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Investment Glossary (Singapore)

Structured Products

Terminology Description
Accrual Condition A predefined rule that determines if and how coupon payments accumulate based on the Underlying's performance.
American option/style Options that can be exercised at any time from the Trade Date to the Final Valuation Date.
Barrier Event Occurs when the price of an Underlying (in a basket of Underlyings, this refers to the worst performing Underlying in the basket) closes below or above a pre-specified level of lower and upper Barriers.
Closing Price Final price of the Underlying (in a basket of Underlyings, this refers to the worst performing Underlying in the basket) at the end of a trading day, used to determine performance or trigger conditions in structured products.
Coupon The interest payable to investors, expressed as a percentage of the initial investment amount.
Currency Pair Quotation of two different currencies, with the value of one currency being quoted against the other. If the USD is valued against the SGD, the currency pair is USD/SGD, and it indicates how much SGD is exchangeable for 1 USD.
Early Redemption/Autocall Feature A feature that allows a structured product to automatically terminate before Maturity if the Underlying  (in a basket of Underlyings, this refers to the worst performing Underlying in the basket) meets or exceeds a specified level on pre-defined observation dates.
Equity-Linked Note A structured note the returns on which are tied to the performance of equities (stocks or indices).
European option/style Options that can only be exercised on the Final Valuation Date.
Final Valuation Date The last scheduled date when the prices of Underlying are assessed to determine the payout or performance of the structured product.
Floor/Minimum Redemption Level The lowest amount an investor can receive at the Maturity of a structured product, regardless of the performance of the Underlying asset. This level is typically expressed as a percentage of the initial investment or principal.
Initial Price The market price at the commencement of a structured product's tenor used as a reference point.
Issue/Settlement Date Date on which the investor pays the initial investment amount (principal) to the issuer, and the issuer assumes the obligation to fulfill the terms of the structured product.
Issuer The entity that creates and offers the structured product.
Issuer Call A feature that gives the issuer the right to redeem the structured product before the Maturity date, typically on pre-defined dates.
Issuer Risk The risk of the structured product's issuer defaulting on its financial obligations.
Knock-in Barrier A pre-specified level/price at which an option contract becomes active. In a structured product where the investor has sold a “put” option to the issuer, the issuer can exercise the put option if the Underlying asset's price reaches the Knock-in barrier.
Knock-out Barrier A pre-specified level/price at which an option contract ceases to exist.
Maturity/Redemption Date The date on which a structured product terminates, and the final payment is made by the issuer.
Modified Following – Adjusted (ADJMBC) Means if a coupon is scheduled to pay on a non-business day, the coupon period end date is adjusted to include the next business day, unless the next business day falls in the next calendar month. In such cases, the coupon end date will be adjusted back to the first business day preceding the non-business day. The investor is compensated for the extra days of interest accrued if the coupon is paid on the next business day, or not compensated if the coupon is paid earlier.
Modified Following – Unadjusted (MBC) Means if a coupon is scheduled to pay on a non-business day, the coupon is paid on the next business day, unless the next business day falls in the next calendar month; in such cases the payment date is the first business day preceding the non-business day. i.e., the actual settlement date of the coupon is changed, but the coupon period start and end dates remain unchanged.
Non-Call Period The period following the Trade Date during which callable structured products are not eligible to be called for redemption.
Observation Date A scheduled date during the life of the structured product when the performance of the Underlying is assessed. These assessments are used to determine where certain conditions, such as coupon payments, early redemption, or barrier events, have been met.
Participation Rate The percentage of the Underlying's performance that is passed on to the investor. E.g., if a product has a participation rate of 80%, the investor receives 80% of the gains or losses of the Underlying.
Principal/Nominal/Notional The initial amount of money invested in a structured product.
Rebate Coupon The interest payable to investors, expressed as a percentage of the initial investment amount at Maturity if a Barrier Event occurs.
Redemption at Maturity Refers to the payment an investor receives at the end of the structured product's term, which may include the principal and any final returns based on the product's terms and the performance of the Underlying.
Reference Entity The security or market indicator that a structured product tracks, that is used to determine the product's performance.
Spot Price Market price of the Underlying at any particular time.
Strike Level The price level of the Underlying at which a call or put option is exercised.
Tenor The duration or maturity period of a structured product.
Trade Date Date on which the structured product transaction is executed.
Underlying The asset, index, or rate upon which a structured product's performance is based.
Worst Performing Underlying The single asset in a basket of Underlying that experiences the largest decline (or the lowest relative performance) from its initial price.
Yield The income or return earned from the structured product, usually expressed in percentage relative to the initial investment.
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Alpha Plus

Terminology Description
Underlying / Base Currency The currency that the investment is denominated in.
Alternate Currency The alternate currency is any currency other than the base currency. It refers to the amount of base currency needed to buy that alternate currency at the spot exchange rate set by the bank on the valuation date.
Fixing Date The date that the derivatives contract terminates and any obligations or rights come due or expire.
Fixing Time The time that the derivatives contract terminates and any obligations or rights come due or expire.
Investment Period The period beginning on the Start Date and ending on the Investment Period End Date.
Investment Period End Date / Maturity Date The date on which the principal amount payable under the option comes due.
Premium The price paid by the buyer of an option to the seller. It represents the cost of buying the right to buy or sell the underlying asset.
Coupon Coupon in relation to Alpha Plus is the annualized option premium added to the deposit returned to the client and interest that the client receives.
Strike The strike price, also known as the exercise price, is the predetermined price at which the buyer of an option can buy or sell the underlying asset. It plays a crucial role in determining the profitability of an options trade.
Barrier A barrier can exist as European / American barriers and Knock In or Knock Out.
American Knock In: If the underlying touches the barrier at any time during the life of the option, the option strike level is triggered.
European Knock In: If the underlying touches the barrier on the Fixing Date, the option strike level is triggered.
American Knock Out: If the underlying touches the knockout barrier at any time, the option ceases/lapses.
European Knock Out: if the underlying touches the knockout barrier on the Fixing Date, the option ceases/lapses.
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Fixed Income

Terminology Description
Maturity The date when the issuer of a bond or debt obligation repays the principal (the original amount invested). Bonds have short, medium or long maturities.
Coupon The rate of interest that the bond issuer pays its bondholders. Using the $1,000 example, if a bond has a 3% coupon, the bond issuer promises to pay investors $30 per year until the bond’s maturity date (3% of $1,000 par value = $30 per annum).
Par Value The amount a bond will be worth at maturity, also known as face value. A bond’s par value is also the basis for calculating interest payments due to bondholders. Most common bonds have a par value of $1,000.
Current Yield  The current yield of a bond is the annual interest payments of the bond divided by the bond’s current market price.
Yield to Maturity The internal rate of return (IRR) of an investment in a bond if the investor holds the bond until maturity, with all payments made as scheduled and reinvested at the same rate.
Yield to Call The total return that will be received if the bond purchased is held only until its call date instead of until full maturity.
Yield to Worst Describes the worst possible yield for a bond without the issuer of the bond going into default.
Callable Bonds The bond issuer can buy back the bonds earlier than the maturity date, paying investors the call price (usually the face value of the bonds), together with accrued interest to date.
Puttable Bonds Bond investors have the option to redeem a puttable bond—also known as a put bond—earlier than the maturity date. Put bonds can offer single or several different dates where investors can execise the early redemption option.
Zero-Coupon Bonds Zero-coupon bonds do not make periodic interest payments. Instead, bond investors buy zero-coupon bonds at a discount to their face value and are repaid the full face value at maturity.
Convertible Bonds These corporate bonds may be converted into shares of the issuing company’s stock prior to maturity.
Ratings Ratings agencies assign ratings to bonds and bond issuers, based on their creditworthiness. Bond ratings help investors understand the risk of investing in bonds. Investment-grade bonds have ratings of BBB- or better
Corporate Bonds Corporate bonds are issued by public and private companies to fund day-to-day operations, expand production, fund research or to finance acquisitions.
Sovereign/Government Bonds Government bonds are issued by the government. They are commonly known as treasuries.  Money raised from the sale of treasuries funds various aspect of government activity.
Total Loss Absorbing Capacity (TLAC) Bonds Total Loss Absorbing Capacity (TLAC) bonds were introduced to ensure that global systemically important banks (G-SIBs) have enough equity and bail-in debt to pass losses to investors and minimise the risk of a government bailout. The bonds are issued by financial institutions and can be written down to zero in terms of value, or converted into equity, so as to reduce the Issuer's debt, thereby shoring up its balance sheet. TLAC instruments consist of regulatory capital (Common Equity Tier 1 (CET1), Additional Tier 1 (AT1) and Tier 2 (T2)), as well as other eligible debt instruments. There are generally 3 stages in the financial position of a bank where loss absorption is applied:
- At "Going concern", losses are absobed by CET1 and AT1 instruments
- At "Point of Non-Viability (PONV)", losses are absorbed by all capital instruments (CET1, AT1 and Tier 2).
- At "Resolution", this may include a bail-in of eligible liabilities including senior debt and potential expropriation of shareholders.
Quasi-Sovereign Bonds  Quasi-Sovereign bonds are issued by Quasi-Sovereign entities with full or partial government ownership or control, a special charter, or a public policy mandate from the national, regional or local government.
Supranational Bonds Supranational bonds are issued by organizations formed by two or more central governments to promote economic development for member countries. Some examples of Supranationals are Asian Development Bank, World Bank, European Investment Bank.
Perpetuals A perpetual has no maturity date and the Issuer pays coupons on perpetuals forever, unless the perpetual has a callable feature and is redeemed by the Issuer.
Contingent Convertible Capital Instruments (CoCos) Contingent Convertible capital instruments (CoCos) are bank securities which can be partially or wholly written down or converted into equity on a going-concern basis (without the issuer defaulting). They are also part of the total loss-absorption capacity (TLAC) of the bank. The loss absorption mechanism on Non-CoCo TLAC debt is at the discretion of the regulator whereas for CoCos this can also be triggered at the option of the issuer based on a pre-defined mechanical trigger level as (Common Equity Tier 1 ratio) defined in the prospectus. CoCos are subordinated debt, issued by financial institutions to meet their Basel III capital requirements. In accordance with FCA (Financial Conduct Authority) guidelines, HSBC Private Bank currently defines any Basel III-compliant bank capital instrument with a mechanical trigger as a “CoCo”.
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Equities

Terminology Description
Stock/Share/Equity A type of security that represents an ownership interest in a company.
Corporate Action An event that brings material change to a company and may affect its shareholders in terms of the number of shares they hold, the amount of capital they have invested, or how and where the shares can be traded.
Brokerage Fee Fee charged by a broker to conduct transactions between buyers and sellers.
Exchange-Traded Fund (ETF) Exchange-traded Funds or ETFs are hybrid investment products with many features of mutual funds combined with the trading features of common stocks or bonds. Essentially, ETFs are typically portfolios of stocks or bonds or commodities that trade throughout the day like common stocks.
Real Estate Investment Trust (REIT) Publicly traded equities representing pools of money invested in real estate properties and/or real estate debt.
American Depositary Receipt (ADR) A negotiable certificate issued by a depositary bank that represents ownership in a non-US company’s deposited equity (i.e., equity held in custody by the depositary bank in the company’s home market).
Global Depository Receipt (GDR) A depository receipt that is issued outside of the company’s home country and outside of the United States.
Trade Date Date when an order is executed in the market.
Settlement Date  Date when the buyer makes cash payment and the seller delivers the security.
Bid Price In a price quotation, the price at which the party making the quotation is willing to buy a specified quantity of an asset or security.
Ask Price The price at which a dealer will sell a specified quantity of a security. Also called ask, offer price, or offer.
Price Quote The price at which a certain stock or security is quoted on an exchange.
Limit Order An instruction to execute an order when the best price available is at least as good as the limit price specified in the order.
Market Order An instruction to execute an order as soon as possible in the public markets at the best price available.
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Alternatives

Terminology Description
Access Fee The fee charged by a feeder fund vehicle for providing access to an underlying fund, typically at a lower investment minimum than required at the underlying fund. Generally, the access fee is the same regardless of the underlying strategy.
Algorithmic Trading A method of executing orders using automated pre-programmed instructions using fundamental, technical, and alternative data to generate trading signals. This type of trading attempts to leverage the enhanced speed and computational resources relative to human traders.
Alpha Refers to excess returns earned on an investment above the market or benchmark return. Alpha, along with beta, is one of two key coefficients in the capital asset pricing model used in modern portfolio theory.
Alternative Investments Encompasses investment types that do not fall within one of the conventional investment types (e.g., stocks, bonds, and cash). Alternative investments are typically held by institutional investors or accredited, high-net-worth individuals because of the complex nature and investor eligibility requirements. Examples include private equity, private credit, real estate, hedge funds, and structured investments.
Arbitrage Strategy An investment strategy that involves the simultaneous purchase and sale of an asset, or related assets, to exploit discrepancies in the value of their respective prices.
Asset-Backed Lending An investment strategy whereby a fund, entity, or individual acts as a non-bank lender and extends loans or credit to private businesses that is secured by a form of collateral, such as inventory, equipment, real estate, or accounts receivable.
AUM (Assets Under Management) The total market value of the assets controlled by a fund, including the value of investments as well as uninvested capital.
Benchmark A standard against which the performance of a fund or portfolio can be measured. Benchmarks are used to show a fund’s relative performance compared to peers (e.g., same type of fund from the same vintage year) or a public index (e.g., S&P 500) over a given period of time.
Beta Describes the activity of an investment’s returns as it responds to swings in the market. The market has a beta of 1.0, meaning that an investment fund or a security with a beta of 0.5 is expected to be up or down half as much as the market.
Business Development Company (BDC) A type of alternative investment fund that invests in small- or medium-sized, private companies, as well as developing or distressed companies. To qualify as a BDC, at least 70% of the fund’s assets must be invested in eligible assets (e.g., public or private U.S.-based companies with market values of less than $250 million). BDCs typically invest in the equity or debt of a company, or a hybrid of both.
Buyout Investment Strategy The acquisition of an established and mature company, typically using debt and equity financing, generally to acquire a controlling interest and/or significant influence, with the intention of improving business operations.
Capital Call A notification by the fund manager to the investors of the fund for cash required to fund investments or fees and expenses. Unlike mutual funds, whereby an investor puts their money into the fund upfront, private market fund managers call capital from investors when needed.
Capital Call Facility/Subscription Line A short-term credit facility that is provided to underlying private market funds (typically secured by investors’ commitments) to make investments, pay expenses, or alleviate frequent capital calls from investors.
Capital Call Structure (or Drawdown Structure) A type of fund structure where capital is called by the fund manager as needed during the fund’s life, rather than invested upfront. An investor commits to investing a specific amount in the fund at the fund’s closing, but the capital is collected from investors as needed to fund investments or fees and expenses.
Capital Commitment (or Total Commitment) The amount of money that an investor commits to investing in the fund. The commitment is confirmed at the fund’s closing, but capital is only called by the manager as needed during the fund’s life.
Capital Distributions A distribution from the fund, occurring primarily after investment realizations but also after other income events such as interest or dividend payments. Distributions are primarily made in cash but can also be in the form of stock of the underlying investment.
Carried Interest (or Carry or Incentive Fee) The share of profits that the general partner of a fund receives as compensation, often after a preferred return or hurdle rate is achieved. This compensation method is designed to motivate the general partner to improve the fund’s performance.
Cash Drag Refers to the opportunity cost of a fund holding a portion of its assets in cash and cash equivalents to meet unfunded obligations, take advantage of future investment opportunities, or provide liquidity. Cash drag is often associated with funds offering periodic liquidity.
Catch-up Provision A provision allowing a fund manager to retain a higher proportional amount of a fund’s profits after a preferred return for investors is achieved, until the fund manager recoups its share of returns accrued. This helps ensure the manager receives their agreed share of the profits after investors receive their preferred returns.
Clawback Provision A provision granting an investor the right to recover excess carried interest paid to a fund manager when subsequent losses reduce the fund’s performance below the preferred return or another agreed-upon measure.
Close (First, Second, Third, … Final) A stage in fundraising where a certain amount of money is raised by a private market fund. Closures occur in stages, with each closing accompanied by a group of limited partners completing their partnership agreement documents. The final close sets the fund's final size, and incentives such as lower fees may encourage early commitments.
Closed-end Fund A fund that is only open to investors during its predefined fundraising period and/or until it has met its specified fundraising target. Private market funds are typically closed-end funds.
Core Real Estate Strategy A type of real estate strategy that focuses on properties that are nearly or fully leased, have more stabilized returns, and require little to no major renovations. Core holdings are generally seen as less risky but also target lower annualized returns compared to other real estate strategies.
Core Plus Real Estate Strategy A real estate strategy focusing on properties requiring some improvements to increase net operating income, either by reducing costs or increasing rents. While cash flow may be less predictable, core-plus investments often target higher returns than core investments.
Credit Long/Short This strategy consists of a core holding of long credits hedged at all times with varying degrees of short sales of bonds and/or index options. Some managers maintain a substantial portion of assets within a hedge structure and commonly employ leverage.
Co-Investment An investment opportunity that allows investors to invest alongside GPs in individual deals which are typically offered to larger existing LPs in the fund. Co-investments are increasingly prevalent in the current market environment where investors see the benefit of investing in single namedeals.
Correlation A statistic measuring the degree to which two securities move in relation to one another. In hedge funds, correlation is often used to compare a fund’s performance movement relative to an index.
Credit Hedge Fund An actively managed alternative investment pooling investor capital to invest in debt securities of different companies. Credit hedge funds may invest in mortgage- and asset-backed bonds, investment-grade and high-yield corporate debt, and securitized credit securities.
Credit Income Interval Fund A type of closed-end fund whose shares do not trade on a secondary market. Shares are subject to periodic repurchase offers by the fund based on its NAV. These funds typically invest in less liquid strategies and can allocate more than 15% of their portfolio to private securities, unlike mutual funds that are generally capped at 15%.
Debt Financing When a company raises money (e.g., for working capital or capital expenditures) by selling debt instruments to investors. In return for lending the money, investors become creditors, senior in the capital structure to equity holders.
Distressed Debt Strategy An investment strategy that invests in the debt of a financially distressed company, government, or public entity (that has filed for bankruptcy or has a significant chance of filing for bankruptcy in the near future), with the goal of improving business operations to generate a return.
Distributions The transfer of cash or assets that are dispersed to investors throughout the life of the fund.
Direct Lending Strategy An investment strategy whereby a fund, entity, or individual acts as a non-bank lender and extends loans or credit to private businesses.
Diversification A method of risk management designed to reduce the risk and volatility of a portfolio through holding a wide array of different assets that have limited correlation to each other.
Downside Deviation A measure of risk that focuses only on returns that fall below a minimum acceptable return (MAR). It is used to calculate the Sortino ratio of a fund or an investment, as opposed to the standard deviation of all returns, which is used to calculate the Sharpe ratio.
DPI (Distributions to Paid-in Multiple) The ratio of the capital that has been distributed back to investors relative to the capital that has been called from investors. It is calculated by dividing the amount of the cumulative distributions by the amount of capital that was paid in. DPI provides insight into how much of the fund’s return has been realized or paid back from the investment.
Drawdown A peak-to-trough decline of a hedge fund, generally quoted as the percentage between the peak and the subsequent trough.
Dry Powder The amount of cash or other liquid assets available for a fund to deploy, based on capital committed to the fund by investors. In other words, dry powder is the difference between a fund’s total committed capital and invested capital to date.
EBITDA Earnings before interest, taxes, depreciation, and amortization. A measure of a company’s performance to provide a better understanding of free cash flow generation.
Event-Driven Hedge Fund A hedge fund that seeks to generate returns by taking advantage of price inefficiencies resulting from company-specific events, including mergers, acquisitions, bankruptcies, reorganizations, and other corporate actions.
Exit The sale of an asset or portfolio company by a fund.
Expense Pass-through (or Pass-through Fee) An alternative to a management fee where investors typically pay the costs associated with running the fund (e.g., operating expenses), in addition to portfolio manager compensation.
Feeder Fund (or Access Fund) An investment vehicle that provides access, typically for a fee, to an underlying private market fund, usually at a lower investment minimum. This allows smaller investors to access investments typically available only to large, institutional investors.
Follow-on Investment A subsequent investment in a portfolio company which has already received funding. In venture capital, there may be several rounds of follow-on investing.
Fund Family A series of funds managed by the same fund manager with the same type of strategy.
Fund Term (or Fund Life) The number of years that a fund expects to be in operation. Typically, private market funds operate for 10 years, with an option for extensions.
Fund-of-Funds A fund that invests in other funds to offer more diversification. These vehicles often have an additional layer of fees.
Fund (or Investment Fund) A vehicle of pooled investor capital that enables the fund manager to make investment decisions on their behalf.
Fundamental Investing An investment strategy focusing on analyzing businesses at a basic level, including financial statements, market analysis, and management discussions, to determine an asset's fair value.
Fundraising Period The period when a fund’s formation is announced to the time when the final closing occurs.
Gate A provision that allows a fund manager to restrict redemptions under certain circumstances. Gates may be applied at the fund level or investor level.
General Partner (GP) The manager of a fund who has unlimited liability for the fund’s obligations and the authority to manage its operations.
Gross Exposure The sum of a fund’s long and short market value exposures, used to measure the fund's total exposure to the market.
Gross Performance Performance metrics that do not include fees, expenses, or carried interest.
Growth Equity Strategy A private equity strategy investing in companies that are profitable but still growing, often with little to no leverage, targeting higher returns than venture capital but less risk than buyouts.
Hard Cap The maximum amount of capital that a fund manager intends to raise.
Harvesting Period A time period once the portfolio investments mature during which the GP actively seeks to monetize investments and return capital to investors in the form of principal and capital gains.
Hedge Fund A managed investment fund that uses advanced strategies, such as short selling and leverage, to generate returns.
High-water Mark The highest NAV reached by an investor's fund holding, used to determine performance-based compensation.
Illiquidity Premium (Liquidity Premium) A premium demanded by investors for locking up their capital in investments that cannot easily be converted into cash at fair market value. Investors in private market funds are compensated with the expectation of greater potential returns.
Investment Period The initial phase of a private market fund’s life (typically 3–6 years) during which deals are sourced and new investments can be made.
IRR (Internal Rate of Return) The annualized compounded rate of return that discounts future cash flows from an investment to the exact amount of the investment. It is the standard performance measure for private markets by the CFA Institute, accounting for the time value of money.
J-Curve A graphical representation showing private market fund returns. It reflects the tendency for negative returns during early years (due to capital calls and investments) and gains in later years (as investments mature and generate returns).
Key Person Provision A legal clause that addresses the fund's management in the event key managers are unable to continue. If triggered, investors may approve a new manager or suspend new investments.
LBO (Leveraged Buyout) The acquisition of a mature company using borrowed money to obtain significant influence or control, aiming to enhance business operations.
Limited Partner (LP) A partner with limited liability in a limited partnership. LPs invest in funds but do not participate in fund management.
Limited Partnership A common structure for alternative investment funds, involving a general partner (fund manager) and limited partners (investors).
Leverage The use of borrowed money or securities by fund managers to amplify potential returns. It magnifies both gains and losses.
Lock-up Period A set period during which investors cannot redeem or sell their shares. Hard lock-ups prohibit any withdrawals, while soft lock-ups allow partial redemptions with penalties (typically 1–5%).
Long/Short Equity Hedge Fund An actively managed investment strategy that takes long or short positions in securities to express positive or negative views on markets, industries, or stocks.
Macro Hedge Fund A fund focusing on price movements in global markets due to policy or economic changes. Macro funds participate in equities, bonds, currencies, and commodities using long and short positions.
Management Fee A fee paid by investors for fund management services. It is typically based on invested or committed capital in private market funds and on net asset value (NAV) in hedge funds.
Market-neutral Strategies Investment strategies that aim to minimize exposure to broad market movements, generating modest, consistent returns regardless of market direction.
Minimum Capital Commitment (Subscription) The minimum amount an investor must commit or invest in a fund as stipulated in the limited partnership agreement.
MOIC (Multiple of Invested Capital) Measures the realized and unrealized value of a fund relative to total called capital. Calculated as the sum of DPI (Distribution to Paid-in-Capital) and RVPI (Residual Value to Paid-in-Capital).
Multi-strategy Hedge Fund A hedge fund employing multiple strategies and asset classes to diversify risk and optimize returns. Strategies may include equity hedge, event-driven, credit, and macro approaches.
Net Exposure The difference between a fund’s long market value and short market value, indicating its exposure to market fluctuations. Lower net exposure generally implies reduced market risk.
Net Asset Value The market value of a fund's total assets, minus its liabilities and intangible assets, divided by the number of its shares outstanding. The measure is used to determine prices available to investors for redemptions and subscriptions. Hedge funds typically calculate their NAVs at the end of every business day, but report them to investors on a monthly basis. Mutual funds report their NAVs daily.
Net Performance Performance metrics reflecting returns after deducting fees, expenses, and carried interest.
Opportunistic Real Estate Strategy A real estate investment strategy focusing on high-risk, high-reward properties, such as those needing significant rehabilitation or development. These investments often involve higher returns than other real estate strategies.
Percent Called The amount of money that a fund has called from investors (less any recallable distributions), divided by the total amount of commitments to the fund.
PIC (Paid In Capital or Drawn Capital) The amount of money that has been called by the fund from investors.
PME (Public Market Equivalent) A benchmarking calculation that compares the performance of a private market fund to the performance of a comparable public market index, such as the S&P 500 or the Dow Jones Industrial Average. It helps determine a fund's relative performance.
Preferred Return (or Hurdle Rate) The minimum rate of return that a fund must achieve before the fund manager can receive paid carried interest.
Private Credit Fund An actively managed type of alternative investment that consists of credit extended to companies or projects on a bilaterally negotiated basis, outside of public markets, aimed at generating returns by investing in privately held company debt.
Private Equity Fund An actively managed alternative investment that pools investors' capital and invests in private or public companies, with the goal of creating value by taking them private.
Private Markets Investments not traded on a public exchange, including asset classes like private equity, private credit, venture capital, infrastructure, and real estate.
Private Real Estate Fund An actively managed type of alternative investment that pools investors' capital to invest in the equity and debt of real estate assets, aiming to generate returns.
Public Non-traded Real Estate Investment Trust An investment vehicle that invests in the equity and/or debt of various properties but is not traded on an exchange, although it is regulated by the SEC.
Quartile A division of observed performance into four defined intervals, from the best performers in the first quartile to the worst performers in the fourth quartile.
Recallable Distribution A distribution to fund investors that the fund manager has the right to call again.
Real Asset Strategy An investment strategy focused on physical assets, such as real estate, timber, or natural resources, which are typically long-term in nature.
Real Estate Investment Trust (REIT) A company that owns and typically operates income-producing real estate or related assets, often providing exposure to real estate markets through investments.
Realized Value The value of assets in a fund that have been sold for a gain or loss or have issued dividends.
RVPI (Residual/Remaining Value of Paid-in Capital) A measurement of the total value of unrealized investments in a fund relative to the capital that has been called from investors.
Schedule K-1 (K-1s) A tax form reporting profits and losses for limited partnerships. Many K-1s are delayed beyond the typical April tax filing deadline.
Secondaries Strategies A private market strategy that acquires interests in other private market funds, providing exposure to later-stage private market strategies.
Sharpe Ratio A measure of a fund's risk-adjusted performance, calculated by dividing the fund's excess return (over the risk-free rate) by its standard deviation.
Short Selling The selling of shares in anticipation of being able to buy them back in the future at a lower price. A manager who sells short estimates that the securities, or the market, are overvalued or anticipates earnings disappointments, often due to accounting irregularities, new competition, change of management etc. Funds that sell short are often used as a hedge to offset long-only portfolios and by those who feel that the market is approaching a bearish cycle. Funds that sell short also are by nature strongly exposed to extreme risks since their short positions present infinite loss potential. As a result, short selling is strictly regulated and should be regarded with caution. Short selling is a directional strategy generally characterized by relatively volatile returns and a significant correlation with major stock indexes.
Sortino Ratio A variation of the Sharpe ratio that distinguishes between downside volatility and overall volatility, focusing on negative returns to assess risk-adjusted performance.
Special Situation Strategies An alternative investment strategy focused on generating returns from atypical or unusual events, such as stressed or distressed situations.
Standard Deviation A measure of volatility that calculates the extent of variability of returns from the mean, often used as a proxy for investment risk.
Subscription The process by which an investor commits capital to a fund by submitting subscription documents, meeting eligibility requirements, and receiving approval from the fund manager.
Subsequent Closing Interest The amount owed by investors who do not participate in the first closing of a fund, compensating initial investors for their share of capital that was previously funded.
Target Size The amount of capital that a fund manager aims to raise during the fundraising period for a specific fund.
Unrealized Value The value of assets in a fund that have not yet been sold, reflecting potential profit or loss if the asset were sold at its current financial performance.
Value-add Real Estate Strategy A real estate investment strategy focusing on properties with management, operational, or capital constraints, aiming for higher returns through improvements and increased value.
Venture Capital Strategy A private equity strategy that provides capital to early-stage companies, often with high growth potential, though it typically involves higher risk and higher return potential.
Vintage Year The year a fund is legally established, typically marked by the fund making its first investment.
Asset allocation The structure of a portfolio - namely the allocation of specific portions of it across different assets classes, i.e. securities, property, cash, fixed interest, etc.
Diversification Refers to a strategy of including a group of investments in a portfolio that are dissimilar to each other, so that the combined effect of their inclusion results in the greater likelihood that the portfolio’s goals will be achieved - compared to the likelihood of doing so with a portfolio of similar investments.
Downside risk Downside risk is a similar measure to Volatility, except that this statistic calculates an average return for only the periods where return was lower than zero (or another benchmark rate) and then measures the variation of only these "losing" periods around the calculated average. In other words, this statistic measures the volatility of the downside performance.
Hedging The process of protecting the value of an investment from the risk of loss in case of an adverse price movement.
Investment strategy The particular investment process employed by a manager in the application of an investment style. Generally there are about 20 primary strategies employed by hedge funds, such as Global Macro and Long-Short Equity. 
Liquidity The ease with which an investment product/fund can be sold/redeemed from, without impacting its price. Hedge funds typically offer quarterly or annual liquidity, meaning that they allow investors to redeem their shares that often.
Performance fee A fee paid to a fund manager for providing returns on an investment, often by reference to a benchmark or Hurdle rate. This fee is based on net new profits and is earned by the hedge fund manager for the period concerned. It may be paid annually or quarterly but accrues monthly in the fund valuation.
Redemption Liquidation of shares or interests in an investment fund.
Risk-adjusted performance Risk relative to return: the return achieved per unit of risk or the risk associated with a particular level of reward, typically represented by the Sharpe ratio. Improving the risk-adjusted return depends either on increasing returns without a commensurate increase in the level of risk, or maintaining the level of returns whilst lowering the associated risk.
Systemic risk The risk that a default by one market participant will have repercussions on other participants due to the interlocking nature of financial markets. For example, Customer A's default in X market may affect Intermediary B's ability to fulfil its obligations in Markets X, Y, and Z.
Value-at-risk A measure of the potential change in value that a fund's portfolio may experience. It is usually expressed as a percentage, which is referred to as a confidence level.
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Discretionary & Funds

Terminology Description
Asset Allocation The allocation of funds held on behalf of an investor to various categories of assets such as equities, bonds and others based on their investment objectives.
AUM (Assets Under Management) The total market value of the assets that a financial institution or fund manager manages on behalf of customers
Benchmark A standard against which the performance of a security, mutual fund, or investment manager can be measured, typically a broad market index.
Beta A measure of a security or portfolio's volatility in relation to the overall market. A beta greater than 1 indicates more volatility than the market, while less than 1 indicates less volatility.
CAGR (Compound Annual Growth Rate) The annualized growth rate of an investment over a specified period, showing the smoothed rate of return.
Developed Markets Economies with high levels of income per capita, well-established financial markets, advanced infrastructure, and stable political environments. Examples include the United States, Western Europe, Japan, and Australia. Investments in developed markets are generally considered less risky compared to emerging markets but may offer lower growth potential.
Discretionary Mandate An agreement where the customer authorizes the portfolio manager to make investment decisions on their behalf, following a set of guidelines or investment strategy.
Diversification To invest in a variety of different markets, products and securities to spread the risk of loss.
Dividend A portion of a company's earnings distributed to shareholders, typically in cash or additional shares.
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. The longer a fund's average duration, the more sensitive the portfolio is to shifts in interest rates. Duration is expressed as a number of years.
Emerging Markets Economies that are in the process of rapid growth and industrialization, typically characterized by lower income levels per capita but higher growth rates compared to developed markets. Examples include countries like China, India, Brazil, and South Africa. Investments in emerging markets may offer higher returns but often come with higher risk due to political instability, currency volatility, and less mature financial markets.
Hedge An investment made to reduce the risk of adverse price movements in an asset, typically by taking an offsetting position in a related security.
High-Water Mark A benchmark that represents the highest peak in value that a fund or portfolio has reached. It is often used to calculate performance fees.
Gating A practice of temporarily restricting or limiting investor redemptions from an investment fund, typically during periods of market stress or unusually high withdrawal requests. 
NAV (Net Asset Value) The value per share of a mutual fund or ETF, calculated by dividing the total value of all the securities in the portfolio, minus liabilities, by the number of outstanding shares. 
Rebalancing The process of realigning the weightings of a portfolio's assets by periodically buying or selling assets to maintain an original or desired asset allocation. 
Reference Index A market index used as a general point of comparison to assess the characteristics or performance of an investment,  strategy or portfolio. Unlike a formal benchmark, a reference index may not be the official target for performance comparison but serves to provide context, illustrate market exposure or guide investment decisions.
Risk Tolerance Risk tolerance is the degree to which an individual is willing to accept losses in order to achieve potential gains. 
Sharpe Ratio A measure used to evaluate the risk-adjusted return of an investment by subtracting the risk-free rate from the return of the portfolio and dividing by the standard deviation. 
Structured Products Structured Products are investment products where the return is linked to an underlying asset with pre-defined features (tenor, currency, payout calculation etc.).
Underlying asset can be equities, interest rates,  commodities, mutual funds & foreign currencies among others. 
Tracking Error The divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. 
Volatility A term for the fluctuation in price of financial instruments over time
Yield The income returns on an investment, such as the interest or dividends received, usually expressed as an annual percentage. 
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