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sector investment strategy
Limiting investments to securities issued by companies that operate in a particular industry sector, such as finance, energy, healthcare or high-tech. Some managers pursue multi-sector strategies that involve more than one sector.

Stands for Stock Exchange Daily Official List. A 7-digit numeric or alphanumeric code assigned by the International Stock Exchange in London.

sell side
The portion of the securities business in which orders are transacted. The sell side includes retail brokers, institutional brokers and traders, and research departments. If an institutional portfolio manager changes jobs and becomes a registered representative, he or she has moved from the buy side to the sell side

Synonymous with a transaction's closing, when, after clearing has taken place, securities are delivered and payment is received.

Sharpe ratio
A risk-adjusted measure developed by William F. Sharpe, calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe ratio, the better the fund's historical The implication of this arrangement is that the Sharpe ratio is a measurement of return per unit of risk. It is for this reason that an investment’s Sharpe ratio is generally considered to be improving as its value increases, and vice versa. Since any such change reflects the net effect of changes to any and all factors involved in its calculation, additional insight into the value of an investment’s Sharpe ratio may be provided by careful consideration of all the components on a case-by-case basis.

short-biased investment strategy
A strategy that emphasizes short sales of securities. Such funds tend to hold larger short positions than long positions.

short-only investment strategy
An approach that seeks to profit exclusively by short sales—taking short positions in securities whose values the fund manager believes will fall.

short-term trading strategy
An approach in which the fund manager focuses on opportunistic trades, holding investments for only brief periods. Such funds often engage in "day trading."

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small cap/micro cap investment strategy
Purchasing stocks issued by small companies. Small-cap companies generally have $250 million to $1 billion of market capitalization, while micro-cap companies have less than $250 million of market capitalization.

Sortino ratio
A variation of the Sharpe ratio which differentiates harmful volatility from volatility in general using a value for downside deviation. The Sortino ratio is the excess return over risk-free rate over the downside semi-variance, so it measures the return to "bad" volatility. This ratio allows investors to assess risk in a better manner than simply looking at excess returns to total volatility, since such a measure does not consider how often the price of the security rises as opposed to how often it falls.

An operation for an immediate one time exchange of currencies contracted with a counterparty using the relevant spot rate.

standard deviation
For an investment portfolio, it measures the variation of returns around the portfolios mean-average return. In other words, it expresses an investment's historical volatility. The further the variation from the average return, the higher the standard deviation.

statistical arbitrage investment strategy
A market-neutral investment strategy that seeks to simultaneously profit and limit risk by exploiting pricing inefficiencies identified by mathematical models. The strategy often involves short-term bets that prices will trend toward their historical norms.

stock-futures arbitrage investment strategy
An approach that seeks to take advantage of differences between a stock's current price and its expected future price by buying a group of stocks and shorting futures contracts in the corresponding index—or by purchasing the futures contracts and short selling the stock.

Purchase in amount or in kind of a fund from a current account.

survivorship bias
The theoretical over-estimation of historic returns for the hedge-fund industry that results from the tendency of poor-performing hedge funds to drop out of an index while strong performers continue to be tracked. The result is a sample of current funds that includes those that have been successful in the past, while many funds that underperformed are not included.

An operation that combines a SPOT and a FORWARD operation for the same amount of one of the currencies. It uses both the spot and forward rates. For evaluation purposes, an unrealized gain/loss is calculated for the FORWARD portion of the SWAP as the valuation date approaches the forward contract maturity date.

swap contract
An agreement to exchange currencies, commodities, interest payments, investment returns, or cash flows, either at present or at a future date. Swaps are a form of derivatives. Interest-rate swaps are the most common type of sway. They are used to convert a fixed-rate investment into a floating-rate investment, or vice versa.

Society for Worldwide Interbank Financial Telecommunication.  An organization that operates the major interbank electronic communication system for financial messages (payments, letters of credit, securities transactions etc.)

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