A measure of performance in percentage above or below what would have been predicted by risk with a positive alpha meaning that the fund performed better than its risk would suggest, and a negative alpha indicating the fund underperformed. See "Beta."


Measures the volatility of a fund. The measure is against the benchmark index which has a beta of 1. So, when a fund's beta is higher than 1, it is moving up and down more (higher volatility) than the benchmark index.
Business Development Companies (BDCs)
These are specially regulated retail investment companies that typically make private equity-style investments in small to middle-market companies. They are primarily focused on second-tier (also called mezzanine) financing and issuing debt instruments -- many with features similar to convertible bonds and convertible preferred stocks attached to the underlying common stock.


Canadian Business Trusts (CBT)
Companies that are in businesses like cold storage, air cargo, public utility operations, timber, manufacturing, food distribution, greenhouse growing, building materials, ice production and recycled energy. While they don't sound very exciting, they are businesses currently enjoying strong industry-specific conditions and benefiting from long-term secular bull-market conditions.
Canadian Royalty Income Trusts (CanRoys)
A really terrific development in the past 10 years has been the issuance of several natural resource-based trusts that are traded as highly liquid public securities. (They are also called "royalty trusts.") Simply put, an income trust is an investment syndicate that pools its money to buy a cash flow generating asset with the cash flow after expenses distributed back to the unit holders.
Closed-end fund
In some respects a closed-end fund is the opposite of an open-end fund. It's a fund that sells a fixed number of shares at one time through an IPO (see below). When you buy a closed-end fund you are buying into a "basket" of securities, not just one company. Closed-end funds also, usually, trade on one of the two major U.S. exchanges -- NYSE and NASDAQ.


The distribution of a company's (trust's) earnings (all or part) to the shareholders.
DRIPs (Dividend Reinvestment Plans)
An optional dividend reinvestment method that is available to holders of REITs -- meaning you can take a dividend in the form of additional shares of the same REIT and compound your earnings, in lieu of taking cash payments.


Exchange-Traded Fund (ETF)
Just as its name implies, an exchange-traded fund is a basket of securities that aims to track a particular index.
Earnings before interest, (income) taxes, depreciation and amortization.
Enterprise value (EV)
Different from simple market capitalization, enterprise value gives a more realistic representation of a company's value. EV is arrived at by adding together market cap, debt and preferred shares and then deducting cash.
Equity Income Hybrid Securities (EIHSs)
For our purposes they can be broken down into Income Deposit Securities (IDSs) or Enhanced Income Securities (EISs).
Essentially, IDSs and EISs are innovative securities whose underlying shares are called units, which represent shares of a company's common stock and debt, all combined into one security that trades like a stock on an exchange. It's a way for a company with a not-so-sexy business to attract investors through the structuring of its stock so it pays out extraordinary dividend yields.
IDSs consist of two securities (common shares and subordinated notes of the issuer), which are "clipped" together. Holders of IDSs receive dividends on the common shares and interest at a fixed rate on the subordinated notes too, in order to produce a blended yield. The distribution policies of IDS issuers are similar to those of REITs, Master Limited Partnerships and Income Trusts.
Ex- (without) dividend means that if you buy the stock on (or after) the ex-dividend date you will purchase the stock without receiving the dividend.


Income Deposit Security
Initial Public Offering
Compounded annual rate of return on investments held for a year or more.


Life Sciences
Companies in biotechnology, pharmaceuticals, biomedical, cosmeceuticals and biomedical devices.
Think of load as "fees." A no-load fund has no fees. This is the investment world, so just saying no "fee" would be too simple.


Master Limited Partnerships (MLPs)
An attractive structure to maximize unitholder value. Exploration and production companies, natural gas liquids businesses, pipelines and other mature, asset-rich businesses that generate large amounts of cash flow particularly find this to be the case.
The special tax treatment MLPs receive has appeal to major oil and natural gas producers. Many of them have transferred their petroleum and natural gas pipeline assets to MLPs that the oil companies control as general partners.
MLPs have delivered more than a 17% annualized total return during the last decade, leading some market analysts to forecast that the MLP sector today could be on a similar trajectory as REITs were in the late '80s. Given the strong need for new energy infrastructure investment, there is the potential for tremendous growth ahead.
Mezzanine Debt
Also known as second-tier debt.


NAV (Net asset value)
The total net assets of a fund divided by the number of outstanding shares in the fund. The NAV is usually not equivalent to the stock price, in fact, most closed-end funds trade at a discount (the stock price is below the NAV) and occasionally at a premium (the stock price is above the NAV).


Oil and Gas Production Acronyms:
  • bcf -- Billion cubic feet
  • boe/d -- Barrels of oil equivalent per day
  • mcf/d -- Million cubic feet per day
  • bbls/d -- Billion barrels per day
  • MMBtu -- Thousand thousand British Thermal Units
Open-end fund
A mutual fund that can issue and redeem shares at any time. These funds are usually actively managed, which simply means that someone working for the fund picks the securities the fund owns.
Outlier event
An event that lies outside what we believe is the norm, i.e., beyond the expected.


Proved plus probable gas or oil reserves.


Real Estate Investment Trusts (REITs)
The majority of REITs are invested in brick-and mortar assets -- in a diversified pool of real estate, either through properties or mortgages. REITs trade like regular, common stocks and provide excellent liquidity.
You can buy into REITs that specialize in one or more of thee real estate sub-sectors such as shopping malls, apartment buildings, senior housing facilities, medical research parks, industrial parks, hotels, car dealerships, warehouses, manufacturing facilities, hospitals, nursing homes or mortgage finance companies.
REITs afford the individual an opportunity to invest in commercial real estate, (something beyond most people's reach) and they also assure liquidity through stock market-traded units, even though the REIT may be invested in large properties that might themselves be very illiquid.
Return Of Capital
When a company's payout ratio exceeds 100% of earnings because the company isn't making enough profit to cover its stated dividend.
Reverse Convertibles/Revertibles
A type of short-term investment that is linked to an underlying stock. It offers individual investors a steady and predictable stream of income due to the payment of a high coupon. At maturity, the investor will receive either 100% of his or her original investment amount or a predetermined number of shares of the underlying stock on top of the stated coupon payment.


An extreme income strategy made up of a short-term bond that is married to an option strategy.
Sovereign Bond
A bond issued by a national government, as opposed to a municipal bond issued by a smaller government entity (city, county, etc.) or a corporate bond issued by a corporation. This type of bond is a popular way for emerging countries to finance their growth. And the three traits consistent with all sovereign bonds are a low debt-to-GDP ration, low debt service-to-exports ratio, and low inflation.