Passive investment management

Similar financial terms

Passive portfolio
A market index portfolio.

Passive portfolio strategy
A strategy that involves minimal expectational input, and instead relies on diversification to match the performance of some market index. A passive strategy assumes that the marketplace will reflect all available information in the price paid for securities, and therefore, does not attempt to find mispriced securities.

Reinvestment risk on bonds
Usually, when the yield of a bond is calculated, you assume that the coupons received before maturity are reinvested. The additional income from such reinvestment is sometimes referred to as interest-on-interest which depends on the prevailing interest-rate levels at the time of reinvestment. Volatility in the reinvestment rate of a given strategy because of changes in market interest rates is called reinvestment risk. This risk is that the interest rate at which interim cash flows can be reinve ...

Investment Club
A group of equal-minded individuals (friends, colleagues or acquaintances) who gather together for the purpose of investing in the stock exchange.

Zero-investment portfolio
A zero-investment portfolio consists of zero net value because of a balanced establishment between long and short position, usually in the context of an arbitrage strategy.

Dept investments
Investments that involve making capital available to others in exchange for intrest, through savings accounts, loans, or bonds.

Equity investments
Investments that involve ownership of shares or units, through purchase of stock or mutual fund shares.

Underinvestment problem
The mirror image of the asset substitution problem, wherein stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to the debtholders.

Short-term investment services
Services that assist firms in making short-term investments.

Return on investment (ROI)
Generally, book income as a proportion of net book value.

REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages secured by any type of real property and issue multiple classes of ownership interests to investors in the form of pass-through certificates, bonds, or other legal forms. A financing vehicle created under the Tax Reform Act of 1986.

REIT (real estate investment trust)
Real estate investment trust, which is similar to a closed-end mutual fund. REITs invest in real estate or loans secured by real estate and issue shares in such investments.

Reinvestment risk
The risk that proceeds received in the future will have to be reinvested at a lower potential interest rate.

Reinvestment rate
The rate at which an investor assumes interest payments made on a debt security can be reinvested over the life of that security.

Net present value of future investments
The present value of the total sum of NPVs expected to result from all of the firm's future investments.

Net investment
Gross, or total, investment minus depreciation.

Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project precludes the acceptance of one or more alternative projects.

Legal investments
Investments that a regulated entity is permitted to make under the rules and regulations that govern its investing.

Working capital management
The management of current assets and current liabilities to maximize short-term liquidity.

Top-down equity management style
A management style that begins with an assessment of the overall economic environment and makes a general asset allocation decision regarding various sectors of the financial markets and various industries. The bottom-up manager, in contrast, selects the specific securities within the favored sectors.

Risk management
The process of identifying and evaluating risks and selecting and managing techniques to adapt to risk exposures.

Management fee
An investment advisory fee charged by the financial advisor to a fund based on the fund's average assets, but sometimes determined on a sliding scale that declines as the dollar amount of the fund increases.

Management buyout (MBO)
Leveraged buyout whereby the acquiring group is led by the firm's management.

Management/closely held shares
Percentage of shares held by persons closely related to a company, as defined by the Securities and exchange commission. Part of these percentages often is included in Institutional Holdings -- making the combined total of these percentages over 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.

Bottom-up equity management style
A management style that de-emphasizes the significance of economic and market cycles, focusing instead on the analysis of individual stocks.

Cash management bill
Very short maturity bills that the Treasury occasionally sells because its cash balances are down and it needs money for a few days.

Corporate financial management
The application of financial principals within a corporation to create and maintain value through decision making and proper resource management.

Management BuyIn (MBI)
This is when a small group of shareholders organise a take-over of a company and form a new management team. The opposite of a Management Buyout.