Cap Rate (REIT)
What is Cap Rate (REIT)? Cap rate is a financial metric that is used by real estate investors to analyze real estate investments, and determine their potential rate of return based on annual returns. It is calculated based on the net income that a real estate investment is expected to generate over a one-year time...
Benchmark
What is a Benchmark? A benchmark is a measure used by individual and institutional investors to analyze the risk and return of a portfolio to understand how it is performing vis-à-vis other market segments. Some of the established benchmarks for standard analysis include the S&P 500, Barclays US Aggregate Bond Index, Russell 2000, and the...
Active Return
What is the Active Return of a Portfolio? Active return refers to the gains or losses from a portfolio that are directly related to the decisions made by the portfolio manager. The active return can be positive or negative, depending on whether it overperforms or underperforms the market. For example, if the benchmark is 5%...
Smart Beta
What is Smart Beta? Smart beta refers to investment in portfolios, being a combination of both passive and active investing. The smart beta approach is an arguably perfect intersection between traditional value investing and the efficient market hypothesis. A smart beta portfolio is efficient because it tracks with an underlying index and is optimized using...
Retained Earnings
What are Retained Earnings? Retained Earnings (RE) are the accumulated portion of a business’s profits that are not distributed as dividends to shareholders but instead are reserved for reinvestment back into the business. Normally, these funds are used for working capital and fixed asset purchases (capital expenditures) or allotted for paying off debt obligations. Retained...
