperation Council (GCC)
a regional political and economic union consisting of all Arab states of the Persian Gulf, except Iraq. Established in 1981, the GCC is also known as the Cooperation Council for the Arab States of the Gulf.
Hang Seng Index (HSI)
a market capitalization-weighted index of 40 of the largest companies that trade on the Hong Kong Exchange. It is not possible to invest directly in an index.
Hang Seng Stock Connect Hong Kong Index (HSHKI)
a benchmark for the performance of equities listed in Hong Kong that are eligible for trading via the southbound trading link of the Stock Connect. It is not possible to invest directly in an index.
Hard Currency
a monetary system that is widely accepted around the world as a form of payment for goods and services.
Harmonic Average
a harmonic average is the reciprocal of the arithmetic mean of the reciprocals. Harmonic averages are generally preferable to weighted averages or other techniques when measuring the fundamental characteristics (e.g., earnings per share, book value per share) of a portfolio of securities. For more information, see the presentation Index Calculation Primer, by Roger J. Bos, CFA, Senior Index Analyst at Standard & Poor's, 17 July 2000.
Hong Kong Basic Law
the constitution of the Hong Kong Special Administrative Region and a national law of China. The Basic Law came into effect on July 1, 1997 when sovereignty over Hong Kong was transferred from the United Kingdom to the People’s Republic of China.
Hot Money
the term is most commonly used in financial markets to refer to the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts. These speculative capital flows are called “hot money” because they can move quickly in and out of markets, and often lead to market instability. (Source: Congressional Research Service Report for Congress, “China’s Hot Money Problems,” July 21, 2008)
a security of a company incorporated in China that trades on the Hong Kong Stock Exchange. H-shares are traded in Hong Kong dollars.
Hukou System
the household registration system in China. Under this system a household registration record officially identifies a person as a resident of an area. Hukou defines a household’s civil, economic and legal rights within a given local municipality. It confers access (or lack thereof) to various government services, health care, education, housing and employment. If a family attempts to move from the countryside to the city, it will not necessarily be entitled to such services in the new urban residence because the family’s hukou remains tied to the original rural home. Ongoing reforms to the hukou system affect the pace of urbanization, the social fairness in the society, and the breadth and stability of growth within China.
hyperinflation occurs when a country experiences very high, accelerating, and possibly “unstoppable” rates of inflation. In such a condition, the general price level within an economy rapidly increases as the currency loses real value.
a legal and binding contract among multiple parties. Between bond issuers and bondholders, an indenture specifies important features of a bond, including maturity date and interest payments.
Initial Coin Offering (ICO)
an unregulated means by which funds are raised for a new cryptocurrency.
Initial Public Offering (IPO)
the process of offering shares of a private company to the public in a new stock issuance. Public share issuance allows a company to raise capital from public investors.
Interbank Market
a foreign exchange market where banks trade currencies.
Interest Cover Ratio
the ratio of cash flow before payment of interest and income taxes to interest on bonds and other contractual debt.
Interest Rate Liberalization
the relaxation of regulations or rules that constrain banks and other financial institutions in their decisions to set interest rates. China has been engaged in interest rate liberalization since roughly 2010, when the central bank of that country began to give local banks greater freedom to set various lending and deposit rates.
Internal Rate of Return (IRR)
a metric used to measure the profitability of a potential investment. The internal rate of return is the discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero. All else equal, the higher the internal rate of return, the more profitable the investment is.
International Financial Reporting Standards (IFRS)
a set of accounting standards developed by the International Accounting Standards Board (IASB), an independent accounting standard-setting body. The IASB seeks for the International Financial Reporting Standards to become the global standard for the preparation of public company financial statements.
International Geary-Khamis Dollar (1990)
a hypothetical unit of currency that has the same purchasing power parity that the U.S. dollar had in the United States in 1990. The Geary–Khamis Dollar, also known as the International Dollar, measures the worth of a local currency unit within the country's borders. It is used to make comparisons both between countries and over time. The year 1990 is often used as a benchmark year for comparisons that run through time. Comparing per capita gross domestic product (GDP) of various countries in Geary–Khamis Dollars, rather than based simply on exchange rates, provides a more valid measure to compare standards of living. The Geary–Khamis Dollar was proposed by Roy C. Geary in 1958 and developed by Salem Hanna Khamis between 1970 and 1972.
International Monetary Fund (IMF)
an organization of countries whose primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. Created in 1945, the IMF is governed by and accountable to the countries that make up its near-global membership.
Internet of Things (IoT)
the network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators, and connectivity that enables these things to connect, collect and exchange data. IoT involves extending internet connectivity beyond standard devices, such as desktops, laptops, smartphones and tablets, to a range of traditionally non-internet-enabled physical devices and everyday objects. Embedded with technology, these devices can communicate and interact over the internet, and they can be remotely monitored and controlled.
Intrinsic Value
the fair value of an asset (such as a company) based on a comprehensive estimate of all aspects of the asset, including both tangible and intangible factors. An asset’s intrinsic value may differ from its current market value. Typically, the intrinsic value of an asset cannot be observed with absolute certainty; often, it must be estimated with some error. As a consequence, it is possible for various market participants to hold differing perceptions of an asset’s intrinsic value. Value investors use a variety of analytical techniques in order to estimate the intrinsic value of securities in hopes of finding investments where the true value of the asset exceeds its current market value.
iShares Trust FTSE China 25 Index
an index that tracks the investment results of an index composed of large-capitalization Chinese equities that trade on the Hong Kong Stock Exchange. Index code: FXI:US. It is not possible to invest directly in an index.
J.P. Morgan Emerging Markets Bond Index (USD)
an index of dollar-denominated sovereign bonds issued by a selection of emerging market countries. Index code: EMBI. It is not possible to invest directly in an index.
J.P. Morgan Government Bond Index – Emerging Markets (Local Currency)
an index of local currency bonds issued by emerging market countries. Index code: GBI-EM. It is not possible to invest directly in an index.
Keepwell Agreement
a contract between a parent company and a subsidiary to maintain solvency and financial backing throughout a specified period of time. The agreement is meant to help the subsidiary company appear more creditworthy in the eyes of lenders. A Keepwell Agreement is also known as a comfort letter.
Korea Composite Stock Price Index (KOSPI)
an index of all common stocks traded on the Stock Market Division of the Korea Exchange (KRX) in South Korea. Index code: KOSPI. It is not possible to invest directly in an index.
Land Bank
aggregated parcels of land for future sale or development.
the amount of debt capital used to finance a firm’s assets, usually considered or measured in relation to the firm’s equity capital.
Leverage Ratio
any one of several financial measurements that calculates how much of a company’s capital is in the form of debt (loans), or that assesses the ability of a company to meet its financial obligations.
Local Government Financing Vehicles (LGFVs)
special purpose vehicles that borrow funds on behalf of local governments to finance projects ranging from infrastructure to real estate development.
London Interbank Offered Rate (LIBOR)
the interest rate at which banks offer to lend funds (wholesale money) to one another in the international interbank market.
Liquidation Value
the residual worth of a business upon its liquidation. Liquidation value is arrived at only after all assets are liquidated (i.e. sold, or otherwise converted to cash), and after all debts are paid off with the resulting proceeds. A company’s liquidation value may differ from its book value if the assets and liabilities are liquidated at values that differ from the accounting values carried on the company’s books.
the ability to buy or sell an asset readily and with reasonable volumes without affecting the asset’s price. (Sources: Seafarer and Barron’s Dictionary of Finance and Investment Terms, 1995)
Liquidity Trap
a situation in which short-term nominal interest rates are zero. In this case, many argue, increasing money in circulation has no effect on either output or prices. The liquidity trap is originally a Keynesian idea and was contrasted with the quantity theory of money, which maintains that prices and output are, roughly speaking, proportional to the money supply. (Source: New York Fed White Paper, “Liquidity Trap”)
analysis of a nation’s economy as a whole, using such aggregate data as price levels, unemployment, inflation and industrial output. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Market Capitalization
the value of a corporation as determined by the market price of its issued and outstanding common stock. It is calculated by multiplying the number of outstanding shares by the current market price of a share. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Market Capitalization of the Portfolio Median Dollar

Note: This statistic pertains only to portfolio holdings issued by publicly-listed corporate entities (i.e. it excludes cash, government bonds, and other asset classes not associated with corporate issuers).

In order to represent the Fund’s “median market capitalization,” Seafarer has chosen to present the capitalization of the holding associated with the median dollar in the portfolio rather than the capitalization of the median holding within the portfolio.

Some investors view the market capitalization of a company’s common stock as a general proxy for the liquidity of the company’s shares. Similarly, investors like to understand the market capitalizations of the holdings within a given portfolio of securities, as that information may provide insight into the liquidity available to the fund as a whole. Typically, fund investors study either the “weighted average market capitalization” or the “market capitalization of the median holding” as a means to quickly digest such information.

We prefer to display an alternative statistic – the market capitalization of the portfolio median dollar – because we believe it offers a more accurate representation of the liquidity available in the underlying portfolio.

To calculate this value, we rank the portfolio’s holdings by market capitalization, from largest to smallest. We then determine where the portfolio’s median dollar lies – i.e., the mid point of the portfolio, where half of the portfolio’s value is invested in larger companies, and half in smaller companies. Once that median dollar has been determined, we present the market capitalization of the company associated with it.

To see how this statistic is composed in practice, please see the example below.

Company Weight Market Cap
A 5% 100.0
B 10% 30.0
C 10% 10.0
D 10% 7.0
E 10% 4.0
F 35% 2.0
G 20% 1.0
Weighted average market capitalization: 11.0
Market capitalization of the median holding: 7.0
Market capitalization of the portfolio median dollar: 2.0
Mark to Market (MTM)
a measure of the fair value of accounts that can change over time, such as assets and liabilities. A mark to market measure aims to provide a realistic appraisal of an institution’s or company’s current financial situation.
Maturity Date
date on which the bond principal comes due for repayment, as defined in the bond indenture. Also called redemption date.
Mergers and Acquisitions (M&A)
the consolidation of companies or assets. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.
Middle Income Trap
a typical feature of many emerging markets. Such countries initially manage to improve average income per capita, but due to declining returns to scale, development is often arrested at a middling level, before incomes reach thresholds associated with richer, developed nations.
Modern Portfolio Theory
a theory, first developed by Professor Harry Markowitz, of how risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk (defined as variance in returns). The theory emphasizes that risk is an inherent part of higher reward; and also that an asset's risk and return should not be assessed by itself, but by how it contributes to a portfolio's overall risk and return.
Modified Duration
a measure of the sensitivity of a bond's price (the present value of its cash flows) to interest rate movements.
Moral Hazard
a situation where one party to a transaction has a financial incentive to incur extra risk because that party knows (or reasonably guesses) that its counterparty will incur the costs or burdens of such extra risks.
MSCI All Country World Index (ACWI)
a market capitalization weighted index designed to provide a broad measure of equity market performance throughout the world. The index is comprised of equities from both developed and emerging markets. It is not possible to invest directly in an index.
MSCI All Country World Index (ACWI) Investable Market Index (IMI), Net Total Return USD
an all-capitalization index designed to represent the equity investment opportunity set in developed and emerging markets. Index code: M1WDIM. It is not possible to invest directly in an index.
MSCI China Index
a free float-adjusted equity index that tracks large- and mid-capitalization companies across China A-Shares, H-shares, B-shares, Red chips and P chips and foreign listings (e.g. ADRs). Index code: GDUETCF and MXCN. It is not possible to invest directly in an index.
MSCI China A (Onshore Local) Index
an index designed to represent large- and mid-capitalization securities listed on the Shanghai and Shenzhen exchanges. The index includes only those securities accessible through China’s Stock Connect. Index code: MSCHAPL. It is not possible to invest directly in an index.
MSCI Emerging Markets Currency Index
an index that tracks the performance of emerging market currencies relative to the U.S. dollar.  The Currency Index measures the total returns of the currencies of countries in the corresponding MSCI equity index (i.e. MSCI Emerging Markets Index). Index code: MXEF0CX0. It is not possible to invest directly in an index.
MSCI Emerging Markets ex-China Index
a free float-adjusted market capitalization index designed to measure the equity market performance of emerging markets excluding China. Index code: M1CXBRV. It is not possible to invest directly in an index.
MSCI Emerging Markets Index
a free float-adjusted market capitalization index designed to measure equity market performance of emerging markets. Index code: MXEF. It is not possible to invest directly in an index.
MSCI Emerging Markets Investable Market Index (IMI)
an all-cap index that represents emerging market countries. Index code: MXEFIM. It is not possible to invest directly in an index.
MSCI Emerging Markets Total Return Growth Index
an index that captures large- and mid-cap securities exhibiting overall growth characteristics across emerging market countries. Index code: M1EF000G. It is not possible to invest directly in an index.
MSCI Emerging Markets USD Total Return Index
MSCI Emerging Markets Total Return Index
the MSCI Emerging Markets Total Return Index, Standard (Large+Mid Cap) Core, Gross (dividends reinvested), USD is a free float-adjusted market capitalization index designed to measure equity market performance of emerging markets. Index code: GDUEEGF. It is not possible to invest directly in an index.
MSCI Emerging Markets Total Return Value Index
an index that captures large- and mid-cap securities exhibiting overall value characteristics across emerging market countries. Index code: M1EF000V. It is not possible to invest directly in an index.
MSCI Europe Index
an index that captures large- and mid-cap representation across the European developed markets equity universe.  Index code: MXEU. It is not possible to invest directly in an index.
MSCI Korea Index
an index designed to measure the performance of the large- and mid-cap segments of the South Korean market. With 107 constituents, this index covers about 85% of the Korean equity universe. It is not possible to invest directly in an index.
MSCI Pakistan Index
an index designed to measure the performance of the large- and mid-capitalization segments of the Pakistan market. Index code: MXPK. It is not possible to invest directly in an index.
MSCI Qatar Index
a free-float adjusted index designed to measure the performance of the large- and mid-capitalization segments of the Qatari market. Index code: MCQA. It is not possible to invest directly in an index.
MSCI United Arab Emirates (UAE) Index
an index designed to measure the performance of the large- and mid-capitalization segments of the United Arab Emirates (UAE) equity universe. Index code: MXAED. It is not possible to invest directly in an index.
an index designed to measure the performance of the large- and mid-capitalization segments of the U.S. market. Index code: MXUS. It is not possible to invest directly in an index.
Multilateral Development Bank (MDB)
an international financial institution, chartered by a group of countries, that provides financing and advisory services in support of economic development.
NASDAQ Composite
a stock market index of the common stocks and similar securities (e.g. ADRs, tracking stocks, limited partnership interests) listed on the Nasdaq stock market. Index code: COMP. It is not possible to invest directly in an index.
National Development and Reform Commission (NDRC)
a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy.
Nationally Recognized Statistical Rating Organization (NRSRO)
a credit rating organization that provides an assessment of the creditworthiness of a firm or financial instrument(s), and is registered with the U.S. Securities and Exchange Commission (SEC). Not all credit rating organizations are NRSROs.
Net Asset Value (NAV)
a fund's net asset value per share; for an open-end mutual fund, the net asset value is equivalent to the fund's price per share. A fund's net asset value per share is calculated by summing the fund's assets (including portfolio securities and cash), netting off the fund's liabilities, and then dividing the residual balance by the number of fund shares outstanding.
Net International Investment Position (NIIP)
the value of overseas assets owned by a nation minus the value of domestic assets owned by foreigners.
Net Profit Margin
a ratio of profitability calculated as net income divided by revenues. It measures how much of each dollar earned by the company is translated into profits.
New Energy Vehicles
plug-in electric vehicles. New energy vehicles include battery electric vehicles and plug-in hybrid electric vehicles.
“New Era” Doctrine
a term referring to President Xi Jinping's personal doctrine, known as “Socialism with Chinese Characteristics for a New Era,” which was codified in the communist party's constitution at China's National People's Congress in 2017. As announced, Xi's New Era doctrine is only a vague vision, but is sweeping in scope. Its main objective is to cultivate influence and project power around the world, in order to install China as a global superpower alongside the U.S.
Nonfinancial Debt
the aggregate of debt owed by governments, households, and companies not in the financial sector.
Non-Performing Loan (NPL)
a loan in which the borrower is in default because they have not made any scheduled payments of principal or interest for a specified period, depending on the terms of the loan.
North American Free Trade Agreement (NAFTA)
a comprehensive trade agreement established among the North American countries of Canada, Mexico, and the United States in 1994.
Office of Foreign Asset Control (OFAC)
a U.S. Department of the Treasury office which administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S.
Official Development Assistance (ODA)
government aid designed to promote the economic development and welfare of developing countries. Aid may be provided bilaterally, from donor to recipient, or channeled through a multilateral development agency such as the United Nations or the World Bank. Loans and credits for military purposes are excluded. (Source: Organisation for Economic Co-operation and Development)
Operating Assets
the working assets that generate cash flow for a business.
Operating Cash Flow (OCF)

a measure of the cash generated by a company’s normal business operations. There are multiple means to calculate operating cash flow, but the “indirect method” can be summarized as follows:

OCF = Net Income + Non-Cash Expenses (Depreciation, Amortization) + Losses on Sales of Assets – Gains on Sales of Assets + Changes in Working Capital
Option Adjusted Spread (OAS)
a measurement of the spread of a fixed-income security rate and the risk-free rate of return, which is adjusted to take into account an embedded option.
Organization for Economic Co-operation and Development (OECD)
an intergovernmental economic organization that promotes policies to improve the economic and social well-being of people around the world. The OECD's origins date back to 1960, when 18 European countries plus the United States and Canada joined forces to create an organization dedicated to economic development. A list of the current OECD member countries is available at
Over the Counter (OTC)
a security that is not listed and traded on an organized exchange. In an over the counter market, securities transactions may be conducted through a dealer network. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Patent Cooperation Treaty (PCT)
an international patent law treaty that provides a unified procedure for filing patent applications in each of its contracting states. By filing one international patent application under the PCT, applicants can simultaneously seek protection for an invention in a large number of countries.
P Chip
a company controlled by Mainland Chinese companies or individuals, with the establishment and origin of the company in Mainland China. A P Chip is incorporated outside China, trades on the Hong Kong Stock Exchange, and derives a majority of its revenue or assets from Mainland China.
People’s Bank of China (PBOC)
the central bank of the People’s Republic of China, located in Beijing.
Pledged Share Lending
a source of funding often used by private entrepreneurs, in which shares in the company are held as collateral for bank loans.
Policy Banks
three banks in China (Agricultural Development Bank of China, China Development Bank, and Export-Import Bank of China) that were established in 1994 to finance state-invested projects, as well as economic and trade development priorities.
Portfolio Turnover
a measure of how frequently assets within a portfolio are bought and sold. Measured as the lesser of long-term purchase costs or sales proceeds divided by the average monthly market value of long-term securities.
Price Discovery
a free market process by which consenting buyers and sellers discover the price at which they agree to exchange an asset.
Price to Book Value (P/BV) Ratio
the market price of a company’s common shares, divided by the company’s book value per share.
Price to Earnings (P/E) Ratio
the market price of a company’s common shares divided by the earnings per common share. The Price to Earnings ratio may use the earnings per common share reported for the prior year or forecast for this year or next year (based on consensus earnings estimates). (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Prime Rate
the interest rate that commercial banks charge their most creditworthy customers. The prime rate serves as a basis for determining most other interest rates lenders make available to borrowers.
Private Placement
a capital funding round of securities sold through a private offering, not through a public offering, usually to a small number of investors. These investors can include large banks, mutual funds, insurance companies, and pension funds.
a process of converting a publicly operated enterprise (i.e., government owned and operated) into a privately owned and operated entity. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Property, Plant, and Equipment (PPE)
physical or tangible assets that typically have a life of more than one year.
Public Debt
the total financial obligations owed by all governmental bodies of a nation.
Public-Private Partnership
a government service or private business venture that is funded and operated through a partnership of government and one or more private sector companies.
Purchasing Power Parity (PPP)
currency conversion rates that both convert to a common currency and equalize the purchasing power of different currencies. In other words, they eliminate the differences in price levels between countries in the process of conversion. (Source: OECD)
Put Option
a contract giving the owner the right, but not the obligation, to sell, or sell short, a specified amount of an underlying security at a pre-determined price within a specified time frame. The pre-determined price the put option buyer can sell at is called the strike price.
Qualified Domestic Institutional Investor (QDII)
a program that permits certain licensed Chinese institutional investors to invest in global capital markets, subject to a quota.
Qualified Domestic Limited Partnership (QDLP)
a program that permits certain licensed Chinese institutional investors to participate in private funds that invest overseas, subject to a quota.
Qualified Foreign Institutional Investor (QFII)
a program that permits certain licensed global institutional investors to participate in China’s renminbi-based mainland capital markets, subject to a quota.
Quantitative Easing
the attempt by a central bank to inject more money into the economy and to keep long-term interest rates low through the purchase of large amounts of assets, often held by financial institutions. (Source: MITnews, “Explained: Quantitative Easing,” August 17, 2010)
Real Monetary Unit
a unit of value, tied to a specific currency (i.e. U.S. dollars), adjusted for price changes that result solely from inflation or deflation (as opposed to price changes that might arise from variation in the underlying quality or quantity of the good or service produced). Real monetary units are often indexed relative to the purchasing power associated with a currency unit in a given base year (i.e., the purchasing power associated with $1 in 1990). For an example of a real monetary unit, see International Geary-Khamis Dollar.
Real-time Delivery Versus Payment (RDVP)
a securities industry settlement procedure in which payment and delivery of securities occur at the same time, reducing or eliminating settlement risk by the counterparties of a trade.
Red Chip
a company incorporated outside of China that trades on the Hong Kong Stock Exchange and is substantially owned, directly or indirectly, by Mainland China state entities with the majority of its revenue or assets derived from Mainland China.
the PBOC purchases loans and other debt instruments from eligible financial institutions in order to increase liquidity within the economy. The purchases may be contingent upon banks using the proceeds to lend to specific sectors of the economy.
Reform and Opening Period
the period of economic reforms in the People’s Republic of China that began in the late 1970s under the leadership of China's paramount leader, Deng Xiaoping. These economic reforms began a multi-decade transformation of the Chinese economy by introducing private business and market incentives to a state-led communist system.
Renminbi (RMB)
the official currency of the People’s Republic of China. The name literally means "people's currency." The yuan (sign: ¥) is the basic unit of the renminbi, but is also used to refer to the Chinese currency generally, especially in international contexts.
Renminbi Qualified Foreign Institutional Investor (RQFII)
a modified version of QFII; RQFII participants can invest in the same range of investment products as QFIIs and are subject to the same restrictions, but RQFII uses renminbi to purchase securities, while a QFII participant uses their domestic currency.
Replacement Value
the cost to replace an older asset with another of similar productivity at present-day prices. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Reserve Ratio
the portion of liabilities that depository institutions must retain, rather than lend out or invest. A reserve ratio regulation is employed by most central banks around the world.
Retained Earnings
net profits kept to accumulate in a business after dividends are paid.
Return on Assets (ROA)
the ratio of annual net income to average total assets of a business during a financial year. Return on assets is one means to measure efficiency of a business in using its assets to generate net income. It is an indicator that simultaneously conveys productivity and profitability.
Return on Equity (ROE)

the amount of net income returned as a percentage of shareholders equity. Return on equity measures a company's profitability by revealing how much profit the company generates with the money shareholders have invested.

Return on equity is calculated as follows:

Return on Equity = Net Income / Shareholder's Equity
Return on Invested Capital (ROIC)
the amount, expressed as a percentage, earned on a company’s total capital – its common and preferred stock equity plus its long-term funded debt – calculated by dividing total capital into earnings before interest, taxes and dividends. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Risk-free Rate of Return
the theoretical rate of return of an investment with zero risk. The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. In theory, the risk-free rate is the minimum return an investor expects for any investment because he will not accept additional risk unless the potential rate of return is greater than the risk-free rate. In practice, however, the risk-free rate does not exist because even the safest investments carry a very small amount of risk. Thus, the interest rate on a three-month U.S. Treasury bill is often used as the risk-free rate for U.S.-based investors.
Risk-weighted Assets
a measure of assets used to determine the minimum amount of capital that must be held by banks and other financial institutions in order to reduce the risk of insolvency. This capital requirement is based on a risk assessment for each type of bank asset.
R-Squared (R²)
a measure of the variance in the return of a security or portfolio that can be explained by movements in the overall market (or a proxy index). An R² of 1 indicates that the market’s (or index’s) movements entirely explain the variance in returns of the security or portfolio in question. An R² of zero indicates that the market’s movements explain no portion of the variance in returns of the security or portfolio.
Russell 2000 Index
an index that measures the performance of the small-cap segment of the U.S. equity universe. It includes the 2,000 smallest companies in the Russell 3000 Index. It is not possible to invest directly in an index.
S&P 500 Total Return Index
S&P 500 Index
a stock market index based on the market capitalizations of 500 large companies with common stock listed on the NYSE or NASDAQ. It is not possible to invest directly in an index.
S&P Sovereign Rating
a rating that assesses a sovereign government's willingness and ability to service its debt on time. (Source: S&P Global)
Securities Association of China (SAC)
a self-regulatory organization that operates under the guidance and supervision of the China Securities Regulatory Commission and Ministry of Civil Affairs of China.
Sell Side Coverage
analysts from the research arms of investment banks who produce proprietary research, including financial estimates, on a company’s securities.
Shadow Banks
financial intermediaries that conduct maturity, credit, and liquidity transformation without explicit access to central bank liquidity or public sector credit guarantees. Examples of shadow banks include finance companies, asset-backed commercial paper conduits, structured investment vehicles (SIVs), credit hedge funds, money market mutual funds, securities lenders, limited-purpose finance companies, and government-sponsored enterprises. (Source: Federal Reserve Bank of New York Staff Report, “Shadow Banking,” July 2010, revised February 2012)
Shanghai Stock Exchange Composite Index (SSE)
a capitalization-weighted index that tracks the performance of A-shares and B-shares listed on the Shanghai Stock Exchange. Index code: SHCOMP. It is not possible to invest directly in an index.
Shanghai-Hong Kong Stock Connect
a trading link launched in 2014 that allows offshore, non-domestic-Chinese investors and entities to invest in Chinese A-shares listed on the Shanghai Exchange. Investment via the Stock Connect occurs through a special mechanism that was designed and implemented by the Hong Kong Stock Exchange. The Stock Connect also allows Mainland China investors to purchase certain Hong Kong-listed stocks via accounts with the Shanghai Exchange.
Sharpe Ratio
a ratio developed by Nobel Laureate William Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate – such as that of the 10-year U.S. Treasury bond – from the rate of return of a portfolio and dividing the result by the standard deviation of the portfolio returns. The higher a portfolio’s Sharpe ratio, the better the portfolio’s returns have been relative to the risk it has taken on. Because it uses standard deviation, the Sharpe ratio can be used to compare risk-adjusted returns across all fund categories.
Shenzhen Stock Exchange Composite Index (SZSE)
a capitalization-weighted index that tracks the performance of A-shares and B-shares listed on the Shenzhen Stock Exchange. Index code: SZCOMP. It is not possible to invest directly in an index.
Shenzhen-Hong Kong Stock Connect
a trading link launched in 2016 that allows offshore, non-domestic-Chinese investors and entities to invest in Chinese A-shares listed on the Shenzhen Exchange. Investment via the Stock Connect occurs through a special mechanism that was designed and implemented by the Hong Kong Stock Exchange. The Stock Connect also allows Mainland China investors to purchase certain Hong Kong-listed stocks via accounts with the Shenzhen Exchange.
Short Selling
the practice of borrowing securities in order to sell them shortly thereafter. The short seller’s intention is to speculate on a subsequent decline in the price of the security. The short seller might profit by repurchasing the same securities (“covering”) at a lower price, and then returning those securities to the original lender. Conversely, the short seller will incur a loss in the event that the price of a shorted instrument should rise prior to repurchase.
Sortino Ratio
the average return earned in excess of the risk-free rate divided by downside deviation (i.e. the standard deviation of negative portfolio returns). The Sortino Ratio is an adaptation of the Sharpe Ratio that focuses on a fund’s returns relative to its downside volatility; the Sharpe Ratio incorporates both upside and downside volatility. The Sortino Ratio is sometimes preferred to the Sharpe Ratio because it differentiates downside (harmful) volatility from total volatility.
Special Administrative Region (SAR)
a provincial-level administrative region of China that possesses a high degree of autonomy. According to the constitution of the People’s Republic of China, there are two SARs in China: Hong Kong SAR and Macau SAR. Generally, a SAR is not considered to constitute a part of Mainland China.
Special Drawing Rights (SDR)
an international reserve asset created by the International Monetary Fund in 1969 to supplement its member countries’ official reserves. SDRs can be exchanged for freely usable currencies. As of October 1, 2016, the value of the SDR is based on a basket of five major currencies — the U.S. dollar, Euro, Chinese renminbi, Japanese yen, and pound sterling.
Spot Rate
the price quoted for immediate settlement on a commodity, security, or currency. The spot rate, also called the spot price, is the current market value of an asset at the moment of the quote. This rate is based on how much buyers are willing to pay and how much sellers are willing to accept.
the difference between two prices, rates or yields. This often refers to the bid-ask spread, or the gap between the bid and ask prices of a security or asset, like a stock, bond, or commodity.
Standard Deviation (Std Dev)
a measure of the dispersion of a set of data from its mean (i.e. spread of data). The more widely spread the data are, the higher the deviation. Standard deviation is calculated as the square root of variance. Standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is sometimes used by investors as a gauge for the amount of expected volatility.
a term coined by economists in the 1970s to describe the previously unprecedented combination of slow economic growth and high unemployment (stagnation) with rising prices (inflation). (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
State Administration of Foreign Exchange (SAFE)
a subsidiary of the People’s Bank of China (PBOC). The main responsibilities of the State Administration of Foreign Exchange are to draft rules and regulations governing foreign exchange market activities and to manage China’s foreign exchange reserves.
State-owned Assets Supervision and Administration Commission (SASAC)
a special commission, directly under the Chinese State Council, set up in 2003 to manage the state-owned assets of enterprises under the supervision of the central government, in accordance with the company law of the People’s Republic of China.
State-owned Enterprise (SOE)
a legal entity that is created by the government in order to participate in commercial activities on the government's behalf. A state-owned enterprise can be either wholly or partially owned by a government.
Statistical Theory
the practice or science of collecting and analyzing numerical data in large quantities, especially for the purpose of inferring proportions in a whole from those in a representative sample. The Central Limit Theorem (CLT) is a critical theorem within the general body of statistics. The CLT states that, given certain conditions, the arithmetic mean of a sufficiently large number of iterates of independent random variables, each with a well-defined expected value and well-defined variance, will be approximately normally distributed, regardless of the underlying distribution.
Stock Connect
trading links that allow offshore, non-domestic-Chinese investors and entities to invest in Chinese A-shares listed on the Shanghai and Shenzhen Exchanges. Investment via the Stock Connect occurs through a special mechanism that was designed and implemented by the Hong Kong Stock Exchange. The Stock Connect also allows Mainland China investors to purchase certain Hong Kong-listed stocks via accounts with the Shanghai and Shenzhen Exchanges.
Stock Market Capitalization Per Capita
the total market value of all publicly listed stocks in a given country, divided by the population of that country.
Strike Price
the set price at which a derivative contract can be bought or sold when it is exercised. Strike price is also known as the exercise price.
a company that is controlled by its parent company. The subsidiary acts and operates as a separate entity, but it is still connected to the larger parent company.
Supply Chain Management
the active management of the flow of goods and services from point of origin to point of consumption. Supply chain management involves efficiently coordinating and integrating the process both within and among companies.
the length of time until a loan or a bond is due. For example, a loan is taken out with a two year tenor. After one year passes, the tenor of the loan is one year.
10-Year US $ Rate (benchmark issuance)
the yield on the benchmark 10 year USD denominated sovereign issuance; a good proxy for the borrowing costs of a nation.
30-Day SEC Yield
a standard yield calculation developed by the Securities and Exchange Commission (SEC). It represents net investment income earned by the Fund over a 30-day period, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. The 30-Day Yield should be regarded as an estimate of the Fund’s rate of investment income, and it may not equal the Fund’s actual income distribution rate.
Total Return Rate
when measuring performance of an investment or index, the total return includes interest, dividends, distributions and capital gains realized over a given period of time.
Tracking Error
the difference in returns between a portfolio or fund, and the benchmark against which performance is evaluated. Tracking error is reported as the standard deviation of the portfolio’s excess return over the benchmark’s return.
Trade Credit
a financing agreement in which one business receives goods or services from a supplier and pays the lending business at a later date.
Trademark Value
the worth generated from a distinctive name, symbol, motto, or emblem that identifies a product, service or firm. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
Treasury Yield
the return on investment, expressed as a percentage, on the U.S. government's debt obligations (bonds, notes and bills). In other words, the Treasury yield is the interest rate the U.S. government pays to borrow money for different lengths of time.
Trust Loan
a specialized type of loan typically made by a trust loan company or private money lenders.
Upside Capture Ratio
a measure of the average extent to which a fund rose with its benchmark index, conditional upon months during which the index rose. A measurement of 100% indicates the fund rose in perfect tandem with the index.
Value Added Tax (VAT)
a tax assessed incrementally based on the increase in value of a product or service at different stages of production or distribution.
Value Trap
a potentially attractive investment within the guidelines of value investing but one with mitigating (and often unforeseen) factors that may negatively impact its expected performance.
Variable Interest Entity (VIE)
a legal structure created in order to facilitate investment by foreign companies into domestic companies in industries with foreign ownership restrictions. The variable interest entity (VIE) enters into a contractual relationship with a foreign-owned company, which gives the foreign company the right to the economic benefits of the domestic company and a degree of effective control without formal legal ownership.
Vesting Period
a period of time in which an employee must work for an employer in order to fully own their shares in the company’s stock option plan.
VIX Index
the Chicago Board Options Exchange (Cboe) Volatility Index, or VIX, represents the market’s expectation for 30-day future volatility of the S&P 500 Index. It is not possible to invest directly in an index.
Weighted Average Market Capitalization of Issuer
the average market capitalization of issuers of Fund holdings, weighted in proportion to their percentage of net assets in the Fund.
Window Guidance
a term used to describe a central bank or banking regulator using its influence to persuade financial institutions to adhere to desired guidelines without the formal adoption of new regulations.
Working Capital (WC)
funds invested in a company’s cash, accounts receivable, inventory and other current assets, minus current liabilities. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)
World Trade Organization (WTO)
an intergovernmental organization that regulates international trade. The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements.
Yield to Maturity (YTM)
a concept used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond, is held to its maturity date. It takes into account purchase price, redemption value, time to maturity, coupon yield, and the time between interest payments. Recognizing time value of money, it is the discount rate at which the present value to all future payments would equal the present price of the bond, also known as internal rate of return. (Source: Barron’s Dictionary of Finance and Investment Terms, 1995)