Glossary

An acceleration clause is a provision commonly found in loan agreements or contracts that allows the lender to demand immediate and full repayment of the outstanding loan balance under certain specified circumstances. This clause grants the lender the right to accelerate the repayment schedule if the borrower fails to meet specific conditions or obligations outlined in the loan agreement.

Accrued interest is the interest that has been incurred but not yet paid.

Mortgages with interest rates indexed to a certain benchmark. Typically, the mortgage begins with a fixed rate for a period and is adjusted periodically thereafter.

Amortisation is the process of spreading out a loan into a series of fixed payments over time.

An annual sinking fund is a designated account created to systematically accumulate funds yearly for the repayment of a debt or bond. This fund involves regular contributions and interest accrual, assisting in either retiring the debt at maturity or purchasing bonds from the open market.

Asset-Backed securities are a type of financial investment that is collateralized by an underlying pool of assets - usually ones that generate a cash flow from debt, such as loans, leases, credit card balances, or receivables.

Asset-based financing is a strategy where tangible assets owned by a company, such as real estate, inventory, or equipment, are used as collateral to secure financing or obtain a loan.

A bad boy guarantee is a specific type of personal guarantee often used in certain lending or financial agreements, particularly in commercial real estate financing. It's a provision that holds an individual (usually a borrower or guarantor) personally liable for certain actions or behaviour that could result in triggering the guarantee.

Bankruptcy is a legal proceeding involving a person or business that is unable to repay their outstanding debts.

The base rate is the set interest rate, as determined by the central bank or reserve within a local economy, to be applied to loans for any commercial banks.

A basis point (bps) is equal to 1/100th of 1% or .01% and is a common unit of measure for interest rate changes.

Bonds are fixed-income securities representing debt obligations issued by governments, municipalities, or corporations, typically paying periodic interest and returning the principal amount at maturity.

Bridge financing is a type of short-term financing intended to cover a company's short-term costs until the moment when regular long-term financing is secured.

A bridge loan is a short-term financing option utilized by individuals or companies to bridge the gap until they obtain permanent financing or clear an existing debt. Typically characterized by higher interest rates, bridge loans often require collateral, like real estate or business inventory, to secure the loan.

Buy down is a financing technique where the buyer attempts to improve the interest rate for the initial period of the loan through an upfront payment.

Collateral is an asset a borrower offers to a lender to secure the loan.

Covenants exist to provide a legally binding set of terms and conditions between a borrower and lender by setting out a set of conditions that a borrower must meet to uphold a contract. They aim to mitigate risk and ensure that borrowers or issuers fulfil their obligations and maintain financial stability throughout the duration of the loan or bond.

Credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation.

Credit rating agency is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves.

Debt is the money owed on financial instruments that were borrowed from a financial lender or institution with the expectation of being repaid.

The debt service coverage ratio is the ratio of cash available for debt servicing to interest, principal and lease payments.

The debt to equity ratio is a leverage ratio that calculates the weight of total debt against total shareholders' equity.

Default is the outcome that occurs when a borrower fails to meet the legal obligations of a debt contract, specifically regarding repayment.

Distressed debt is the securities of companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy.

Bond duration is a measure of the average time it takes to receive the bond's cash flows, considering both coupon payments and the return of principal, weighted by their present values.

EURIBOR is the average interest rate at which a large panel of European banks borrow funds from one another. It's calculated daily and serves as a reference rate for euro-denominated loans and financial products in the interbank market within the Eurozone.

Financial leverage is the utilisation of borrowed funds (debt) rather than equity in the purchase of an asset. The usage of financial leverage comes with the assumption that after-tax income and capital gain generated from the asset to equity holders exceed the borrowing cost of debt.

Foreclosure is a legal process that allows lenders to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.

Gilts is a term used in the United Kingdom to refer to government bonds issued by the British government, specifically by Her Majesty's Treasury. The name "gilt-edged" originates from the historical practice of issuing these bonds with a gold edge, signifying their perceived reliability and security.

Debt securities issued by a government and sold to investors to support government spending. Government bonds are considered low-risk investments with fixed interest payments.

Ijara is an Islamic financial contract based on a leasing or rental agreement. In an Ijara arrangement, a financial institution or lessor purchases an asset (such as property, equipment, or vehicles) and leases it to a lessee (customer) for a specified period. The lessee pays rent or lease payments to use the asset, and at the end of the lease term, the lessee might have the option to purchase the asset at an agreed-upon price. Ijara contracts comply with Sharia principles, avoiding the charging of interest (riba) and adhering to asset-backed financing where the lessor retains ownership of the asset during the leasing period.

Interest rates refer to the cost of borrowing money or the return on invested funds, typically expressed as a percentage of the principal amount over a specified period.

Interest rate risk is the potential that a change in overall interest rates will reduce the value of a bond or other fixed-rate investment. Interest rate risk is measured by a fixed income security's duration, with longer-term bonds having a greater price sensitivity to rate changes.

Junk bonds are high-yield or non-investment grade bonds with a rating of 'BB' or lower due to their high default risk or junk bonds debts issued by companies or governments which are at high risk of default, either by not paying their interest or repaying their capital at maturity. Levels of interest are high to compensate for the risks involved to the bondholder.

Leverage ratio serves as a broad term encompassing various metrics that quantify the extent of borrowed funds relative to invested capital or assets within a specific investment or venture. The most common types of leverage ratio include: - Debt to Equity (D/E) - Debt to Asset (D/A) - Loan to Value (LTV) - Loan to Cost (LTC) - Debt Service Coverage Ratio (DSCR) - Interest Coverage Ratio (ICR) - Equity Multiplier

A lien refers to a legal claim or right granted to a creditor against a borrower's property or assets as security for a debt or obligation. It provides the creditor with the right to take possession of the property or assets in the event of default or non-payment by the borrower.

Ratio determining the value of the loan, compared to the total project cost. Loan to Cost = Loan Amount / Total Project Cost

Ratio determining the value of the loan, compared to the project's market value. Loan to Value = Loan Amount / Project Market Value

LIBOR is a benchmark interest rate that reflects the average rate at which major banks based in London can borrow from one another in various currencies. It was historically used as a reference rate for various financial products globally. However, due to issues related to manipulation and the decline in transaction volumes on which it was based, regulators encouraged its replacement. As of recent times, many markets have transitioned away from LIBOR to alternative benchmark rates, such as the Secured Overnight Financing Rate (SOFR) in the United States and the Sterling Overnight Index Average (SONIA) in the UK, among others.

Mezzanine debt is when a hybrid debt issue is subordinated to another debt issue from the same issuer. Mezzanine debt bridges the gap between debt and equity financing and is one of the highest-risk forms of debt-being subordinate to pure debt but senior to pure equity.

Mortgage-backed securities (MBS) are variations of asset-backed securities that are formed by pooling together mortgages exclusively. The investor who buys a mortgage-backed security is essentially lending money to home buyers.

An Islamic financial contract based on a profit-sharing partnership. It involves two parties: the Rab al-Maal (capital provider) who contributes funds, and the Mudarib (entrepreneur) who manages the invested capital and conducts business operations. Profits generated from the venture are shared according to a pre-agreed ratio, while the capital provider bears the losses, except in cases of negligence or misconduct by the entrepreneur.

Non-recourse is a type of loan secured by collateral, where the borrower is not personally liable if they default on the loan.

An originator typically refers to a lender or creditor who assists in determining the terms of a loan.

Payment in Kind (PIK) refers to a method of making payments on a financial obligation, such as interest on a loan or dividends on preferred stock, by issuing additional securities or instruments rather than paying in cash.

A prepayment penalty is a fee that is charged to a borrower who pays off a loan before it is due.

Property bonds are asset backed securities used by developers to raise money from investors in the form of a loan.

Refinancing refers to the process of replacing an existing debt obligation with a new loan that has different terms, often to take advantage of better interest rates, alter the repayment schedule, or adjust the loan structure.

Riba, in Islamic finance, refers to the prohibition of usury or interest. It is considered a fundamental principle in Sharia (Islamic law) that prohibits the charging or paying of interest on loans or transactions.

SOFR serves as a reference rate for a wide range of financial products in the United States. It is published daily by the Federal Reserve Bank of New York and is gaining acceptance and usage as a benchmark rate in various financial markets globally. SOFR is based on transactions in the U.S. Treasury repurchase market, where banks and other financial institutions borrow or lend Treasury securities overnight on a collateralized basis.

Securitization is the process in which certain types of assets are pooled so that they can be repackaged into interest-bearing securities.

Debt that takes priority over other unsecured or subordinated debt in the event of default. Senior debt has the highest priority and therefore the lowest risk. Thus, typically offers lower interest rates.

Debt backed by specific assets or collateral, giving lenders a claim on those assets in case of default, providing lower risk compared to unsecured debt.

The priority level or ranking of a financial claim or obligation in the event of liquidation or bankruptcy.

Statutory foreclosure is a type of foreclosure that occurs when a trust deed or mortgage includes a power of sale clause that allows a trustee to initiate a non-judicial sale of the property.

SONIA is the effective overnight interest rate paid by banks for unsecured transactions in the British sterling market. It represents the weighted average of interest rates that banks charge each other for overnight loans. SONIA is administered and published by the Bank of England.

Subordinated debt is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Subordinated debentures are thus also known as junior securities.

Sukuk (plural of "sakk") are Islamic financial instruments commonly known as Islamic bonds. They represent a form of investment that complies with Sharia principles.

Underwriting is the process through which an individual or institution takes on financial risk for a fee, such as with the issuance of an insurance policy or a new securities issue.

An asset class is a grouping of similar financial instruments or investments with comparable characteristics and behaviours in the market. Examples include stocks (equities), bonds (fixed income), cash equivalents, real estate, commodities, and alternative investments. Investors use asset classes to diversify their portfolios based on risk and return preferences.

Capital call is a legal right of an investment firm or an insurance firm to demand a portion of the money promised to it by an investor.

Carried interest is a share of the profits earned by the private equity firm on successful investments. It represents a share of the profits earned by the fund or partnership that is allocated to the fund managers or general partners, typically after a certain return threshold is achieved.

Cash flow is the movement of money in and out of a company.

A cash yield is a financial measure in real estate investment that evaluates the annual pre-tax cash flow generated by an investment property relative to the initial amount of cash invested. It represents the ratio of the property's annual pre-tax cash flow to the total cash invested, typically expressed as a percentage. The term is often used interchangeably with "Cash on Cash".

Cash on cash is a financial metric used in real estate investing to evaluate the annual pre-tax cash flow generated by an investment property relative to the initial amount of cash invested. It is calculated by dividing the property's annual pre-tax cash flow by the total cash invested. The term is sometimes used interchangeably with "Cash Yield".

Catch-up is a provision in the fund's fee structure that allows the fund manager to receive a portion of profit distributions after the investors have achieved a certain rate of return.

A commitment is the amount an investor obliges to pay to the fund in the subscription agreement.

A commitment period is the period of time during which the fund makes new investments and draws down capital from investors for investment purposes.

Ownership represented by common stock, entitling shareholders to voting rights and potential dividends.

Covenants exist to provide a legally binding set of terms and conditions between a borrower and lender by setting out a set of conditions that a borrower must meet to uphold a contract. They aim to mitigate risk and ensure that borrowers or issuers fulfil their obligations and maintain financial stability throughout the duration of the loan or bond.

The distribution to paid-in capital metric measures the realized profits that have been distributed by the fund back to their limited partners. It can be calculated through the equation: Distribution to Paid-In Capital (DPI) = Cumulative Distributions / Paid-In Capital

A distribution refers to the disbursement of profits or income generated by an investment among its investors. Distributions can include dividends, interest, capital gains, or other income generated by the investment entity, which are allocated and paid out periodically to its shareholders.

A distribution waterfall is the order in which gains from a pooled investment are allocated between investors in the pool. The distribution waterfall typically consists of tiers or levels, each specifying how profits are distributed among different classes of investors or stakeholders. These tiers often include preferential returns, hurdle rates, or preferred returns that determine the distribution priority.

Equity is the portion of the company's value that belongs to its shareholders, encompassing rights to profits, voting privileges, and residual claims on assets after settling debts and liabilities. There are two types of equity: common equity and preferred equity.

Equity multiple is defined as the total cash distributions received from an investment, divided by the total equity invested.

A feeder fund is an investment vehicle, often a limited partnership, that pools capital commitments of investors and invests such capital into an umbrella fund, or master fund, which directs and oversees all investments held in the portfolio.

A final closing represents the culmination or conclusion of the fundraising process for a particular investment vehicle. It occurs when the fund managers have secured the targeted amount of capital commitments from investors, and the fund is officially closed to new investors.

The first closing refers to the initial phase of the fundraising process. During the first closing, the fund is officially launched, and initial investors commit capital to the fund based on the terms outlined in the offering documents. This capital may not be immediately called upon by the fund managers but signals the commencement of the fund's operation.

The financial commitment made by the general partner (GP) of a fund to invest its own capital alongside limited partners. Limited partners expect the GPs to have “skin in the game” by committing some of their own money into the fund that they are raising.

The managing partner or entity responsible for the operation and management of a partnership, typically holding decision-making authority.

A hard cap refers to the maximum limit or ceiling set for the total amount of capital that the fund or project aims to raise. It represents the absolute upper boundary of funds that the organizers or managers are willing to accept.

The hurdle rate is the minimum rate of return a project or investment must achieve before the manager or investor approves a predetermined condition.

A metric used to evaluate the potential profitability of an investment or a series of cash flows. The IRR represents the annualized rate of growth at which an investment breaks even or yields a net present value of zero.

An investment memorandum is a document that is given to investors in a private placement deal. It sets out the placements objectives, risks, financials, and deal terms.

The time allocated for deploying committed capital into specific assets or projects

Leverage refers to the use of debt (borrowed funds) to amplify returns from an investment or project. Investors use leverage to multiply their buying power in the market.

A limited partner is an investor who has no control over the day-to-day management of the business.

Liquidity refers to the ease with which an asset, or security, can be converted into cash without affecting its market price.

Management fees are regular charges paid by investors to managers of investment funds for the service of managing investment funds or accounts.

MOIC is a measure used to quantify the returns generated from an investment relative to the amount of capital initially invested. It can be calculated using the equation: MOIC = Total Value / Invested Capital.

The payback period is the length of time it takes to recover the cost of an investment or the length of time an investor needs to reach a breakeven point.

Payment frequency refers to the regular intervals at which payments are made for financial obligations, investments, loans, or other contractual arrangements. It specifies how often a payment, such as interest, principal, dividends, or rent, is due and disbursed to the recipient.

Preferred return is the minimum return limited partners must earn before the general partner can collect carried interest.

RVPI measures the ratio of the remaining or unrealized value of a private equity fund's portfolio (the residual value) to the amount of capital that the limited partners (investors) have contributed to the fund (the paid-in capital).

Return on Equity is a financial metric used to evaluate the efficiency of generating profits or returns relative to the equity invested in an entity. It assesses the effectiveness of utilizing the ownership stake or capital contributed by investors to generate income or returns.

Refers to financial activities, products, or services that adhere to Islamic law (Sharia principles). Sharia-compliant finance operates based on ethical and moral guidelines derived from Islamic teachings, primarily the Quran and Hadith

The Sharpe ratio divides a portfolio's excess returns by a measure of its volatility to assess risk-adjusted performance.

Skin in the game refers to owners, executives, or principals having a significant stake in the shares of the investment they manage. It is important to investors because it shows executives share a stake in the company's success.

An individual or entity that acts as the driving force behind an investment fund or partnership. Sponsors often take the role of the General Partner (GP), leading the fund's activities, including fundraising, deal sourcing, due diligence, and managing the investment portfolio.

Total Value to Paid-In compares the total value of an investment, including both realized and unrealized returns, to the amount of capital that limited partners have contributed to the fund.

Financial metric used in investing to calculate the annualized return generated by an investment relative to its original cost or purchase price. It measures the yield or return based on the initial investment amount.

A CSR report is a periodic report published by companies with the goal of sharing their corporate social responsibility actions and results.

Carbon footprint is the total amount of greenhouse gases, including carbon dioxide and methane, that are emitted by an individual, organization, event, product, or service.

ESG certifications provide an independent, objective assessment of a property's environmental, social and economic sustainability.

An ESG fund is an investment fund that selects companies for inclusion based on ESG criteria, aiming to generate long-term competitive financial returns and positive societal impact.

ESG frameworks represent the 3 main topic areas that companies are expected to report in. The goal of ESG is to capture all the non-financial risks and opportunities inherent to a company's day to day activities.

Fair trade is a trading partnership which seeks to follow sustainable development goals by ensuring that producers in developing countries are provided sustainable and equitable trade relationships.

The global reporting initiative is an international independent organization that helps businesses, governments, and other organizations understand and communicate their impacts on issues such as climate change, human rights, and corruption.

Greenwashing is the process in which companies make false or misleading statements about their environmental credentials, whether unintentionally or as a deliberate marketing strategy.

Net zero is measure of the amount of energy used in emissions. It means that the emissions of a project or company are balanced by equivalent removals of carbon from the atmosphere.

Renewable energy is energy from sources that are naturally replenishing but flow-limited, such as sunlight, wind, rain, tides, waves, and geothermal heat.

Socially responsible investing is an investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by proponents.

Sustainable investing is the practice of investing in companies that produce sustainable products and services, and/or have sustainable practices, considering the long-term health of the economy and society.

Zero waste is a policy that focuses on preventing the generation of waste by redesigning products, rethinking how products are used, and reusing products with the goal that no waste is sent to landfills.

An alternative investment fund is a private fund which is not regulated under conventional financial regulatory frameworks, mainly investing in assets other than traditional stocks and bonds, like real estate, hedge funds, private equity, and commodities.

The financial regulatory authority in Luxembourg responsible for supervising and regulating the country's financial sector, including banks, investment firms, and other financial entities.

EURIBOR is the average interest rate at which a large panel of European banks borrow funds from one another. It's calculated daily and serves as a reference rate for euro-denominated loans and financial products in the interbank market within the Eurozone.

The European Central Bank is the central bank of the 19 EU countries that have so far adopted the Euro.

An independent EU authority that regulates securities markets and oversees the financial industry to ensure investor protection, stable financial markets, and integrity in the EU's financial system.

The group of countries within the EU that have adopted the euro as their official currency. These countries use the euro for their financial transactions, trade, and monetary policy.

EU legislation that governs the operation of financial markets, aiming to improve transparency, investor protection, and efficiency in trading various financial instruments within the EU.

An investment fund structure in Luxembourg that can operate similarly to other alternative investment funds but doesn't require regulatory approval from the CSSF (Commission de Surveillance du Secteur Financier) before launching.

A specialized investment vehicle in Luxembourg dedicated to risk capital. SICARs are designed for investments in riskier assets, such as private equity and venture capital.

Switzerland's independent regulatory agency overseeing banks, insurance companies, and financial markets. It ensures compliance with Swiss financial laws, promotes stability, and safeguards consumer interests by supervising and regulating financial institutions and activities.

Regulated investment funds that can be marketed to retail investors across the European Union, complying with specific EU directives and regulations.

The cost of acquiring a property, including purchase price and all other allied costs.

Administrative expenses are operational costs such as custody fees, accounting expenses, legal fees, and other administrative charges.

Carried interest is a share of the profits earned by the private equity firm on successful investments. It represents a share of the profits earned by the fund or partnership that is allocated to the fund managers or general partners, typically after a certain return threshold is achieved.

Catch-up is a provision in the fund's fee structure that allows the fund manager to receive a portion of profit distributions after the investors have achieved a certain rate of return.

A commitment fee refers to a charge or fee that limited partners in a private equity fund may pay to the general partner based on the committed but uncalled capital, also known as the commitment amount.

In private equity, subsequent investors might join the fund at varying periods, with differing terms or prices compared to the initial investors. An equalization payment is used to ensure fairness by reconciling these discrepancies among investors, especially concerning differences in costs or performance-related terms. This payment aims to equalize the economic position or treatment of all investors within the fund.

An exit charge is a fee which may be charged when an investor sells shares or units in a fund.

The hurdle rate is the minimum rate of return a project or investment must achieve before the manager or investor approves a predetermined condition.

Management fees are regular charges paid by investors to managers of investment funds for the service of managing investment funds or accounts.

A provision within the fund's structure that allows the General Partner (GP) to offset a portion of the management fee against other fees or expenses accrued by the fund.

Total expenses associated with managing and operating an investment fund. These charges encompass various costs incurred by the fund over a given period, usually calculated annually, and are expressed as a percentage of the fund's average net assets.

This fee represents the share of profits that the GP receives from successful investments. It's usually calculated as a percentage of the fund's profits after a certain hurdle rate (preferred return) is achieved and is meant to align the interests of the GP with those of the Limited Partners (LPs). Also referred to as Carried Interest.

The distribution of profits realized from successful investments among the stakeholders, typically the General Partners (GPs) and Limited Partners (LPs).

A balance sheet is a financial statement that reports a company's assets, liabilities, and shareholder equity at a specific point in time, providing a snapshot of a company's finances.

A blue chip stock refers to the shares of an established, profitable, and well-recognized corporation, with large market capitalization, a listing on a major stock exchange, and a history of reliable growth and dividend payments.

A cash flow statement is a financial report that provides a detailed breakdown of the cash generated and used by a company during a specific period, typically quarterly or annually. It presents information about how cash has moved in and out of the business, focusing on three main categories: operating activities, investing activities, and financing activities.

Commodities are basic goods used as inputs in the production of other goods or services.

An emerging market economy is an economy that's transitioning into a developed economy. Emerging market economies typically feature a unified currency, stock market, and banking system; they're in the process of industrializing.

Fiscal policy is the use of government spending and taxation to influence the economy, promoting strong growth to reduce poverty and recessions.

Government agencies are organizations that operate at various levels of government (federal, state, local) and have specific responsibilities set forth by law or statute. They have the power to regulate financial markets and oversee economic policies.

An income statement, also known as a profit and loss statement, is a financial report that provides a summary of a company's revenues, expenses, and profits (or losses) over a specific period, usually quarterly or annually. It showcases the company's financial performance by detailing its sources of revenue, various expenses incurred to generate that revenue, and the resulting net income or net loss.

Monetary policy is a form of economic legislation used by the government or central bank to control the supply of money, availability of money, and rate of interest to stabilize the economy.

Quantitative easing is a monetary policy tool used by central banks to stimulate the economy when standard monetary policy has become ineffective. They do this by buying a predetermined amount of government bonds or other financial assets in order to inject money directly into the economy, hoping to encourage increased lending.

A 401(K) plan is a qualified retirement plan where employees reduce their salary by paying a levelled pre-tax contributions to a trust.

Accumulation shares refer to a type of mutual fund share where any income generated by the fund is automatically reinvested in the fund. This leads to an increase in the value of each share, as the earnings are used to purchase more assets within the fund rather than being paid out to investors as cash distributions.

Advisors are professionals who provides expert advice in a particular area, often financial advice for a fee.

Advisory boards are a committee of limited partners who provide non-binding strategic advice to the management of a corporation, organization, or foundation.

Agents are an individual or entity authorized to act on behalf of another in dealings with a third party.

An alignment of interest is the alignment of the contrasting interests of the sponsor (fund manager) and the investors of a fund through the fund agreement as a compromise which brings these interests as close as possible.

Alternative investments are investments made outside of the three traditional stocks, bonds and cash.

A bear market is a market condition where securities prices fall and widespread pessimism causes the negative sentiment to be self-sustaining.

A benchmark is a standard against which the performance of a security, mutual fund, or investment manager can be measured.

Bitcoin is a digital currency which offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies.

A blind pool is an investment vehicle in which investors contribute funds without knowing the specific assets or investments the pool will acquire or engage in

Blockchain is a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.

Bull markets are a financial market of a group of securities in which prices are rising or are expected to rise.

Capital call is a legal right of an investment firm or an insurance firm to demand a portion of the money promised to it by an investor.

A commitment is the amount an investor obliges to pay to the fund in the subscription agreement.

A commitment period is the period of time during which the fund makes new investments and draws down capital from investors for investment purposes.

A financial ratio used to evaluate the income generated by an investment, primarily bonds or fixed-income securities. It is calculated by dividing the annual interest or dividend income earned from the investment by its current market price.

Defensive assets are investments that are expected to hold their value, and possibly even profit, during market downturns.

Due diligence is a process involving an extensive economic, legal, fiscal and financial check. It occurs to analyse and mitigate risk from a business or investment decision.

A financial advisor is someone who has strong expertise and knowledge of finance and the general economic market. Financial advisors generally create financial plans for their clients to aid them in achieving their financial objectives, and consult regularly with clients to evaluate and adjust their financial plans.

A fund life cycle is the total stages a fund goes through from its formation, growth, maturity and decline.

The process of raising capital or funds from various sources, such as investors, institutions, or individuals, to finance specific projects, ventures, or investment vehicles.

The hold period is the duration of time an investment is held before it is sold or liquidated.

Illiquid investments are assets that cannot easily and quickly be sold or exchanged for cash without a substantial loss in value.

The IA Sector is the process of classing funds with similar characteristics together and represents the UK investment management industry.

The total value of a company's outstanding shares in the market, calculated by multiplying the current share price by the total number of outstanding shares.

Market value is the price an asset would fetch in the marketplace, or the value that the investment community gives to a particular equity or business.

A periodic review refers to a scheduled assessment or evaluation conducted at regular intervals to analyse the performance and status of investments

Private markets are part of the capital markets that involve investments into securities that are not publicly traded on a stock exchange.

Public markets are part of the capital markets that involves the issuance of stocks and bonds to the public, typically through a stock exchange.

Reinvestment refers to the practice of taking the income or dividends earned from an investment and using those earnings to purchase additional shares or units of that same investment, rather than receiving the income in cash. This strategy aims to compound the investment's returns over time by leveraging the power of reinvested earnings to potentially generate greater returns in the future.

Risk tolerance is the degree of variability in investment returns that an individual or organization is willing to withstand in their investment portfolio. It helps determine the level of risk that is possible to take during investment goals.

Security is a financial instrument that represents some type of financial value.

Shares are units of ownership of a company or investment.

Sub-asset classes are a more specific categorization of assets within a broader asset class, defined by more distinct characteristics or strategies.

A technology incubator programme is a platform that gives new and innovative technological ideas the potential to enter into the market through the development and funding of companies.

An accredited investor is an individual or firm who meets the minimum financial threshold set by regulators in the country to be allowed to deal in securities.

Active income refers to the income received from performing a service, including salaries, commissions, and income from businesses in which there is material participation.

Customer/ client due diligence is the process where financial institutions and other regulated companies must verify the identity of their clients to prevent business relationships with those involved in money laundering or other financial crimes.

Elective professional clients are clients who have the choice to be categorised as an elective client in accordance with COBS 3.5 professional clients specification.

Enhanced due diligence is the set of additional measures that financial institutions have to implement to check and monitor high-risk customers and unusual transactions for potential money laundering activities.

High net worth Individual is a classification used by describe someone with significant liquid assets who has the capacity to build and maintain an investment portfolio.

High risk jurisdiction refers to countries or regions with higher risk associated with money laundering or terrorist financing. Financial transactions in these areas require additional scrutiny.

Identification document refers to an official document which may be used to verify aspects of a person's personal identity.

Institutional investors are organizations that invests on behalf of its members who might include large corporations, banks, endowments, pension funds, insurance companies, and mutual funds.

Proof of address is a basic document such as a residence permit or a lease agreement that verifies where an individual lives.

Sophisticated investors are investors who are deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity.

Source of funds are the origins of the funds used for the transactions or activities that occur within the business relationship or occasional transaction.

A source of wealth refers to the activities which have generated the total net worth of an individual.

Wealth managers are individuals or firms that provide advisory services, investment management, and financial planning services to private investors.

An acceleration clause is a provision commonly found in loan agreements or contracts that allows the lender to demand immediate and full repayment of the outstanding loan balance under certain specified circumstances. This clause grants the lender the right to accelerate the repayment schedule if the borrower fails to meet specific conditions or obligations outlined in the loan agreement.

An alternative investment fund is a private fund which is not regulated under conventional financial regulatory frameworks, mainly investing in assets other than traditional stocks and bonds, like real estate, hedge funds, private equity, and commodities.

A bad boy guarantee is a specific type of personal guarantee often used in certain lending or financial agreements, particularly in commercial real estate financing. It's a provision that holds an individual (usually a borrower or guarantor) personally liable for certain actions or behaviour that could result in triggering the guarantee.

Bankruptcy is a legal proceeding involving a person or business that is unable to repay their outstanding debts.

A closed-ended investment company is a type of investment vehicle that issues a fixed number of shares that are then traded on a stock exchange or in the over-the-counter market. Unlike open-ended funds, which issue and redeem shares based on investor demand, closed-ended investment companies have a fixed capital structure and do not issue new shares or redeem existing ones once the initial offering period has ended.

The financial regulatory authority in Luxembourg responsible for supervising and regulating the country's financial sector, including banks, investment firms, and other financial entities.

A deed where the legal title to the property is transferred to a trustee which holds it as security for a loan between a borrower and a lender.

Encumbrance is any claim on a property, such as a mortgage, that may affect the transferability of the property or reduce its value.

Escrow is an agreement between two or more parties for an asset to be held by a third party (escrow agent) on behalf of two other parties that are in the process of completing a transaction.

A feeder fund is an investment vehicle, often a limited partnership, that pools capital commitments of investors and invests such capital into an umbrella fund, or master fund, which directs and oversees all investments held in the portfolio.

Foreclosure is a legal process that allows lenders to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.

An investment vehicle where pooled money from multiple investors is professionally managed and invested in various securities or assets.

A fund of funds is a pooled investment fund that invests in other types of funds.

An investment memorandum is a document that is given to investors in a private placement deal. It sets out the placements objectives, risks, financials, and deal terms.

A structured entity or financial instrument that allows investors to channel their funds into various assets or markets.

A lien refers to a legal claim or right granted to a creditor against a borrower's property or assets as security for a debt or obligation. It provides the creditor with the right to take possession of the property or assets in the event of default or non-payment by the borrower.

A limited partner is an investor who has no control over the day-to-day management of the business.

The limited partnership agreement sets out the legally binding relations between the limited partner and the general partner.

A master fund is the central vehicle where the pooled investment occurs.

A master-feeder structure is an investment structure used by funds to pool capital raised by separate feeder funds into a single master fund to simplify management.

A mutual fund is an investment program funded by shareholders that trades in diversified holdings and is managed by professional investment managers.

Non-recourse is a type of loan secured by collateral, where the borrower is not personally liable if they default on the loan.

Open-ended investment company is a type of mutual fund that does not have restrictions on the amount of shares the fund will issue.

Pari Passu is a Latin phrase meaning “equal footing” that describes situations where two or more assets, securities, creditors, or obligations are equally managed without preference.

A participation agreement is a legal contract or document that outlines the terms and conditions governing the participation of multiple parties in a specific transaction, project, or venture. It establishes the rights, responsibilities, and obligations of each participating entity or individual involved in the arrangement.

Pooled investment vehicles are investment funds where multiple investors contribute assets and share in the profits and losses.

Post-settlement funding is a cash advance provided to plaintiffs awaiting the payout of their settlement in a lawsuit.

A prepayment penalty is a fee that is charged to a borrower who pays off a loan before it is due.

A Private Placement Memorandum (PPM) is a legal document used in private offerings of securities to provide potential investors with detailed information about an investment opportunity. It is typically utilized in fundraising efforts by companies seeking to raise capital.

Regulation A+ is a provision in the JOBS Act that allows smaller companies to raise money publicly under less stringent regulatory requirements.

Regulation D is an SEC regulation governing private placement exemptions, allowing companies to raise capital through the sale of equity or debt securities without having to register the securities with the SEC.

An investment fund structure in Luxembourg that can operate similarly to other alternative investment funds but doesn't require regulatory approval from the CSSF (Commission de Surveillance du Secteur Financier) before launching.

A settlement is the resolution of a lawsuit before a trial concludes.

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code in a distributed, decentralised blockchain network.

A specialized investment vehicle in Luxembourg dedicated to risk capital. SICARs are designed for investments in riskier assets, such as private equity and venture capital.

A special purpose vehicle is a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.

Statutory foreclosure is a type of foreclosure that occurs when a trust deed or mortgage includes a power of sale clause that allows a trustee to initiate a non-judicial sale of the property.

A subscription agreement is a promise by the company to sell a certain number of shares to an investor at a certain price, and a promise by the investor to pay that price.

Switzerland's independent regulatory agency overseeing banks, insurance companies, and financial markets. It ensures compliance with Swiss financial laws, promotes stability, and safeguards consumer interests by supervising and regulating financial institutions and activities.

Regulated investment funds that can be marketed to retail investors across the European Union, complying with specific EU directives and regulations.

Units refer to a share or interest in an investment fund or trust.

A warranty deed is a document that guarantees that the title to a piece of real estate is clear and that the seller has the right to sell it to the buyer.

A buyout refers to the acquisition or purchase of a controlling interest in a company, often through the use of significant amounts of borrowed money (debt) or equity financing. Buyouts can take various forms and are commonly categorized into different types: management buyout (MBO), leveraged buyout (LBO), private equity buyout, public-to-private buyout.

Growth equity investments are made in established companies that require capital for expansion, market penetration, or restructuring. These companies are typically beyond the early stages but still have potential for substantial growth.

The J-curve describes the development in stages of a private equity fund’s returns, generating negative results in the initial years due to acquisition costs and initial losses, followed by returns exceeding costs in later years through the disposition of individual investments.

An LBO involves using a significant amount of borrowed money, often through loans or bonds secured by the assets of the acquired company, to finance the acquisition. The purchased company's assets are usually used as collateral for the loan.

Private equity is a form of capital investment made into companies that are not publicly traded on a stock exchange. Investments in private equity are typically made by private equity firms, venture capital firms, or angel investors, with the goal of funding new technology, making acquisitions, expanding working capital, or strengthening a company's balance sheet.

A private equity fund is a pooled investment vehicle where funds are collected from institutional and individual investors for the purpose of making investments in private companies. Managed by private equity firms, these funds typically have a longer investment horizon and focus on acquiring significant or controlling stakes in companies with the aim of restructuring, growing, or improving them for a future exit.

Secondary private equity involves buying and selling existing stakes in private companies or private equity funds. Investors in the secondary market can acquire positions in established private equity portfolios.

Special situations investing involves taking advantage of unique investment opportunities such as mergers, acquisitions, spin-offs, restructurings, or other specific events that can create value for investors.

The absorption rate is the rate at which homes sell in an area over a time period. It is calculated by the equation: absorption rate = average number of sales per month/ total number of available properties.

The cost of acquiring a property, including purchase price and all other allied costs.

Mortgages with interest rates indexed to a certain benchmark. Typically, the mortgage begins with a fixed rate for a period and is adjusted periodically thereafter.

An anchor tenant is the major occupier of the subject property. They often receive rent discounts and incentives as reward for leasing a significant space of a shopping mall is a major retail or department store that is one of the larger stores in the mall.

Ancillary tenants are smaller tenants of a subject property that occupy less space and pay a higher rent rate.

A business plan is a document describing a company's business activities and how it plans to achieve its goals.

Cap rate is the rate of return for a property based on its annual income. It is calculated by dividing the net operating income of the property by the total value of the property.

Commercial real estate refers to properties used specifically for business or income-generating purposes. They hold the potential to generate profit for the property owner through capital gain and/or rental income.

Real Estate tool that helps to determine the fair market value of a landed property by evaluating similar properties that are recently sold in the same area.

An investment strategy focusing on low-risk, income-producing properties in established markets. Core assets are stable, fully leased to quality tenants, and typically provide predictable returns with lower potential for significant appreciation.

A real estate investment approach similar to core strategy but with opportunities for slight enhancements or improvements. Core plus assets may involve moderately higher risk compared to core, aiming for slightly higher returns while still prioritizing stable income and lower volatility.

A deed where the legal title to the property is transferred to a trustee which holds it as security for a loan between a borrower and a lender.

A double net lease is a rental agreement, usually in commercial tenancies, whereby the tenant agrees to cover the costs of two of the three primary property expenses: taxes, utilities, or insurance premiums.

ESG certifications provide an independent, objective assessment of a property's environmental, social and economic sustainability.

Encumbrance is any claim on a property, such as a mortgage, that may affect the transferability of the property or reduce its value.

Escrow is an agreement between two or more parties for an asset to be held by a third party (escrow agent) on behalf of two other parties that are in the process of completing a transaction.

Floor area ratio is the ratio of a building’s total floor area to the size of the lot on which it is built. The ratio is determined by dividing the total or gross floor area of the building by the gross area of the lot.

Freehold property refers to the indefinite ownership of both the property and land that the property it is on.

Ijara is an Islamic financial contract based on a leasing or rental agreement. In an Ijara arrangement, a financial institution or lessor purchases an asset (such as property, equipment, or vehicles) and leases it to a lessee (customer) for a specified period. The lessee pays rent or lease payments to use the asset, and at the end of the lease term, the lessee might have the option to purchase the asset at an agreed-upon price. Ijara contracts comply with Sharia principles, avoiding the charging of interest (riba) and adhering to asset-backed financing where the lessor retains ownership of the asset during the leasing period.

Leasehold is a method of acquiring property for a fixed term without buying the land it is on.

Mortgage-backed securities (MBS) are variations of asset-backed securities that are formed by pooling together mortgages exclusively. The investor who buys a mortgage-backed security is essentially lending money to home buyers.

Multifamily real estate is a housing classification where multiple separate housing units, such as apartments or condos, for residential inhabitants are contained within one building or several buildings within one complex.

Net effective rent (NER) is a calculation of average monthly rental cost that incorporates landlord rental concessions, typically a free month of rent.

Opportunistic real estate investments are usually associated with little to no in-place rent roll, require significant rehabilitation or even entail ground-up development.

Property bonds are asset backed securities used by developers to raise money from investors in the form of a loan.

Property management is the management and overseeing of a real estate asset by a property management firm or property manager.

Property preservation is the process of maintaining the inside and outside of a property that may be occupied or vacant. The objective of property preservation is to keep a vacant property in tip-top condition.

A Purchase Lease Option is a legal mechanism that allows someone to control a property and produce income from it, with the right to purchase the property at a later date, but not the obligation to do so.

Real estate crowdfunding refers to a method of raising funds from a large number of individuals or investors to finance real estate projects or properties. It utilizes online platforms or websites that connect investors with real estate developers or property owners seeking funding for their projects.

Real estate depreciation is an accounting method used to allocate the cost of a property over its useful life for tax and accounting purposes. It recognizes that buildings and certain improvements have a limited lifespan and their value declines over time due to wear and tear, deterioration, or obsolescence.

A Real Estate Investment Trust is a company that owns, operates, or finances income-generating real estate. These trusts pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments without having to buy, manage, or finance any properties themselves.

They are prices for recently sold assets in the immediate surroundings of a target property. Sales comps included in the investment thesis during underwriting, serving as evidence of support for projected sale (or exit) price.

Tenancy in Common is a legal arrangement in which two or more parties have ownership interests in a real estate property or parcel of land.

Triple net leases are found in commercial real estate, where a tenant is required to pay a portion, or all, of the taxes, fees, and maintenance costs for a property.

An investment approach focused on increasing the worth or attractiveness of a property to enhance its value and potential returns. This strategy involves making targeted improvements, renovations, or operational changes, aiming to boost its desirability, income generation, or overall market value.

A warranty deed is a document that guarantees that the title to a piece of real estate is clear and that the seller has the right to sell it to the buyer.

Zoning is an urban planning tool used by the government to allocate segments of the land within towns and cities, with each segment assigned for specific uses, rules and regulations.

Alpha refers to excess returns earned on an investment above the benchmark return when adjusted for risk.

Cap rate is the rate of return for a property based on its annual income. It is calculated by dividing the net operating income of the property by the total value of the property.

Capital growth is an increase in the value of an asset or investment over time. It is measured by the difference between the current market value of an investment and its purchase price.

Cash flow is the movement of money in and out of a company.

A cash yield is a financial measure in real estate investment that evaluates the annual pre-tax cash flow generated by an investment property relative to the initial amount of cash invested. It represents the ratio of the property's annual pre-tax cash flow to the total cash invested, typically expressed as a percentage. The term is often used interchangeably with "Cash on Cash".

Cash on cash is a financial metric used in real estate investing to evaluate the annual pre-tax cash flow generated by an investment property relative to the initial amount of cash invested. It is calculated by dividing the property's annual pre-tax cash flow by the total cash invested. The term is sometimes used interchangeably with "Cash Yield".

The cost of capital represents the minimum rate of return a company must achieve to generate value.

A financial ratio used to evaluate the income generated by an investment, primarily bonds or fixed-income securities. It is calculated by dividing the annual interest or dividend income earned from the investment by its current market price.

Disbursement is the delivery of money from a fund, made as a payment in cash during a specific time period. It shows how the business is spending cash over time.

The distribution to paid-in capital metric measures the realized profits that have been distributed by the fund back to their limited partners. It can be calculated through the equation: Distribution to Paid-In Capital (DPI) = Cumulative Distributions / Paid-In Capital

A distribution refers to the disbursement of profits or income generated by an investment among its investors. Distributions can include dividends, interest, capital gains, or other income generated by the investment entity, which are allocated and paid out periodically to its shareholders.

A distribution waterfall is the order in which gains from a pooled investment are allocated between investors in the pool. The distribution waterfall typically consists of tiers or levels, each specifying how profits are distributed among different classes of investors or stakeholders. These tiers often include preferential returns, hurdle rates, or preferred returns that determine the distribution priority.

Earnings per share is a company's net profit divided by the number of common shares it has outstanding. It is an indication of how much money a company makes for each share of its stock.

In private equity, subsequent investors might join the fund at varying periods, with differing terms or prices compared to the initial investors. An equalization payment is used to ensure fairness by reconciling these discrepancies among investors, especially concerning differences in costs or performance-related terms. This payment aims to equalize the economic position or treatment of all investors within the fund.

Equity multiple is defined as the total cash distributions received from an investment, divided by the total equity invested.

Free cash flow is a financial metric used to measure a company's financial performance and its ability to generate cash from its operations after accounting for capital expenditures (Capex) necessary to maintain or expand its asset base.

Income distribution is the allocation of earnings and profits to investors in a pooled private fund. This is decided by the fund's structure and the agreement between investors and the fund managers.

A metric used to evaluate the potential profitability of an investment or a series of cash flows. The IRR represents the annualized rate of growth at which an investment breaks even or yields a net present value of zero.

The J-curve describes the development in stages of a private equity fund’s returns, generating negative results in the initial years due to acquisition costs and initial losses, followed by returns exceeding costs in later years through the disposition of individual investments.

MOIC is a measure used to quantify the returns generated from an investment relative to the amount of capital initially invested. It can be calculated using the equation: MOIC = Total Value / Invested Capital.

A term applied to companies, funds, partnerships, trusts or other investment entities that describes the current value of the entity, usually expressed on a per-share basis.

Net operating income measures an income-producing property's profitability before deducting in any costs from financing or taxes. The equation to calculate it is: NOI = Gross operating income - operating expenses.

Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment or project by comparing the present value of its expected cash flows to the initial investment outlay. It helps in determining whether an investment is worthwhile by considering the time value of money.

The PIC multiple is calculated by dividing paid-in capital by committed capital. This ratio shows a potential investor the percentage of a fund’s committed capital that has actually been drawn down.

The payback period is the length of time it takes to recover the cost of an investment or the length of time an investor needs to reach a breakeven point.

Preferred return is the minimum return limited partners must earn before the general partner can collect carried interest.

Pro rata is proportionally, found in areas like dividends, which are awarded to investors based on their proportion of investment.

A measure of how an investment is performing in its peer group.

Real return refers to the profit or loss on an investment after adjusting for inflation. The real return is calculated by taking the nominal return (the reported percentage gain or loss) and subtracting the rate of inflation during the period of the investment.

Redemption is the process repayment of an investor exchanging a bond or fund for its underlying monetary value.

RVPI measures the ratio of the remaining or unrealized value of a private equity fund's portfolio (the residual value) to the amount of capital that the limited partners (investors) have contributed to the fund (the paid-in capital).

Return on Equity is a financial metric used to evaluate the efficiency of generating profits or returns relative to the equity invested in an entity. It assesses the effectiveness of utilizing the ownership stake or capital contributed by investors to generate income or returns.

Risk-adjusted return measures an investment's return after considering the degree of risk taken to achieve it. Some common risk measures used in investing include alpha, beta, and the Sharpe ratio.

The Sharpe ratio divides a portfolio's excess returns by a measure of its volatility to assess risk-adjusted performance.

Total Value to Paid-In compares the total value of an investment, including both realized and unrealized returns, to the amount of capital that limited partners have contributed to the fund.

Valuation is the analytical process of determining the current, or projected, worth of an asset or a company.

Windfall profits refer to unexpectedly large profits received by a company or individual, typically resulting from unexpected circumstances.

Financial metric used in investing to calculate the annualized return generated by an investment relative to its original cost or purchase price. It measures the yield or return based on the initial investment amount.

Beta is a measure of the volatility, or systematic risk, of a security or portfolio compared to the market as a whole.

The Consumer Price Index measures the overall change in consumer prices based on a representative basket of goods and services over time.

Correlation is a statistic that measures the degree to which two variables move in relation to each other.

Counterparty risk is the likelihood or probability that one of those involved in a transaction might default on its contractual obligation.

Credit risk is the probability of a financial loss resulting from a borrower's failure to repay a loan.

Currency hedging is a strategy used to eliminate or minimize the risk of currency fluctuations affecting the value of investment returns.

Currency risk refers to the potential for financial loss due to fluctuations in the exchange rate between two currencies. This affects the value of foreign investments, the cost of imports and exports, and the overall financial performance of a company.

Default is the outcome that occurs when a borrower fails to meet the legal obligations of a debt contract, specifically regarding repayment.

Diversification is a commonly used investment strategy, understood as the mixture of a variety of investments within an investment portfolio.

Hedging is a risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities.

Inflation risk is the potential decrease in the value of investments or income due to rising inflation of an investment, asset or income stream.

Interest rate risk is the potential that a change in overall interest rates will reduce the value of a bond or other fixed-rate investment. Interest rate risk is measured by a fixed income security's duration, with longer-term bonds having a greater price sensitivity to rate changes.

Key person risk is the risk to business operations if one of these critical employees is out for an extended period of time for reasons including, but not limited to, health, sabbatical or parental leave.

A liquidity premium is an incremental return that compensates an investor for owning an asset that is not highly liquid.

Liquidity risk refers to the potential difficulty an entity may face in meeting its short-term financial obligations due to an inability to convert assets into cash without incurring a substantial loss.

Macroeconomics is the branch of economics that deals with the structure, performance, behaviour, and decision-making of the whole economy. This mainly focuses on economic growth and shorter-term business cycle.

Market risk is the risk of financial losses due to the performance of the market.

Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, people or systems in a company when it attempts to do its day-to-day business.

Political risk is the risk that investors, firms, organizations, and countries, will lose money or make less money than expected, due to political decisions, conditions, or events occurring in the country or emerging market in which they have invested.

A recession is the downturn in economic activity, beginning after the economy reaches a peak of activity and ends when the economy reaches its trough. It usually leads to reduction in the aggregate output of goods and services, leading to a decline in consumer demand, an increase in unemployment rates, and often a decrease in inflation.

Regulatory risk is the risk that a change in laws and regulations will materially impact a security, business, sector, or market.

Risk assessment is the process of identifying, analysing, and evaluating risks involved in a particular situation or for a specific entity. This process involves determining the likelihood and potential impact of various risks, which can include financial, operational, strategic, or environmental factors, among others.

Risk diversification is a risk management strategy that involves spreading investments across various financial instruments, industries, or other categories to reduce exposure to any single asset or risk.

Risk exposure refers to the extent to which an entity, such as an individual, company, or organization, is vulnerable to potential losses or adverse effects from external or internal uncertainties and risks. It is determined by considering both the likelihood of an adverse event occurring and the potential impact or severity of the event.

Risk management is the process of identifying, assessing, and mitigating risks to minimize potential losses or negative impacts on investments or business operations.

Risk mitigation refers to the process of planning and implementing strategies to reduce the negative impact of identified risks on a project, business, or operation.

Risk tolerance is the degree of variability in investment returns that an individual or organization is willing to withstand in their investment portfolio. It helps determine the level of risk that is possible to take during investment goals.

Risk-adjusted return measures an investment's return after considering the degree of risk taken to achieve it. Some common risk measures used in investing include alpha, beta, and the Sharpe ratio.

Standard deviation measures the dispersion of a dataset relative to its mean and is a measure of a relative riskiness of an asset. It is calculated as the square root of the variance.

Systematic risk is the risk inherent to the entire market, affecting the overall market based on changes in the economic, geopolitical and financial factors of a state.

Tail risk refers to the risk of extreme or unexpected events occurring in the financial markets that deviate significantly from the norm or the anticipated range of outcomes. These events are often characterized by their rarity and extreme impact, lying in the "tails" of a probability distribution in statistical terms.

Unsystematic risk is a risk that is unique to a specific company or industry.

Volatility is how much an asset's price fluctuates around the mean price of the asset.

Shariah compliance certificate issued by Islamic scholars or Shariah advisors certifying that a financial product, service, or transaction complies with Islamic principles and is therefore permissible (halal) according to Islamic law (Shariah).

Islamic jurisprudence or Islamic law. It involves the understanding, interpretation, and application of rules and principles derived from Islamic sources, such as the Quran, Hadith, consensus (Ijma), and analogical reasoning (Qiyas).

Hawala is an informal and traditional system of money transfer originating in Islamic finance. It involves the transfer of funds or assets between individuals or entities using a network of brokers or agents without the physical movement of money.

Ijara is an Islamic financial contract based on a leasing or rental agreement. In an Ijara arrangement, a financial institution or lessor purchases an asset (such as property, equipment, or vehicles) and leases it to a lessee (customer) for a specified period. The lessee pays rent or lease payments to use the asset, and at the end of the lease term, the lessee might have the option to purchase the asset at an agreed-upon price. Ijara contracts comply with Sharia principles, avoiding the charging of interest (riba) and adhering to asset-backed financing where the lessor retains ownership of the asset during the leasing period.

An Islamic financial contract based on a profit-sharing partnership. It involves two parties: the Rab al-Maal (capital provider) who contributes funds, and the Mudarib (entrepreneur) who manages the invested capital and conducts business operations. Profits generated from the venture are shared according to a pre-agreed ratio, while the capital provider bears the losses, except in cases of negligence or misconduct by the entrepreneur.

Musharaka is an investment partnership in which profit sharing terms are agreed in advance, and losses are pegged to the amount invested.

Riba, in Islamic finance, refers to the prohibition of usury or interest. It is considered a fundamental principle in Sharia (Islamic law) that prohibits the charging or paying of interest on loans or transactions.

Sharia Boards are a committee of Islamic scholars available to an Islamic financial institution for guidance and supervision in the development of Shariah compliant products.

Sharia governance refers to the systems, structures, and processes put in place by financial institutions or organizations offering Sharia-compliant products and services to ensure compliance with Islamic law.

Refers to financial activities, products, or services that adhere to Islamic law (Sharia principles). Sharia-compliant finance operates based on ethical and moral guidelines derived from Islamic teachings, primarily the Quran and Hadith

Sukuk (plural of "sakk") are Islamic financial instruments commonly known as Islamic bonds. They represent a form of investment that complies with Sharia principles.

Takaful is Islamic insurance which is structured as a charitable collective pool of funds based on mutual assistance.

Zakat is an Islamic finance term referring to the obligation that an individual has to donate a certain proportion of wealth each year to charitable causes.

Acquisition is the act of obtaining control of another corporation, known as a target, either by purchasing its shares, or by purchasing its assets.

Active investment involves frequent buying and selling of assets to outperform the market, relying on ongoing market analysis and strategy adjustments.

Allocation is the distribution of investments across various types of assets or asset classes to balance risk and reward based on an individual's goals, risk tolerance, and investment horizon.

Asset-based financing is a strategy where tangible assets owned by a company, such as real estate, inventory, or equipment, are used as collateral to secure financing or obtain a loan.

Bottom-up investing is an investment strategy that focuses company-specific fundamentals when analysing whether to buy or sell shares.

Bridge financing is a type of short-term financing intended to cover a company's short-term costs until the moment when regular long-term financing is secured.

A buyout refers to the acquisition or purchase of a controlling interest in a company, often through the use of significant amounts of borrowed money (debt) or equity financing. Buyouts can take various forms and are commonly categorized into different types: management buyout (MBO), leveraged buyout (LBO), private equity buyout, public-to-private buyout.

Capital preservation refers to an investment strategy that protects capital and avoids losses in investment portfolio.

Co-investment is an investment strategy where investors join together, often alongside a private equity firm, to invest directly in a specific deal or company.

An investment strategy focusing on low-risk, income-producing properties in established markets. Core assets are stable, fully leased to quality tenants, and typically provide predictable returns with lower potential for significant appreciation.

A real estate investment approach similar to core strategy but with opportunities for slight enhancements or improvements. Core plus assets may involve moderately higher risk compared to core, aiming for slightly higher returns while still prioritizing stable income and lower volatility.

Crowdfunding is the process of financing a business venture, product, idea, or property using funds pooled from a large number of potential investors.

An ESG fund is an investment fund that selects companies for inclusion based on ESG criteria, aiming to generate long-term competitive financial returns and positive societal impact.

Growth equity investments are made in established companies that require capital for expansion, market penetration, or restructuring. These companies are typically beyond the early stages but still have potential for substantial growth.

An investment strategy is a set of rules, behaviours, or procedures designed to guide an investor's selection of an investment portfolio.

An LBO involves using a significant amount of borrowed money, often through loans or bonds secured by the assets of the acquired company, to finance the acquisition. The purchased company's assets are usually used as collateral for the loan.

A management buy-in is a transaction where an external management team buys an ownership stake in a company and replaces the existing management team.

A management buy-out is the acquisition of a company by its own company management with support from investors providing additional capital.

Passive investment is an investment strategy involving limited ongoing buying and selling actions.

Risk diversification is a risk management strategy that involves spreading investments across various financial instruments, industries, or other categories to reduce exposure to any single asset or risk.

Secondary private equity involves buying and selling existing stakes in private companies or private equity funds. Investors in the secondary market can acquire positions in established private equity portfolios.

Socially responsible investing is an investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by proponents.

Special situations investing involves taking advantage of unique investment opportunities such as mergers, acquisitions, spin-offs, restructurings, or other specific events that can create value for investors.

Sustainable investing is the practice of investing in companies that produce sustainable products and services, and/or have sustainable practices, considering the long-term health of the economy and society.

Top-down investing is an investment strategy that finds the best sectors or industries to invest in, based on analysis of the corporate sector as a whole and general economic trends.

An investment approach focused on increasing the worth or attractiveness of a property to enhance its value and potential returns. This strategy involves making targeted improvements, renovations, or operational changes, aiming to boost its desirability, income generation, or overall market value.

Value-based investing is an investment strategy where the investor aligns their portfolio with their ethical, moral, or religious beliefs.

A 1031 exchange is a tax break that occurs when a property owner sells a property held for business or investment purposes in order to buy a new one for the same purpose.

The accelerated cost recovery system is a depreciation method for assets with the goal of providing tax breaks. Accelerated depreciation increases the deductions asset owners are able to claim.

The adjusted tax basis refers to the modified value of an asset or security for tax purposes, considering changes to its initial cost or value when acquired. It involves the original purchase price along with adjustments such as capital improvements, depreciation, or other alterations impacting the asset's value over time. It is crucial in determining taxable gains or losses upon the sale or disposal of the asset, influencing the reported amount on tax returns.

Capital gains taxes are paid on the sale or profits made on a set asset or investment. Capital gains taxes apply to income received on rentals, dividends, or yield from an investment.

Cost basis is the original price that an asset was acquired for. It is necessary for understanding for tax purposes as this value is used to determine the capital gain of the value depending on the current market value.

Depreciation recapture is a tax provision in the United States requiring taxpayers to pay taxes on gains from the sale of assets for which they previously claimed depreciation deductions to reduce taxable income. When such assets are sold at a profit, taxpayers must report and pay taxes on a portion of the gain that represents the previously claimed depreciation. For real estate under Section 1250, the maximum tax rate for depreciation recapture is generally capped at 25%. However, this rate can vary for other depreciable assets.

Federal tax refers to the taxes imposed by the national government in a country, such as the United States. In the U.S., federal taxes are collected by the Internal Revenue Service (IRS) and contribute to funding various federal programs and services.

A net operating loss exists if a company’s deductions exceed taxable income. This can lead to tax benefits and restricting opportunities for investors.

Opportunity zones represent economically distressed communities that are in need of investment and revitalization. These areas have tax benefits for investors who invest in them through a qualified opportunity fund.

A business that does not pay income tax of its own. Its income, losses, credits, and deductions ‘pass-through’ to each business owner's personal tax return, where its profits are taxed according to each owner's individual income tax rate.

Stamp duty is a type of tax imposed by governments on various transactions, particularly on legal documents and certain types of transactions. It is typically associated with the transfer of assets, such as real estate, stocks, or certain contracts, and is payable by the parties involved in these transactions.

State tax is a direct tax levied by a state on income earned in or from the state.

A step-up in basis is a tax provision that adjusts the value of an asset for tax purposes upon inheritance at its fair market value once the owner has passed away.

Tax efficiency involves organizing financial activities to minimize taxes, aiming to preserve and grow wealth. Strategies include using tax-advantaged accounts, tax-loss harvesting, and managing gains to reduce tax liabilities. The goal is to optimize after-tax returns by reducing taxes on income, gains, or assets.

Tax incentives are financial benefits provided by governments to encourage certain behaviours or investments that are seen as beneficial to the economy. They include reduced tax rates, tax credits, tax deductions, tax exemptions, and/ or deferral of taxes.

Tax shield refers to the reduction in taxable income or tax liability resulting from allowable deductions, credits, or other strategies that lower an entity's taxable income. It helps to reduce the amount of taxes owed by individuals or businesses, providing a financial benefit by shielding a portion of income from taxation.

A tax treaty is a bilateral agreement made by two countries to resolve issues involving double taxation of passive and active income of each of their respective citizens.

Tax-advantaged accounts are investment accounts that offer tax benefits to the account holder by making their assets either exempt from taxation or offer the advantage of tax deferrals on earnings.

Tax-loss harvesting is a strategy used in investing to improve tax efficiency. It involves selling securities at a loss to offset capital gains taxes.

A withholding tax is an amount deducted from various types of income payments by the payer before distributing funds to the recipient. This tax is withheld at the source and remitted to the government as an advance payment of the recipient's final tax liability. It is applied to income sources like salaries, wages, interest, dividends, royalties, and payments to non-residents.

Artificial Intelligence is technology that uses machine learning to think like humans and perform their tasks. It processes mass data, analyses it and establishes patterns which it can use to make conclusions.

Big data mining is the extraction of information to input into machine learning to detect patterns.

Bitcoin is a digital currency which offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies.

Blockchain is a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.

The blockchain trilemma is the belief that decentralised networks can only provide two/ three benefits of decentralisation, security and scalability at a given time.

Clustering refers to the utility of artificial intelligence to detect anomalies in customer purchasing behaviour.

A digital currency exchange is a marketplace which allows for the purchasing, exchanging and selling of electronic currency as a legal tender.

Investments in emerging technologies target novel and innovative technologies that are nearing commercialization but haven't gained widespread adoption yet, demonstrating substantial growth potential.

Fintech refers to new technology that seeks to improve and automate the delivery and use of financial services in order to help companies and consumers better manage financial operations.

Machine learning is the process in which technology, through a machine, combs through data to make insights and observations based on any correlations found.

The metaverse is a digital reality that combines aspects of social media, online gaming, augmented reality, virtual reality, and cryptocurrencies to allow users to interact virtually.

Real estate crowdfunding refers to a method of raising funds from a large number of individuals or investors to finance real estate projects or properties. It utilizes online platforms or websites that connect investors with real estate developers or property owners seeking funding for their projects.

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code in a distributed, decentralised blockchain network.

Structured data is information that is well-organised and formatted under a distinct model that is easily searchable in relational databases. Examples include names, dates, addresses, credit card numbers and stock information.

A technology incubator programme is a platform that gives new and innovative technological ideas the potential to enter into the market through the development and funding of companies.

Unstructured data is information that either does not have a pre-defined data model or is not organized in a pre-defined manner. Examples include data from social media, emails, PDFs, images and survey responses.

The alternative investment market is a sub-market of the London Stock Exchange designed to help smaller, less-viable companies access capital from the public market by allowing them to raise capital with lower levels of regulatory requirements than the main market.

The Bank of England base rate is the interest rate that the Bank of England will charge to lend money to a commercial bank.

Elective professional clients are clients who have the choice to be categorised as an elective client in accordance with COBS 3.5 professional clients specification.

The Financial Conduct Authority is a financial regulatory body in the United Kingdom which operates independently of the UK Government and is financed by charging fees to members of the financial services industry.

Gilts is a term used in the United Kingdom to refer to government bonds issued by the British government, specifically by Her Majesty's Treasury. The name "gilt-edged" originates from the historical practice of issuing these bonds with a gold edge, signifying their perceived reliability and security.

The IA Sector is the process of classing funds with similar characteristics together and represents the UK investment management industry.

LIBOR is a benchmark interest rate that reflects the average rate at which major banks based in London can borrow from one another in various currencies. It was historically used as a reference rate for various financial products globally. However, due to issues related to manipulation and the decline in transaction volumes on which it was based, regulators encouraged its replacement. As of recent times, many markets have transitioned away from LIBOR to alternative benchmark rates, such as the Secured Overnight Financing Rate (SOFR) in the United States and the Sterling Overnight Index Average (SONIA) in the UK, among others.

The London Stock Exchange is the primary stock exchange in the UK, comprising 1,300 companies listed on the main market and the Alternative Investment Market.

The main market is the principal market of the London Stock Exchange where larger, more established companies are listed and traded.

SONIA is the effective overnight interest rate paid by banks for unsecured transactions in the British sterling market. It represents the weighted average of interest rates that banks charge each other for overnight loans. SONIA is administered and published by the Bank of England.

A 1031 exchange is a tax break that occurs when a property owner sells a property held for business or investment purposes in order to buy a new one for the same purpose.

A 401(K) plan is a qualified retirement plan where employees reduce their salary by paying a levelled pre-tax contributions to a trust.

A 403(B) plan is a tax-deferred retirement savings program available to employees of public schools and non-profits.

The accelerated cost recovery system is a depreciation method for assets with the goal of providing tax breaks. Accelerated depreciation increases the deductions asset owners are able to claim.

American depositary receipts refer to the stocks of most foreign companies that trade in the U.S. markets. Owning an ADR enables a person to have the right to obtain the foreign stock it represents.

Depreciation recapture is a tax provision in the United States requiring taxpayers to pay taxes on gains from the sale of assets for which they previously claimed depreciation deductions to reduce taxable income. When such assets are sold at a profit, taxpayers must report and pay taxes on a portion of the gain that represents the previously claimed depreciation. For real estate under Section 1250, the maximum tax rate for depreciation recapture is generally capped at 25%. However, this rate can vary for other depreciable assets.

The Dodd-Frank Act targeted financial system sectors that were believed to have caused the 2007-2008 financial crisis, and is a legislation that seeks to make the U.S. financial system safer for consumers and taxpayers.

The federal funds rate is the target interest rate range set by the FOMC and is the rate at which commercial banks borrow and lend their excess reserves to each other overnight.

The Federal Reserve Board are a group of officials who control the U.S. government's central banking system.

The Federal Reserve System is the central bank and monetary authority of the United States. The Fed works to provide the country with a safe, flexible, and stable monetary and financial system.

Federal tax refers to the taxes imposed by the national government in a country, such as the United States. In the U.S., federal taxes are collected by the Internal Revenue Service (IRS) and contribute to funding various federal programs and services.

Generally accepted accounting principles is the common set of accepted accounting standards and procedures that companies and their accountants must follow when they compile their financial statements.

The Jumpstart Our Business Startups Act is a U.S. law enacted in 2012 aimed at encouraging the funding of small businesses by easing various securities regulations. It includes provisions that make it easier for companies to go public and for private companies to raise capital.

Opportunity zones represent economically distressed communities that are in need of investment and revitalization. These areas have tax benefits for investors who invest in them through a qualified opportunity fund.

Regulation A+ is a provision in the JOBS Act that allows smaller companies to raise money publicly under less stringent regulatory requirements.

Regulation D is an SEC regulation governing private placement exemptions, allowing companies to raise capital through the sale of equity or debt securities without having to register the securities with the SEC.

The Sarbanes-Oxley act is an American legislation that creates strict new rules for accountants, auditors, and corporate officers, and imposed more stringent recordkeeping requirements.

SOFR serves as a reference rate for a wide range of financial products in the United States. It is published daily by the Federal Reserve Bank of New York and is gaining acceptance and usage as a benchmark rate in various financial markets globally. SOFR is based on transactions in the U.S. Treasury repurchase market, where banks and other financial institutions borrow or lend Treasury securities overnight on a collateralized basis.

The U.S. Securities and Exchange Commission is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market manipulation.

State tax is a direct tax levied by a state on income earned in or from the state.

A venture round is a type of funding round used for venture capital financing, by which startup companies obtain investment, generally from venture capitalists and other institutional investors.

The alternative investment market is a sub-market of the London Stock Exchange designed to help smaller, less-viable companies access capital from the public market by allowing them to raise capital with lower levels of regulatory requirements than the main market.

Anchor investors are typically large institutional investors who commit to purchasing a substantial number of shares in a company's initial public offering before it is made available to the public.

Angel financing is when an individual or a company invest in early-stage startups, providing capital and guidance in exchange for an ownership stake.

The burn rate is the rate at which a company is spending its capital or cash reserves, typically expressed on a monthly basis or yearly basis.

Investments in emerging technologies target novel and innovative technologies that are nearing commercialization but haven't gained widespread adoption yet, demonstrating substantial growth potential.

The enterprise investment scheme is a UK government scheme that helps smaller, higher-risk companies raise finance by offering tax reliefs to investors who purchase new shares in those companies.

An initial public offering is the process through which a private company offers shares to the public in a new stock issuance. This allows a company to raise capital from public investors, and the shares are subsequently traded on a stock exchange.

The Jumpstart Our Business Startups Act is a U.S. law enacted in 2012 aimed at encouraging the funding of small businesses by easing various securities regulations. It includes provisions that make it easier for companies to go public and for private companies to raise capital.

"Series A" refers to a significant round of funding that a company raises after it has gone through the initial seed funding or angel investment stage. This round typically occurs once the company has validated its business model, demonstrated growth potential, and has a working product or service.

A venture capital fund pools money from investors to finance early-stage high-growth potential companies.