Wealth Outlook 2024 - Slow then grow

Glossary 137 Solactive Global Copper Miners Index is an index creat- ed by the German index provider Solactive as a measure of international companies active in the exploration, min- ing and/or refining of copper. At any given time, the index may have between 20 and 40 members. It’s calculated in USD on a total return basis incorporating the reinvest- ment of dividends, and re-weighted semi-annually. Tokyo Price Index (TOPIX) is a measure of the overall trends of Japan’s stock market and is used as a bench- mark for investment in Japanese stocks. TOPIX is a free float–adjusted market capitalization-weighted index. Trade-weighted US Dollar Index , also known as the “broad index,” was created by the Fed to value USD, based on its competitiveness relative to 25 other curren- cies (both DM and EM) widely used in international trade. Published both in “nominal” and “real” (i.e., inflation-ad- justed) terms, it’s considered an improvement over the older, privately operated US Dollar Index, both for its greater breadth and the fact that it’s reweighted annual- ly. It’s now the standard for determining USD purchasing power, and for summarizing the effects of USD apprecia- tion and depreciation against other currencies. US IG Corporate (1-5yr) Yield Inde x measures the per- formance of IG fixed-rate, USD-denominated corporate bonds with maturities between one and five years. The in- dex is market-capitalization weighted and does not incor- porate environmental, social, or governance (ESG) criteria. Other terminology: Adaptive Valuations Strategies (AVS ) is Citi Glob- al Wealth Investments’ own strategic asset allocation methodology. It determines the suitable, long-term mix of assets for each client’s investment portfolio. Application-specific integrated circuit (ASIC) is a mi- crochip on which the pattern of connections has been set up exclusively for a specific function. Required for mod- ern electronic engineering, ASICS form a diverse group of integrated circuits (ICs) that help designers optimize so- phisticated electronic devices. One example is the mem- ory technology required for generative AI. Assets under managemen t (A UM) are the total market value of the investments that a person or entity handles on behalf of investors. Compound annual growth rate (CAGR) is the rate of re- turn required for an investment to grow from its starting balance to its ending balance, considering any profits being reinvested at the end of each period of the invest- ment’s length. Consumer Price Index (CPI) measures inflation by track- ing the changes in prices paid by consumers for a basket of goods and services over time and compares that to previous periods. A second CPI measured monthly called “core CPI” excludes specific items like food and energy due to their volatility. Correlation is a statistical measure of how two assets or asset classes move in relation to one another. Correlation is measured on a scale of 1 to -1. A correlation of 1 implies perfect positive correlation, meaning that two assets or asset classes move in the same direction all the time. A correlation of -1 implies perfect negative correlation, such that two assets or asset classes move in the opposite di- rection to each other all the time. A correlation of 0 im- plies zero correlation, such that there is no relationship between the movements in the two over time. Curve steepener trade is a strategy that uses a combi- nation of long and short derivatives to benefit from esca- lating yield differences that occur between bonds of dif- ferent maturities. This strategy can be effective in some macroeconomic situations in which the yields are pushed up (and the prices down) on longer-term bonds and/or the yields on shorter-term bonds are driven down (and prices up), causing a plotting of those maturities to, in ef- fect, “steepen.” (See “ yield curve, ” below.) Dollarization is the process by which a country decides to use twocurrencies – the local currency anda stronger,more established currency like USD. The process can encourage more international businesses to establish localized offic- es to take advantage of the stable currency, which can help the country’s economy developmore quickly. Durati on is a measurement of a bond's interest rate risk that considers a few different factors, including a bond’s maturity, yield, coupon, and call features. These aspects Wealth Outlook 2024