Knowledge base

Yield is the income returned on an investment, such as the interest received from holding a security. The yield is usually expressed

Venture capital is financing that investors provide to start-up companies and small businesses that are believed to have long-term growth potential. Venture

A rate that expresses the fund’s performance in relation to a certain reference index, during the period when that index achieved only

This is a common measure of performance that focuses on a Fund’s return over the last twelve months. Hedge fund investors use

This is a measure of volatility, which is often used as a proxy for risk. It measures the degree to which a

This is similar to the Sharpe Ratio, but is adjusted by using the standard deviation of only the fund’s negative returns (“downside

This is a measure of performance adjusted by the associated risks. It is calculated by taking a fund’s annualized return, removing the

One time fee, usually 2%-3% of investment commitments, that is taken for subscription expenses.

An index of 500 stocks issued by 500 large companies with market capitalizations of over $5 billion. The Total Return reflects the

A situation in which a company purchases its own shares / a partnership purchases the share of the limited partner. Repurchase allows,

A legal document that states the objectives, risks, and terms of an investment involved with a private placement.

Private equity is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is

Private equity is an alternative investment class and consists of capital that is not listed on a public exchange. Private equity is

Private credit is credit that is extended to companies or projects on a bilaterally negotiated basis. It is not publicly traded such

The amount of money that has been called by the fund from investors.

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 performance means the return after all fees and expenses. Net performance is lower than gross performance as it accounts for and

Net exposure is a measure of the fund’s exposure to market fluctuations. It is calculated by taking the difference between the firm’s

This ratio is calculated by dividing the remaining net asset value of a fund plus the cumulative distributions returned, by the total

Mezzanine debt is unsecured debt which is junior to the senior debt. Mezzanine debt is frequently associated with acquisitions and buyouts, for

An investment fund of which at least one of its partners is an access fund (Feeder). The underlying fund is a “classic”

A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to

This tracks the total amount of capital that is valued or realized below cost (below 1.0x) in a fund, over total invested

This represents the window of time when investors in a hedge fund are not allowed to redeem (sell) their holding. There are

A limited partner is a business partner whose liability is limited to the amount of their investment in the company.

This is the use of borrowed money or securities that are used by an investment manager to increase the potential return of

A phenomenon where an where an initial loss is followed by a significant gain. Typically shown as a line graph which illustrates

The IRR is a performance metric which expresses the discount rate that sets a fund’s cash outflows equal to its inflows in

The initial period of a private equity fund’s life in which deals are sourced and new investments can be made. The investment

These two terms are used interchangeably for the manager of a hedge fund. The GP, or investment manager, is given authority to

ITD stands for “Inception-to-Date”.

Represents the minimum rate of return that a fund must earn before it can begin to charge a performance fee. A hurdle

This represents the peak net asset value that an investor’s holding in an investment fund has reached. A high-water mark is used

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

This is an investment partnership. The name derives from the use of trading techniques that the partnership can utilize, most importantly to

Growth equity investors pursue companies at a development stage between venture capital (early stage businesses with limited historical financials) and leveraged buyouts

Gross performance means the return before the investment manager’s fees and expenses are deducted.

Gross exposure refers to the absolute total of a fund’s investments and indicates the Fund’s total exposure to financial markets. It is

This is a provision in an investment fund’s offering documents that allows the investment manager to restrict redemptions and identifies the circumstances

The period from when a fund’s formation is announced to the time when the final closing occurs.

A fund that pools the money of various investors, thereby enabling a consolidated investment in an underlying fund. The access fund does

An investment fund that combines investment terms of a hedge fund and the investment activity of a private equity fund. The fund

EBITDA stands for earnings before interest, taxes, depreciation and amortization.

This is the research performed by an investor on a potential investment, in order to determine its merits and uncover potential risks.

The amount of cash or other liquid assets available for a fund to deploy, based on capital committed to the fund by

This represents the peak-to-trough decline of an investment fund; it is normally measured in %-terms.

A realization multiple is a private equity measurement that shows how much has been paid out to investors. The realization multiple is

Cash returns that investors receive back from their alternative fund investments once those funds make a profit. They can be driven by

A common term for funds distributed to fund investors (dividend).

Distressed debt refers to debt bought from companies that are either in bankruptcy or on the verge of it. Some investors specialize