Active share: Active share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index.
Alerian Midstream Energy Index: The Alerian Midstream Energy Index is a broad-based composite of North American energy infrastructure companies. The capped, float-adjusted, capitalization-weighted index, whose constituents earn the majority of their cash flow from midstream activities involving energy commodities, is disseminated real-time on a price-return basis (AMNA) and on a total-return basis (AMNAX).
Alerian Midstream Energy Select Index: The Alerian Midstream Energy Select Index is a composite of North American energy infrastructure companies. The capped, float-adjusted, capitalization-weighted index, whose constituents are engaged in midstream activities involving energy commodities, is disseminated real-time on a price- return basis (AMEI) and on a total-return basis (AMEIX).
Alerian MLP Index: The Alerian MLP Index is the leading gauge of energy infrastructure master limited partnerships (MLPs). The capped, float-adjusted, capitalization-weighted index, whose constituents earn the majority of their cash flow from midstream activities involving energy commodities, is disseminated real-time on a price-return basis (AMZ) and on a total-return basis (AMZX).
Alpha: Alpha is a measurement of excess return relative to the return of a benchmark.
Basis point (bp): A basis point (bp) is a unit equal to 1/100th of 1% and used to denote the change in a financial instrument.
Beta: Beta is the covariance of manager and benchmark divided by the variance of the benchmark. Beta is a measure of systematic risk, or the sensitivity of a manager to movements in the benchmark. A beta of 1 implies that you can expect the movement of a manager’s return series to match that of the benchmark used to measure beta.
Compound annual growth rate (CAGR): The compound annual growth rate is the rate of return that an investment would need to have every year in order to grow from its beginning balance to its ending balance, over a given time interval. The CAGR assumes that any profits were reinvested at the end of each period of the investment’s life span.
Capital expenditures (CapEx): funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.
Cash yield is the simplest way to evaluate the performance of a real estate investment. It utilizes a formula to calculate the return on investment by taking the property’s annual net cash flow and divide by the investment’s down payment, and is expressed as a percentage.
Cash or adjusted yield: An MLP’s current yield adjusted for its GP share of cash flow. For example, if the GP is receiving 10% of an MLP’s total distributions and the partnership’s units trade at a 7% yield, the cash yield would be 7.8% (current yield / [1 – % of cash distributions paid to GP]).
Compound annual growth rate (CAGR): The compound annual growth rate (CAGR) is the rate of return that an investment would need to have every year in order to grow from its beginning balance to its ending balance, over a given time interval. The CAGR assumes that any profits were reinvested at the end of each period of the investment’s life span.”
Consumer Price Index (CPI): The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.
Correlation: Correlation is a statistical measure of how two securities move in relation to each other.
Current Yield: The current yield is calculated by taking the current declared quarterly distribution annualized and dividing it by current stock price.
Distributable Cash Flow (DCF): Distributable Cash Flow (DCF) is the cash flow available to be paid to common unitholders after payments to the general partner.
Distribution: In a typical partnership agreement, the MLP is required to distribute all of its “available cash.” MLPs typically distribute all available cash flow (i.e. cash flow from operations less maintenance capex) to unitholders in the form of distributions (similar to dividends). However, management typically has some discretion in how much cash flow they choose to pay out.
Distribution Coverage Ratio: The distribution coverage ratio indicates the cash available for distribution for every dollar to be distributed. The ratio is calculated by dividing available cash flow by distributions paid. Investors typically associate the coverage ratio as the “cushion” a partnership has in paying its cash distribution. In this context, the higher the ratio, the greater the safety of the distribution.
Distribution Rate: Distribution rate is not performance and is calculated by annualizing the distribution per share for the preceding 3-month period and dividing it by the net asset value as of the reported date. This calculation does not include any non-income items such as loan proceeds, borrowings or return of capital.
Down market capture: Down market capture is a statistical measure of an investment manager’s overall performance in down markets. The down market capture ratio is used to evaluate how well or poorly an investment manager performed relative to an index during periods when that index has dropped.
Downstream: Downstream refers to the sector of the energy industry responsible for electric power generation, transmission and/or distribution of energy to end users.
Duration: Duration is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA): EBITDA is a non-GAAP measure used to provide an approximation of a company’s profitability. This measure excludes the potential distortion that accounting and financing rules have on a company’s earnings; therefore, EBITDA is a useful tool when comparing companies that incur large amounts of depreciation expense because it excludes these non-cash items which could understate the company’s true performance.
Earnings Per Share (EPS): Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock, serving as a profitability indicator.
EBITDA Multiple: An EBITDA multiple is the expected return an acquisition or organic growth project is estimated to generate. For example, a $100 million investment at an 8x EBITDA multiple, would be expected to generate approximately $12.5 million of EBITDA on an annual basis (or a 12.5% return).
Effective duration: Effective duration is the sensitivity of a bond‘s price against the benchmark yield curve.
The Energy Information Administration (EIA): The Energy Information Administration (EIA) is the statistical agency of the Department of Energy. It provides policy-independent data, forecasts, and analyses to promote sound policy making, efficient markets, and public understanding regarding energy, and its interaction with the economy and the environment.
Exajoule: An exajoule (EJ) is a standard unit of energy in the International System of Units (SI), equivalent to one quintillion (10^18) joules. Global annual energy consumption is measured in the hundreds of exajoules.
Exchange Traded Fund (ETF): An ETF is a type of ETP containing hundreds or even thousands of stocks or bonds in a single fund. It tracks the indices we run, is low cost and copies an index.
Passive ETF: A passive ETF typically track an index and is regularly updated to reflect changes in the reference index.
Active ETF: An active ETF is actively managed by an investment manager.
The Federal Energy Regulatory Commission (FERC): The Federal Energy Regulatory Commission (FERC) regulates the interstate transmission of electricity, natural gas and oil.
The Federal Open Market Committee (FOMC): The Federal Open Market Committee (FOMC) is a committee within the Federal Reserve System that is charged under United States law with overseeing the nation’s open market operations. This Federal Reserve committee makes key decisions about interest rates and the growth of the United States money supply.
Free Cash Flow: Free cash flow is the cash a company produces through its operations, less the cost of total capital expenditures (growth and maintenance).
Gross Current Yield: The current yield of a bond is calculated by dividing the annual coupon payment by the current market value of the bond. Current yield can be viewed as the cash-on-cash return.
The International Energy Agency (IEA): The International Energy Agency (IEA) is an international intergovernmental organization based in Paris that was established in 1974. Its stated mandate is to maintain the stability of the international oil supply, although its mission has expanded in recent years to emphasize the promotion of renewable energy sources.
Liquefied Natural Gas (LNG) is a natural gas that has been cooled to a liquid state for shipping and storage – the volume in this state is about 600 times smaller than in its gaseous state, able to transport for much longer distances when pipeline transport is not feasible.
Liquefied Petroleum Gas (LPG) is a group of hydrocarbon gases, primarily propane, normal butane and isobutane, derived from crude oil refining or natural gas processed. They may be marketed individually or mixed. They can all be liquefied through pressurization for convenience of transportation or storage.
Magnificent 7 Stocks (Mag 7): The “Magnificent Seven” (Mag 7) refers to a group of seven high-performing, influential stocks in the technology sector: Alphabet (GOOGL;GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA).
Master Limited Partnership (MLP): A master limited partnership (MLP) is a limited partnership investment vehicle that is traded on public exchanges. MLPs are traded in units rather than shares and consist of a general partner and limited partners. There are certain tax advantages as well as opportunity for more liquidity.
Midstream: Midstream reflects the sector of the energy industry responsible for transportation, gathering, processing and storage of energy commodities.
Natural gas liquid (NGL): NGLisliquid or liquefied hydrocarbons produced in the manufacture, purification and stabilization of natural gas. Their characteristics vary, ranging from those of ethane, butane and propane to heavy oils. NGL’s are either distilled with crude oil in refineries, blended with refined petroleum products or used directly depending on their characteristics.
The Organisation for Economic Co-operation and Development (OECD): The Organisation for Economic Co-operation and Development (OECD): an international organisation that works to build better policies for better lives. Our goal is to shape policies that foster prosperity, equality, opportunity and well-being for all.
The Organization of the Petroleum Exporting Countries (OPEC): The Organization of the Petroleum Exporting Countries (OPEC) refers to a group of 12 of the world’s major oil-exporting nations. OPEC was founded in 1960 and aims to manage the supply of oil in an effort to set the price of oil on the world market and avoid fluctuations that might affect the economies of both producing and purchasing countries.
The Organization of the Petroleum Exporting Countries Plus (OPEC+): The Organization of the Petroleum Exporting Countries Plus (OPEC+) is a group that comprises the 12 member countries of OPEC and other non-OPEC members. This group was established in 2016, a time when the economy was seeing significantly low oil prices. The purpose was to help bring stability to the global market. Together, OPEC+ nations boast 90% of the world’s oil reserves.
PJM: PJM Interconnection is the regional grid operator, whose primary focus is to maintain electric reliability for over 65 million consumers in its footprint covering all or parts of 13 states and Washington D.C.
Purchasing Managers’ Index (PMI): PMIis an index of the prevailing direction of economic trends in the manufacturing and service sectors.
Power purchase agreement (PPA): PPA is an arrangement in which a third-party developer installs, owns, and operates an energy system on a customer’s property. The customer then purchases the system’s electric output for a predetermined period.
Producer Price Index (PPI): PPI measures the average change over time in the selling prices received by domestic producers for their output.
Return of capital (ROC): ROCis a payment, or return, that an investor receives as a portion of their original investment that is not considered income or capital gains from the investment.
Risk-adjusted return (Sharpe ratio): Sharpe ratio measures risk-adjusted performance. It is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The greater a portfolio’s Sharpe ratio, the better its risk-adjusted performance has been.
S&P 500® Energy Index: The S&P 500® Energy Index comprises those companies included in the S&P 500 that are classified as members of the GICS® energy sector.
S&P 500® Index: The S&P 500® Index is an unmanaged, market-value weighted index of stocks that is widely regarded as the standard for measuring large-cap U.S. stock market performance.
Sortino ratio: The Sortino ratio was developed by Frank A. Sortino to differentiate between good and bad volatility in the Sharpe ratio. This differentiation of upwards and downwards volatility allows the calculation to provide a risk-adjusted measure of a security or fund’s performance without penalizing it for upward price changes.
Standard deviation: Standard deviations is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance and is used by investors as a gauge for the amount of expected volatility.
30-Day SEC Yield: The30-Day SEC Yieldreflects the annualization of the fund’s total net investment income per share for the 30-day period ended on the last day of the month.
30-Day SEC Yield (Subsidized): The30-Day SEC Yield(subsidized) is a yield metric mandated by the SEC for standardized comparison across fixed income funds. It is calculated by dividing the net investment income earned over the last 30 days of the period by the NAV on the last day. This number is then annualized. The 30-Day Subsidized Yield reflects fee waivers and/or expense reimbursements recorded by the Fund during the period. Without waivers and/or reimbursements, yields would be reduced.
30-Day SEC Yield (Unsubsidized): The30-Day SEC Yield(unsubsidized) does not adjust for any fee waivers and/ or expense reimbursements in effect. If the fund does not incur any fee waivers and/or expense reimbursements during the period, the 30-Day Standard Subsidized Yield and 30-Day Standardized Unsubsidized Yield will be identical.
Unrelated business taxable income (UBTI): UBTI is income regularly generated by a tax-exempt entity by means of taxable activities.
Up market capture: Up market capture is a statistical measure of an investment manager’s overall performance in up markets. The up market capture ratio is used to evaluate how well or poorly an investment manager performed relative to an index during periods when that index has risen.
Upstream: Upstream reflects the sector of the energy industry responsible for exploration and pumping of crude oil and natural gas.
West Texas Intermediate (WTI): WTI is light, sweet crude oil commonly referred to as “oil” in the Western world. West Texas Intermediate is the underlying commodity of the New York Mercantile Exchange’s oil futures contracts.