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Part: 5 Here's Our Advice > Glossary - Pg. 283

Glossary 283 active investment management Managing an investment portfolio by picking what the manager hopes are the right investments at the time. Active trading of securities will theoretically produce above-average returns on a risk-adjusted basis. Active management is built on the belief that it is possible to beat the market averages consistently. Very few managers consistently beat the market. aggressive growth fund Seeks rapid growth of capital, often through investment in medium and smaller companies. Some aggressive funds make use of options and futures or borrow against the fund's assets to buy stock. Aggressive growth funds typically provide dramatic gains and losses for shareholders and, therefore, should be monitored closely. annuitant The person who is covered by an annuity and who will normally receive the benefits of an annuity for life or a specified period. annuity A series of regular payments, usually from an insurance company, guaranteed to continue for a specific time, usually the annuitant's lifetime, in exchange for a single payment or a series of payments to the company. With an immediate annuity, the payments begin right away. With a deferred annuity, payments begin sometime in the future. A fixed annuity pays a fixed-income stream for the life of the contract. With a variable annuity, the payments may change according to the relative investment success of the insurance company. Annuities offer the advantage of tax-deferred compounding. asset allocation A strategy for keeping investments diversified. The challenge is to determine the optimum mix of stocks, bonds, and cash, given different economic conditions. Fixed-asset allocation plans set specific amounts or percentages in different types of asset categories; the portfolio is ad-