25 Investment Terms to Know When Meeting with Your Portfolio Manager


Working with a seasoned investment team to design your customized, long-term financial plan is a great way to set yourself up for success. But, if you are new to investing or depend on your trusted team to make decisions on your behalf, you may find the “lingo” to be confusing. 

Key Investment Terms

Investing can be overwhelming, especially with the complexity of the jargon. We’ve compiled a list of commonly used terms to help you navigate the world of investing and to help you better communicate with your advisor and portfolio manager.

Alternative Investment ​MAI defines alternative investments as anything that falls outside of traditional equities and fixed income.
Appreciation The increase in value of a financial asset.​
Asset AllocationHow investors allocate their portfolios among different assets that might include equities, fixed-income assets, alternative assets, and cash and its equivalents.
Bear Market ​A bear market is a prolonged period of falling asset prices, marked by a decline of 20% or more. A market in which prices decline sharply against a background of widespread pessimism, growing unemployment or business recession. The opposite of a bull market.​
Benchmark A standard, usually an unmanaged index, used for comparative purposes in assessing performance of a portfolio or mutual fund.​
Beta A measurement of an asset’s volatility relative to the entire market.
BondA bond is a fixed income instrument that represents a loan between the investor and a borrower. The bond includes terms for interest payment. When the bond matures, the investor typically receives the capital invested into the bond back.
Bond Premium ​The amount by which a premium bond sells above its par value.​
Bull Market​Any market in which prices are advancing in an upward trend. In general, someone is bullish if they believe the value of a security or market will rise. The opposite of a bear market. ​
CommoditiesCommodities are often raw materials such as agriculture, energy, or metals.
Dry Powder ​Cash reserves kept on hand to purchase assets.​
Exchange Traded FundAlso known as “ETF,” they are funds that trade on exchanges, generally tracking a specific index.
Growth-Style InvestmentGrowth-style funds or stocks typically hold company stocks in rapidly growing sectors of the economy and invest in companies with above average earnings growth.​
Index FundsA index fund tracks the performance of a specific market benchmark – or index – as closely as possible. Instead of hand-selecting which stocks or bonds a fund will hold, the fund’s manager buy all or a representative sample of the stocks or bonds in the index it tracks.
Idiosyncratic RiskIdiosyncratic risk is a type of investment risk that is endemic to an individual asset (like a particular company’s stock), a group of assets (like a particular sector), or in some cases a very specific asset class (like collateralized mortgage obligations). Idiosyncratic risk is also referred to as a specific risk or unsystematic risk.
Inflation A rise in the prices of goods and services over a given period, often equated with loss of purchasing power.​
Market CapitalizationTotal value of all a company’s shares of stock. It is calculated by multiplying the price of a stock by the number of shares outstanding.​
Market CorrectionA market correction occurs when stock prices drop for a period after reaching a peak, usually indicating that prices rose higher than they should have. During a market correction, the price of a stock may drop to a level more representative of its true value. Under typical circumstances, a market correction tends to last less than two months, and price drops are usually only 10% or less.
Mutual FundsMutual funds allow you to pool your money with other investors to “mutually” buy stocks, bonds, and other investments. Typically, these are run by professional money managers and give investors exposure to all the investments in the fund or income they generate.
Par ValuePar value is the amount originally paid for a bond and the amount that will be repaid at maturity. Bonds are typically sold in multiples of $1,000.​
Recession A downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country’s gross domestic product.​
Risk Adjusted ReturnsThe risk-adjusted return measures the profit your investment has made relative to the amount of risk the investment has represented throughout a period. If two or more investments delivered the same return over a given time, the one with the lowest risk will have a better risk-adjusted return.
Standard Deviation​A statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution. An asset with a high standard deviation often experiences increased volatility with sharp increases and decreases.​
StockA share of stock is a piece of ownership of a public or private company. By owning stock, the investor may be entitled to dividend distributions generated from the net profit of the company
Systemic RiskSystematic risk refers to the risk inherent to the entire market or market segment. Systematic risk, also known as undiversifiable risk, volatility risk, or market risk, affects the overall market, not just a particular stock or industry.
Value-StyleValue-style funds or stocks typically hold company stocks that are undervalued in the market. Fundamentally strong companies whose stocks are inexpensive but trending upward may also be selected for value funds.​

Meeting with Your Investment Team

Once you understand some of these basic terms, you may ask yourself, “What should I ask my wealth advisor and/or portfolio manager when I meet with them?” At MAI, we believe that clients should know the following:

  1. What is your investment philosophy?
  • Is this in line with my overall financial plan?
  • Why is it important for my investment firm to be a fiduciary?

If you are interested in learning more about MAI’s investment philosophy and process, please contact us today.


We look forward to learning about your financial goals.