Glossary
Investor glossary
Financial market terms explained with simple examples and the way FundStat calculates them: returns, results, risk, taxes, currencies and portfolio structure.
24 terms
Returns
How to measure what a portfolio earns and how fast your money grows.
Portfolio structure
How to split money between assets and stick to the plan.
Risk
Measures of swings, declines and the portfolio’s sensitivity to the market.
Currencies
How exchange rates change the result of foreign investments.
All terms from A to Z
CAGR
CAGR is the compound annual growth rate: the constant yearly rate that turns a starting value into an ending value over a period. It ignores deposits and withdrawals.
Cost basis
Cost basis is what you paid for the shares you hold, including commissions. Both your paper gain and your taxable gain are calculated from it.
Dividend yield
Dividend yield is the annual dividend per share divided by the current share price. Yield on cost relates the same dividend to the price you paid for the shares.
Drawdown
Drawdown is the percentage decline in portfolio value from its latest peak. Maximum drawdown is the deepest such decline in the history of an investment.
MWR
MWR is a money-weighted rate of return: it accounts for the amount and date of every deposit and withdrawal, showing how fast the investor’s money grew.
MWR vs TWR
MWR measures the investor’s result including the timing of deposits; TWR measures the portfolio alone. One portfolio can have a positive TWR and negative MWR.
P&L
P&L (profit and loss) is the result of your investments: the gain or loss in money. It splits into realized (after selling) and unrealized (on open positions).
Portfolio allocation
Portfolio allocation is how your money is split between asset classes such as stocks, bonds and cash, and within them between regions, sectors and currencies.
Portfolio alpha and beta
Beta measures how strongly a portfolio reacts to market moves. Alpha is the excess return over what you could expect given that beta.
Portfolio benchmark
A portfolio benchmark is a reference point, usually an index such as the S&P 500 or WIG20TR, that you compare your investment results with to see if you are beating it.
Portfolio diversification
Portfolio diversification is spreading investments across many assets, sectors and regions, so a weak result in one of them does not decide the outcome of the whole.
Portfolio exposure
Portfolio exposure is what market factors you are actually exposed to: currencies, sectors, countries. For futures, it is measured by the notional value.
Portfolio rebalancing
Portfolio rebalancing restores your target allocation after price moves shift the weights, e.g. by trimming what has grown or by directing new deposits.
Portfolio return
Portfolio return is the percentage result of your investments over a period. It can be simple, money-weighted (MWR) or time-weighted (TWR), cumulative or annual.
Portfolio volatility
Portfolio volatility measures how much its returns swing. It is usually calculated as the standard deviation of daily, monthly or yearly returns.
Realized gain
A realized gain is the result on units you have sold: sale proceeds minus their purchase cost. It is the realized result, not the paper gain, that is taxed.
ROI
ROI is the return on investment: net profit divided by the capital invested, as a percentage. It does not account for how long the investment lasted.