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Venture Capital Fund
Venture capital is financing that investors provide to start-up companies and small businesses that are believed to have long-term growth potential. Venture
Upside / Downside Participation (Capture) Ratio
A rate that expresses the fund’s performance in relation to a certain reference index, during the period when that index achieved only
Trailing Twelve Months (TTM)
This is a common measure of performance that focuses on a Fund’s return over the last twelve months. Hedge fund investors use
Standard Deviation
This is a measure of volatility, which is often used as a proxy for risk. It measures the degree to which a
Sortino Ratio
This is similar to the Sharpe Ratio, but is adjusted by using the standard deviation of only the fund’s negative returns (“downside
Sharpe Ratio
This is a measure of performance adjusted by the associated risks. It is calculated by taking a fund’s annualized return, removing the
Set-up Fee / Placement Fee / Upfront Fee
One time fee, usually 2%-3% of investment commitments, that is taken for subscription expenses.
S&P 500 Total Return Index
An index of 500 stocks issued by 500 large companies with market capitalizations of over $5 billion. The Total Return reflects the
Repurchase / Buy-Back
A situation in which a company purchases its own shares / a partnership purchases the share of the limited partner. Repurchase allows,
Private Placement Memorandum (PPM)
A legal document that states the objectives, risks, and terms of an investment involved with a private placement.
Private Equity Fund (PE)
Private equity is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is
Private Equity
Private equity is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is
Private Credit
Private credit is credit that is extended to companies or projects on a bilaterally negotiated basis. It is not publicly traded such
Open-End Fund
Open-end funds are funds which are not closed-end, meaning that such a fund has no term, and funds can be redeemed from
Net Return / Performance
Net performance means the return after all fees and expenses. Net performance is lower than gross performance as it accounts for and
Net Exposure
Net exposure is a measure of the fund’s exposure to market fluctuations. It is calculated by taking the difference between the firm’s
MOIC (Multiple of Invested Capital) / TVPI
This ratio is calculated by dividing the remaining net asset value of a fund plus the cumulative distributions returned, by the total
Mezzanine Debt
Mezzanine debt is unsecured debt which is junior to the senior debt. Mezzanine debt is frequently associated with acquisitions and buyouts, for
Master / Underlying Fund
An investment fund of which at least one of its partners is an access fund (Feeder). The underlying fund is a “classic”
Management Fee
A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to
Loss Ratio
This tracks the total amount of capital that is valued or realized below cost (below 1.0x) in a fund, over total invested
Lock-up Period + Soft Lock
This represents the window of time when investors in a hedge fund are not allowed to redeem (sell) their holding. There are
Limited Partner (LP)
A limited partner is a business partner whose liability is limited to the amount of their investment in the company.
Leverage / Debt Financing
This is the use of borrowed money or securities that are used by an investment manager to increase the potential return of
IRR (Internal Rate of Return)
The IRR is a performance metric which expresses the discount rate that sets a fund’s cash outflows equal to its inflows in
Investment Period
The initial period of a private equity fund’s life in which deals are sourced and new investments can be made. The investment
Investment Manager / General Partner (GP)
These two terms are used interchangeably for the manager of a hedge fund. The GP, or investment manager, is given authority to
Hurdle Rate / Preferred Interest
Represents the minimum rate of return that a fund must earn before it can begin to charge a performance fee. A hurdle
High Water-Mark (HWM) / Loss Carry-forward
This represents the peak net asset value that an investor’s holding in an investment fund has reached. A high-water mark is used
HFRI Fund Weighted Composite Index
The index is a global, equal-weighted index of over 1,500 single-manager funds that report to HFR Database. Constituent funds report monthly net
Hedge Fund (HF)
This is an investment partnership. The name derives from the use of trading techniques that the partnership can utilize, most importantly to
Growth Equity
Growth equity investors pursue companies at a development stage between venture capital (early stage businesses with limited historical financials) and leveraged buyouts
Gross Return / Performance
Gross performance means the return before the investment manager’s fees and expenses are deducted.
Gross Exposure
Gross exposure refers to the absolute total of a fund’s investments and indicates the Fund’s total exposure to financial markets. It is
Gate / Redemption Gate
This is a provision in an investment fund’s offering documents that allows the investment manager to restrict redemptions and identifies the circumstances
Fundraising Period
The period from when a fund’s formation is announced to the time when the final closing occurs.
Feeder Fund/ Access Fund
A fund that pools the money of various investors, thereby enabling a consolidated investment in an underlying fund. The access fund does
Evergreen Fund
An investment fund that combines investment terms of a hedge fund and the investment activity of a private equity fund. The fund
Due Diligence Report
This is the research performed by an investor on a potential investment, in order to determine its merits and uncover potential risks.
Dry Powder
The amount of cash or other liquid assets available for a fund to deploy, based on capital committed to the fund by
DPI (Distributions to Paid-In) Multiple
A realization multiple is a private equity measurement that shows how much has been paid out to investors. The realization multiple is
Distribution
Cash returns that investors receive back from their alternative fund investments once those funds make a profit. They can be driven by
Distressed Debt
Distressed debt refers to debt bought from companies that are either in bankruptcy or on the verge of it. Some investors specialize
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