(Equity) Beta
A statistical measure of the relationship between the returns of an investment and an equity benchmark. Most long-only equity portfolios will target a beta around 1.0 to their benchmark; most market-neutral portfolios will target a beta around 0.0.
Industry Neutral
Industry neutral equity strategies try to outperform the benchmark while maintaining a similar industry or sector composition as the benchmark (i.e., choosing to overweight and underweight stocks within an industry or sector).
Information Ratio
The risk-adjusted return of a fund’s returns relative to its benchmark’s returns (akin to a Sharpe ratio but relative to an equity benchmark instead of the risk-free rate).
Long-Only Equity
Investment strategy that seeks to outperform a benchmark by over- or under-weighting individual stocks.
Multi-Factor
Strategies that combine multiple investment styles within a single, integrated portfolio.
Portable Alpha
A strategy that combines hedge fund returns with equity markets. These investments typically provide 100% exposure to equities while using free cash to fund a hedge fund strategy overlay, giving the investor access to alternative returns in addition to the returns of an equity index.
Relaxed Constraint or Active Extension
Active equity portfolios that allow for moderate shorting and additional longs (i.e., moderate leverage on the long and short sides) in order to increase expected outperformance.
Single Factor
Strategies that provide pure implementations of individual styles, such as defensive, momentum, or value.
Tracking Error or Active Risk
The risk or volatility of an equity fund’s returns versus its benchmark. Higher tracking error means greater risk of deviating from the benchmark return.