Glossary of alternative investment terms – private wealth management vnd to usd converter


On the assumption that those with money must have some financial savvy, the U.S. Securities and Exchange Commission does not regulate funds that cater solely to the wealthy exchange rate us to pound. Therefore hedge funds and private equity firms will often restrict their customer base to so-called accredited investors — those who earn at least $200,000 per year ($300,000 for a couple), or boast $1 million in net worth. Black Swan

A term popularized by mathematician Nassim Taleb, it refers to a rare and extreme event that has the potential to throw financial markets into turmoil usd rate. Many alternative investments advertise that they protect investors against such events. Closed-End Fund

Like a mutual fund or an exchange-traded fund (ETF), a closed-end fund pools securities, but it differs from its open-ended cousins in that it rarely creates or redeems new shares.

Because of the fixed supply of shares, eager investors who want to buy into the fund may wind up paying a significant premium over the market value of the pooled securities. On the other hand, if investor demand lags, the shares of a closed-end fund could sell for a hefty discount 10110 binary. Correlation

If two investments move up and down at the same time, and to the same degree, those investments are said to be perfectly correlated. (More technically, they have a “correlation of 1.”) Two investments that move with no relation to each other are said to be uncorrelated. (They have a “correlation of 0.”) And two investments that move in opposite directions, at the same time and to the same degree, are said to have perfect negative correlation. (They have a “correlation of -1.”) Alternative investments strive for low to negative correlation to the broad markets. Drawdown (or Maximum Drawdown)

An historic measurement of the worst you could have possibly done in a particular investment — had you bought at the absolute top and rode it all the way down to the absolute bottom. It is often expressed as a percentage, so that a fund that reaches a high of $100 a share and then slides to $50 a share (regardless of whether that happened in a decade or a day) would have a maximum drawdown of 50 percent goldman sachs gold forecast 2016. Hedging

If you expect that your Asset A may zig, and you purchase Asset B in the hope that it will simultaneously zag, you’ve just hedged your position. A common hedging strategy is to use short positions (selling stock shares you don’t own, but borrow) to offset any potential loss you may suffer by holding a long (buy and hold) position. Hedging reduces risk, but it also tends to mute returns. The term inflation-hedge refers to any asset or type of asset, such as commodities, expected to appreciate in value in a climate of rising prices msn news. Hedge Fund

Years ago, it referred to a fund engineered to protect against market downfalls. Today, it is most often used to describe any number of funds that cater only to accredited investors. Often set up as limited partnerships, hedge funds may use exotic investment strategies, and are much more loosely regulated than mutual funds, although recent government proposals would tighten oversight. Leverage

An investment made with borrowed funds is said to be leveraged stock market futures today. A common type of leveraged investment, although usually not thought of as such, is a home purchased with little money down, but a big mortgage stock futures market. Leveraged investments offer great potential for profit or — as many homeowners have found out the hard way in recent years — risk of loss. Many closed-end funds use leverage to boost performance. Performance Fee

Typically, investors in hedge funds pay an annual fee of 2 percent of assets under management, plus a 20 percent cut of any profits, known as a performance fee. R-Squared (or R²)

Otherwise known by the clunky term coefficient of determination, R² measures the degree to which the performance of an investment can be attributed to a certain index or standard (usually the T-bill yield for bonds, and the return of the S&P 500 for stocks). An R² of 100 would be expected of an S&P 500 Index fund exchange rate usd to cad history. A fund with an R² of about 92 means 92 percent of its performance is linked to the performance of the S&P 500. Alternative funds shoot for low R²s. Risk Premium

If short-term U.S nyse futures market. Treasury obligations were paying 30 percent, rather than just a smidgen above zero, it is doubtful that any sane person would invest in anything else, never mind something as volatile as stocks. Higher returns are a reward for taking risk. The risk premium is the difference between the expected return on your investment, and the return you would get if your principal were guaranteed. Yield

Refers to the interest paid on a bond or the dividends on a stock — otherwise known as investment income eur usd converter. Total return — what matters or should matter most to investors — is the sum of yield and capital appreciation.