"With instability in the EU, the continued disruption of traditional finance by fintech companies, and a retirement crisis looming, these terms are an incredibly strong reflection of the state of the financial industry this year," said David Siegel, CEO of Investopedia.
Some may be familiar to a finance novice, while others are a bit more niche.
Investopedia shared the top words with Business Insider. Check out the top terms of 2015, along with an explanation for why they were chosen.
10. Backdoor Roth IRA
A “backdoor” Roth IRA allows wealthy individuals who have reached their contribution limit for a regular Roth IRA to contribute more to retirement. As over 10,000 boomers retire every day and the threat of a retirement crisis looms, investors are looking for new ways to save for retirement.
Fintech has been a buzzword for a few years now and has taken center stage as robo-advisors and mobile apps for trading stocks threaten to bring down the legacy of the traditional financial world. The trend will only continue as millennials look for new ways to save money while predominantly using their mobile devices.
8. Gamma Hedging
An active trading strategy meant to hedge risk on options trades. Gamma hedging, tactical trading and intraday momentum used to be for hedge fund managers exclusively, but as technology disrupts many professions that had high bars of entry, more retail investors are becoming sophisticated active traders.
7. Tactical trading
The strategy of active traders, particularly hedge fund traders. Again, as technology disrupts the space, many investors are becoming more actively involved in these alternative investing strategies.
6. Intraday Momentum Index
A technical indicator used by day traders to signal when a stock is trending up or down. High volatility is good for day traders, and many traders were looking for ways to capitalize on the high volatility in the market this year and, in particular, over the recent summer months.
The high-profile success of tech startups like Snapchat and Uber, with their valuations at over one-billion dollars and negative cash flows, prompted skeptical investors to label them “unicorns”: mythical creatures that can’t truly be real.
4. Exchange-traded Mutual Fund
As fees increase and returns languish for traditional mutual funds, investors are researching new products, like ETMFs, that combine the advantages of investment strategies of an actively managed mutual fund and the performance and tax efficiencies of an ETF.
3. Negative Interest Rate Policy
The European Central Bank experimented with unconventional monetary policy in 2015, including negative interest rates where savers pay to save, to pull Europe’s economy out of the doldrums. With US interest rates at zero for so long, many finance experts discussed the possibility of a negative interest rate coming to the States.
In 2015, the global economy was shaken by the possibility of a Greek default on sovereign debt and the failure of the Eurozone as a common currency union. The discussion of Great Britain and Greece exiting the EU led to the formation of these terms.
1. Smart Beta
A new, popular financial product that attempts to beat indices, but many investors are still not familiar with it. Among stagnant markets, people are looking for ways to make money through new investment tactics. The popularity of smart beta in the industry this year led it to being Investopedia's top term of the year. The inconsistent way in which asset management firms apply this term also made it the most confused by investors and therefore the most searched new term on Investopedia.