Glossary of Terms – Sustainable Investment Event
Endowment – An endowment is a permanent fund that is managed for the benefit of students,
faculty and programs. Endowment funds have a perpetual time horizon and are pooled
together and then invested. A portfolio of investments is designed to generate earnings that
will, over time, cover the amount of the annual withdrawal, plus grow with the rate of inflation.
For example:
 A $100,000 gift (principal) is made to UNH for scholarships.
 The $100,000 is invested and generates a 5% return ($5,000) on the
principal.
 The $100,000 remains intact and the $5,000 in interest gains is used to
fund a scholarship.
Return – The percentage (or dollar amount) that is yielded through investing the endowment.
Payout – Annual income to the university received through endowment investments. The
payout is designated to a specific purpose (e.g. scholarships for students majoring in English), as
defined by the donor.
Mutual funds – An investment fund that will hold securities (ie. stocks or bonds) on behalf of
the investors. All investors’ money is commingled within the fund.
Investment – the act of investing money to return income (either interest from bonds or
dividends from stocks) or capital appreciation (price increases).
Divestment – the act of eliminating or stopping certain investments.
Investment performance – the rate of return on an investment portfolio.
Risk – Many definitions, but generally viewed as the chance of permanently losing value or
suffering through fluctuations in value (either individual investment, fund or market).
Reward – the result of making good investment selections resulting in positive returns (interest,
dividends or price appreciation).
Liquidity – the ability, in terms of time (e.g. days, months, years) and cost, for withdrawing from
an investment.
Asset classes – a group of investments that exhibit similar performance and risk characteristics
under changes in market conditions. For example, domestic stocks are considered an asset
class, and domestic bonds would be considered another asset class (since they behave very
differently). A diversified portfolio will contain at least several different asset classes.
Capitalization – Generally speaking, this refers to the size of a company. “Small capitalization
stocks” have a combination of lower prices and less shares available (ie. small companies).
“Large capitalization stocks” tend to be bigger companies with more stock available (these
would be companies like GE, IBM, ExxonMobil, etc.).
Equity portfolio – a collection of stocks that are publicly traded. A portfolio can be held within
a mutual fund or held separately (where the investor actually owns the individual stocks, rather
than just a portion of a mutual fund)..