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Financial glossary

Every term, in plain English

74 words you’ll meet on fund pages, statements and policy documents — each with a short definition, a worked example where it helps, and the tools that put it to use.

Most looked up

8 of 74 terms in Returns & risk

Terms starting with A

  • Alpha

    The return a fund earned above or below what its benchmark or level of market risk would explain — a rough gauge of a manager’s value-add.

    Returns & risk

Terms starting with B

  • Benchmark

    The index a fund’s performance is measured against, chosen to represent the market or segment the fund invests in.

    Returns & risk

  • Beta

    How much a fund or stock has tended to move relative to its benchmark; a beta of 1.2 suggests swings about 20% larger in either direction.

    Returns & risk

Terms starting with C

  • CAGR

    Compound Annual Growth Rate

    The steady yearly growth rate that would take an investment from its starting value to its ending value over a given period.

    Returns & risk

Terms starting with R

  • Real return

    Your return after accounting for inflation — the growth in what your money can actually buy.

    Returns & risk

Terms starting with S

  • Sharpe ratio

    The return earned above a baseline, such as a Treasury bill yield, for each unit of volatility taken; higher means more return per unit of risk.

    Returns & risk

  • Standard deviation

    A measure of how widely an investment’s returns have varied around their average; a higher figure means a bumpier ride.

    Returns & risk

Terms starting with X

  • XIRR

    Extended Internal Rate of Return

    An annualised return for investments with several cash flows on irregular dates, such as SIPs, top-ups and partial withdrawals.

    Returns & risk