Glossary
Find handy definitions of financial jargon quickly and easily.
Search for a term or browse our alphabetical list.
Junk Bonds
Junk bonds (also referred to as high yield bonds) are bonds with credit rating below BBB- on the S&P scale (or its equivalent by another rating agency). They are referred to as "junk" because of their riskiness and high probability of default.
Jensen's Alpha
The Jensen’s Alpha is the difference between actual returns of a fund and those that could have been earned on a benchmark portfolio with the same amount of market risk (e.g. the same Beta). Jensen's Alpha measures the return earned by a portfolio above or below that...
KIID
In an attempt to create a structure for the provision of easily understandable fund disclosures, Directive 2009/65/EC on UCITS IV and Commission Regulation 583/2010 has replaced the simplified prospectus with the Key Investor Information Document (“KIID”). The UCITS...
Liquidity
Liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value. Money, or cash, is the most liquid asset, and can be used immediately to perform economic actions like buying, selling, or paying debt,...
Leverage
In finance, leverage (sometimes referred to as gearing in the United Kingdom) is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money (expecting the profits made to be greater than the cost of borrowing), or...
MiFID
The Markets in Financial Instruments Directive (MiFID) replaced the Investment Services Directive (ISD). MiFID makes changes to the regulatory framework to reflect developments in financial services and markets since the ISD was implemented. In particular, MiFID...
Mutual Fund
A professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities. Mutual funds are operated by fund managers, who invest the fund's capital and attempt...
Marginal VaR
Marginal VaR measures the change in the total portfolio VaR following an increase of investment of 1 unit of portfolio base currency in the asset or segment.
Maximum Loss
Maximum Loss (also referred to as maximum drawdown) represents the worst possible investment period in the period analysed. This may include temporary up periods.
Master Feeder structures
In a master-feeder structure, the feeder is the 'collection fund' in the target distribution country in which retail and/or institutional investors may be allowed to invest. The feeder invests the cash received from its own investors in the master fund becoming its...
Modified Dietz Method
The modified Dietz method is a calculation used to determine an approximation of the performance of an investment portfolio based on money-weighted cash flow. In the absence of daily portfolio valuations, the modified Dietz method weights individual cash flows by the...
Marginal Volatility
Measures the change in the total portfolio volatility following an increase of investment of 1 unit of portfolio base currency in the asset or segment.
Management fee
A periodic payment made by investors to fund (or portfolio) manager for portfolio management services. Unlike performance fee, management fee is not linked to the performance of the portfolio. Management fees are typically higher for active investment strategies than...
Money-Weighted Return
Money-weighted return is the same as Internal Rate of Return (IRR). It is the rate of return which calculates portfolio performance based on its market value and cash flows.
Market Value
The price at which investors can buy or sell an investment at a given time multiplied by the quantity held plus any accrued income.
Marginal Potential Upside
Measures the change in the total portfolio Potential Upside following an increase of investment of 1 unit of portfolio base currency in the asset or segment.
Marginal Expected Upside
Measures the change in the total portfolio Expected Upside following an increase of investment of 1 unit of portfolio base currency in the asset or segment.
Marginal Expected Shortfall
Measures the change in the total portfolio Expected Shortfall following an increase of investment of 1 unit of portfolio base currency in the asset or segment.