Glossary
Plain-language definitions of the market and portfolio terms used across the Charter and the Lab.
- DiversificationSpreading capital across assets that behave differently, so weakness in one is offset by others. It reduces avoidable risk but does not remove market-wide risk.
- DrawdownThe decline from an investment's most recent peak to its subsequent trough, in percent — a direct measure of pain endured, and of the gain needed to recover.
- ETF (Exchange-Traded Fund)A fund that trades on an exchange like a single share and usually tracks an index, giving low-cost, diversified exposure to a whole market.
- Fund fees (TER)The ongoing cost of holding a fund, quoted as a total expense ratio (TER). Small-looking annual fees compound into large sums over an investing lifetime.
- Market regimeA persistent market environment — trending, calm, or turbulent — that a rules-based reading identifies from price behaviour, rather than a prediction of what comes next.
- MomentumThe tendency of assets that have performed well (or poorly) recently to keep doing so for a time — a well-documented pattern used by trend and momentum strategies.
- Tactical Asset Allocation (TAA)Adjusting a portfolio's mix of assets over time, within rules, in response to the market environment — as opposed to holding fixed weights regardless of conditions.
- VolatilityHow much an asset's price fluctuates over time. High volatility means larger swings; it measures turbulence, not direction — and is not the same thing as risk.