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Glossary of Asset Allocation Terms
EQUITY – (Stock Funds)
Aggressive Growth - Seeks maximum capital appreciation, by investing primarily in common stocks of companies that are believed to offer rapid growth potential. These funds tend to employ greater-than-average risk strategies than a typical growth fund in an attempt to gain a higher rate of return. Aggressive Growth funds have the flexibility to invest in companies with any capitalization.
Small Cap – Seeks maximum capital appreciation, by investing primarily in stocks of domestic small companies, as determined by market capitalization. Typically, capitalization’s under $1 billion are classified as small capitalization companies.
Mid Cap – Seeks long term capital appreciation by investing in stocks of medium size companies, as determined by market capitalization. Typically, capitalizations between $1 billion and $5 billion are ranked as medium capitalization companies.
Growth – Domestic (U.S.) – Seeks long term capital appreciation by investing primarily in domestic equity securities of any market capitalization. Income is usually incidental.
Non-US Equity/Foreign – Invests primarily in non-US equity securities of any market capitalization. Income is usually incidental.
Global Equity – Invests primarily in domestic and foreign equity securities of any market capitalization. Income is usually incidental.
Emerging Market Equity – Seeks long term capital appreciation by investing primarily in emerging market equity securities. Income is usually incidental.
Equity-Income – Seeks current income by investing a minimum of 65% of its assets in income-producing equity securities.
Growth & Income – Seeks both capital appreciation and income primarily by investing in equities with a level or rising dividend stream.
Fixed Income – (Bond Funds)
Multi-Sector Bond – Seeks income by investing without geographic boundary in corporate debt, government debt or preferred securities. Investments are not tied to any specific maturity or duration.
General Bond – Short & Intermediate Term – Seeks income by investing in corporate debt, government debt and preferred securities with an average maturity under 10 years or an average duration under 6 years.
General Bond – Long Term – Seeks income by investing in corporate debt, government debt and preferred securities with maturity’s over 10 years or an average duration over 6 years.
General Bond – Investment Grade – Seeks income by investing in investment grade domestic or foreign corporate debt, government debt and preferred securities.
US Government/Agency – Invests a minimum of 65% in securities issued or guaranteed by the Government, its agencies or instrumentality’s. Investments are not tied to any specific maturity or duration.
US Government – Short and Intermediate Term – Invests a minimum of 65% in securities issued or guaranteed by the Government, its agencies or instrumentality’s with maturity’s under 10 years or an average duration under 6 years.
US Government – Long Term – Invests a minimum of 65% in securities issued or guaranteed by the Government, its agencies or instrumentality’s with maturity’s over 10 years or an average duration over 6 years.
Emerging Market Income – Seeks income by investing in income producing securities from emerging market countries.
Global Income – Invests a minimum of 65% in fixed income securities issued by domestic and/or foreign governments.
Municipal National – Seeks federally tax-free income by investing at least 65% in issues from any state municipality.
Municipal Insured – Seeks federally tax-free income by investing a minimum of 65% of its assets in municipal debt obligations that are insured as to timely payment of principal and interest.
Municipal Single State - Seeks tax-free income by investing in issues which are exempt from federal and the taxation of a specified state.
Municipal High Yield – Seeks tax-free income by investing a minimum of 65% of its assets in generally low-quality issues from any state municipality.
Corporate – Investment Grade – Seeks current income by investing a minimum of 65% in investment grade corporate debt issues. Investment grade securities must be BBB or higher, as rated by Standard & Poor’s.
Corporate – High Yield – Seekds high current income by investing a minimum of 65% of its assets in generally low-quality corporate debt issues.
Taxable Money Market – Seeks income and stability by investing in high-quality obligations issued by the US Government, corporations, financial institutions, and other entities.
Tax Free Money Market – Seeks tax-free income and stability by investing in high-quality, short-term obligations which are exempt from federal and the taxation of a specified state.
Blend – (Combination of domestic (U.S.) stocks, bonds and cash)
Asset Allocation – Domestic – Seeks both income and capital appreciation by determining the optimal percentage of assets to place in domestic stocks, bonds, and cash.
Asset Allocation – Global – Seeks both income and capital appreciation by determining the optimal percentage of assets to place in domestic and foreign stocks, bonds, and cash.
Balanced – Domestic – Seeks both income and capital appreciation by determining the optimal proportion of assets to place in domestic stocks, bonds, and cash. The allocation across asset classes will remain relatively stable.
Balanced – Global – Seeks both income and capital appreciation by determining the optimal proportion of assets to place in domestic and foreign stocks, bonds, and cash. The allocation across asset classes will remain relatively stable.
Convertible – Invests at least 65% in convertible securities. Convertible securities are bonds or preferred stocks that are exchangeable for a set number of share of common stock.
Specialty Classes
REITs (Real Estate Investment Trusts) – Funds that invest in various types of commercial and residential developments, raw land, and real estate companies. REIT’s can combine some of the best features of real estate and stocks.
Specialty Precious Metals – seeks capital appreciation by investing primarily in equity securities of companies engaged in the mining, distribution, or processing of precious metals.
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Global Financial Planning Group, LLC
- 3155 W. Big Beaver Road - Suite 123 - Troy, MI 48084
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Global Financial Planning Group, LLC; a registered investment advisor and separate entity from LPL Financial. Copyright © 2003 Global Financial Planning Group, LLC |
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