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Glossary

Active Weights – For stocks in the portfolio that have a greater than benchmark weight, active weights measure the degree of conviction the team has behind specific securities.

Alpha – A coefficient which measures risk-adjusted performance, factoring in the risk due to the specific security, rather than the overall market.

Annual Turnover – Turnover is the lesser of purchases or sales divided by the average total assets for the period.

Beta – A quantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the S&P 500.

Earnings Growth Rate  A measure of growth in a company's net income over a specific period, often one year.

Operating Margin – Operating income divided by revenues, expressed as a percentage.

Predicted Tracking Error – The amount by which the performance of the portfolio is expected to differ from that of the benchmark. Tracking error quantifies the degree to which a portfolio differs from the index or benchmark, by measuring the standard deviation between the two values.

Price-to-Earnings – The most common measure of how expensive a stock is.

Price-to-Book – A stock's capitalization divided by its book value. The value is the same whether the calculation is done for the whole company or on a per-share basis.

Price-to-Sales – A stock's capitalization divided by its sales over the trailing 12 months.

Relative Contributors/Detractors – Securities in the portfolio that helped or hurt overall portfolio return relative to the primary benchmark due to their weight in the portfolio or the time they were added to or sold from the portfolio.

Standard Deviation – A statistical measure of the historical volatility of a mutual fund or portfolio, usually computed using 36 monthly returns.

Typical Sector Weight vs. Benchmark – Provides a general expected range for sector weights relative to the primary benchmark.

Weighted Average Market Cap – The average market value of securities in a portfolio or index, weighted in proportion to their percentage of net assets in the portfolio or index.

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