Glossary of Terms
Product Profile ::
Base Currency – This is the default currency in which you offer your product. This will be the currency
that you choose to enter data in, from which other currencies will be converted.
Portfolio Management Strategy – The means by which investment decisions are made. Active
managers rely on analytical research, forecasts, and their own judgment/experience in making
investment decisions on what securities to buy, hold and sell. Passive management is an
investment strategy that mirrors a market index and does not attempt to beat the market. Passive
managers follow the efficient market hypothesis.
Preferred Benchmark – The particular index that the strategy is benchmarked against.
Primary Investment Approach – The means by which securities are evaluated and selected.
Fundamental analysis utilizes the balance sheet and income statements of companies in order to
forecast their future stock price movement. It takes into account past records of assets, earnings,
sales, products, management, and markets in predicting future trends, and concluding whether the
stock is overvalued or undervalued. Technical analysis relies on price and volume movements, and
does not concern itself with financial statistics. Quantitative analysis seeks to understand behavior
by using mathematical and statistical modeling, measurement and research.
Primary Screening Approach – The process that fund managers apply when considering what
stocks to pick, what sectors to explore, or what countries to invest in. Top-Down screening involves
looking at the “big picture” of what is going to happen to economies, currencies, politics, and the
rest of the financial world before making decisions about investing with individual companies. A
bottom-up approach focuses on specific companies, rather than the industry in which that company
operates.
Investment Focus - The underlying theme driving the investment style and investment
methodology of the portfolio. Options for Equity include Long Only, Enhanced Index, REIT,
Environmental Social Governance, and Extended Equity. Options for Fixed Income include Long
Only, Enhanced Index, Environmental Social Governance, Inflation Protected, Stable Value/GICs,
Liability Driven/Cash Flow Matching, and Bank Loan.
Long Only – Strategies that do not take short positions in the portfolio.
Enhanced Index – Strategies that seek to closely follow the general methodology of a specific
index but will invest outside of the index to generate alpha. These strategies typically have a
tracking error between one and three.
REIT – A pool of securities with which can have both direct and indirect exposure to real estate.
Environmental Social Governance – Strategies that utilize a socially responsible investment
strategy by investing in firms that meet a specific set of criteria. Examples include funds that
invest in alternative energy and renewable resources while avoiding tobacco companies.
Extended Equity – Equity funds that use a specified short exposure to offset long positions.
Examples include 130/30 and 120/20 funds, the first number indicating the long exposure and
the second indicating the short exposure.
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Inflation Protected – Fixed Income products that invest in securities that include a safeguard
or feature that aims to maintain the security’s value relative to the inflation rate. An example of
an inflation protected security is a Treasury Inflation Protected Security (TIPS).
Stable Value/GICs – Stable Value strategies are typically utilized by defined contribution plans
and offer investors the ability to withdraw or transfer funds with minimal market value risk or
early withdrawal penalty. These funds typically invest in high quality fixed income.
Liability Driven/Cash Flow Matching – Liability-driven strategies are designed to generate
returns that will satisfy an estimated future cash flow obligation of the investor such as a pension
fund or defined benefit plan.
Bank Loan – Bank loan funds hold a portfolio of company-issued loans that typically pay floating
rate of interest and generate returns based on the interest payments from the issuers.
Fiduciary Duty – Select yes for Fiduciary Duty if your firm will accept the duty to exercise the powers of
your position for the benefit of the represented.
Product Status
Active – A product with active status indicates the strategy is open to new investment, has assets
and current accounts.
Active but Closed - Closed is a strategy with assets but closed to new investment. Closed is most
common in the small cap space or strategy that is being phased out by a Portfolio team.
Inactive – An inactive status is a strategy that has been taken off the market. The inactive status may
indicate the strategy is out of business or has merged with another product manager.
Product Profile :: Equity
Primary Equity Capitalization – What most accurately represents the capitalization of the
portfolio historically, what it is currently and what you believe it will be on a going-forward basis.
The options are: Micro Cap, Small Cap, Small/Mid-Cap, Mid-Cap, Mid-Large Cap, Large-Cap, Mega
Cap, and All Cap.
Primary Equity Style Emphasis – What most accurately represents the style of the portfolio
historically, what it is currently and what you believe it will be on a going-forward basis. Growth
style seeks out companies whose earnings are expected to grow at an above-average rate as
compared to its industry or the overall market. Value managing indicates that the stocks tend to
trade at lower prices, relative to their fundamentals, and thus considered undervalued. These
stocks typically have a low P/E ratio, low P/B ratio and/or a high dividend yield. Long-Short equity
style involves buying certain stocks long and selling others short. These products use leverage,
derivatives and/or short positions in an attempt to maximize total returns. REIT products invest in
real estate, either through properties (equity REITs) or mortgage REITs. An enhanced index is a
product that tracks a stock market index but with certain modifications in place to allow for more
equivalent position sizes, the exclusion of certain securities, or the use of leverage; all with the goal
of beating the return of the tracking index. A passive index mirrors that of a market index and does
not attempt to beat the market.
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Product Profile :: Fixed Income
Fixed Income Style Emphasis – What most accurately represents the capitalization style of the
portfolio historically, what it is currently and what you believe it will be on a going-forward basis.
The options are: Core, Core Plus, High Yield, Mortgage Only, Corporate Only, Govt/Agency Only,
Municipal Only, Cash Mgmt, Stable Value, Inflation Indexed, Enhanced Index, and Passive Index.
Primary Duration Emphasis – The focus of the portfolio’s bond sensitivity to price and its
subsequent risk to movements in interest rates.
Hedging Strategy – Whether or not hedging strategies were used in the product.
Asset/Account Information
Total Assets Under Management – This is the sum of all Corporate, Public Fund, Taft-Hartley,
Foundation & Endowment and any other assets under management. This figure should avoid
double-counting any Defined Contribution assets that are already represented under a specific plan
sponsor type.
Institutional Assets Under Management – This is the sum of all assets managed on behalf of
institutional clients, such as Corporate plans, Public Funds, etc. (i.e. plan sponsors). This category does
not include any assets managed on behalf of High Net-Worth Individuals or Private clients.
Taxable Assets Under Management – This is the sum of all taxable assets managed on behalf of
taxable High Net-Worth Individuals, Private clients and any taxable assets managed on behalf of
institutional clients. Any assets that are subject to taxation should be listed in this category.
Tax-Exempt Assets Under Management – This is the sum of all assets managed on behalf of
clients that are not subject to taxation because they are part of company-sponsored retirement plans or
other tax-exemption.
Corporate – This is the sum of assets managed for corporations regardless of account type (i.e.
Defined Benefit Plan, Defined Contribution Plan, etc.).
Public Fund – This is the sum of the assets managed for public fund clients regardless of account
type (i.e. Defined Benefit Plan, Defined Contribution Plan, etc.).
Superannuation –The sum of assets for Superannuations which are government regulated investment
strategies designed to provide a person with an income upon their retirement. Superannuation schemes
are commonly found in Australia and New Zealand.
Union/Multi-Employer – This is the sum of the assets managed for union or multi-employer
fund clients regardless of account type (i.e. Defined Benefit Plan, Defined Contribution Plan,
etc.).
Foundation & Endowment – This is the sum of the assets managed for a client whose assets, funds
or property are donated to an institution, individual or group as a source of income.
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Healthcare – This is the sum of the assets managed for clients in a healthcare organization (for
profit and nonprofit).
Insurance – The sum of assets managed on behalf of insurance companies. Insurance companies often
invest pooled assets to further grow available capital and finance additional operations.
High Net Worth Individuals – This is the sum of assets managed directly for a high net worth
individual.
Sub Advised – Products whose day-to-day management is handled by a third party hired by the primary
manager.
Wrap Accounts – Platform programs in which Investors pay a single fee for all services
associated with their account as opposed to per transaction fees. This is a sum of assets
managed for these types of programs.
Supranationals - The sum of assets for Supranationals which are international organizations whose
member states share decision-making power. Membership is voluntary and decisions by the group follow
majority rule. The European Union and World Trade Organization are both Supranationals.
Defined Contribution – A retirement plan in which the employer and/or employee contribute specified
amounts (i.e. 401(k), 403(b), etc.). This is the sum of assets managed for Defined Contribution plans.
This category is independent of the other asset breakdown.
Characteristics :: Equity
Strategy Snapshot
Secondary Equity Style Emphasis – indicate whether or not the underlying product has a secondary
emphasis (see ‘Primary Equity Style Emphasis’ above).
Current Number of Holdings – The number of stocks held in the portfolio at the end of the most
recent quarter.
Historical Range in Holdings – The range of holdings number the portfolio has held over the most
recent 4 quarters. So, if the lowest number of holdings the portfolio held during the past 4 quarters was
30 and the highest number of holdings held was 70, then the range would be 30-70.
Annual Turnover (LTM) – This indicates the level of trading activity being conducted in a specific
investment strategy. This is calculated by taking the lesser of purchases and sales and dividing by the
average annual market value times 100%.
Annual Activity (LTM)- Indicates the level of production in a specific investment strategy over the
last twelve months. This percentage is calculated by summing purchases and sales and dividing by the
average annual market value times 100%.
Active Share- A measure that compares the proportion of security holdings within the product against
those of the respective benchmark. The value represents the percentage difference between fund and
benchmark.
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Current Cash Position – This represents the amount of cash that the portfolio is currently holding
expressed as a percentage of total product assets. For example, if asset in the product are currently
$100 million and $95 million is currently invested with $5 million currently being held in unequitized
cash, then the ‘Current Cash Position’ would be 5.0%.
Historical Range in Cash – This will be the range of cash in percent in the portfolio over the most
recent 4 quarters. So, if the lowest cash percentage held during the past 4 quarters was 2% and the
highest cash percentage held was 10%, then the range would be 2-10%.
Number of Countries in Portfolio – The total number of countries that are represented throughout
the portfolio’s holdings.
Maximum Allocation Guidelines (Regional/Country) – This indicates whether the or not there
have been limits placed on the amount of the portfolio that can be invested in any one region or
country.
Market Capitalization
Weighted Avg. Mkt. Cap ($Mil) – Compute this measure by multiplying the market capitalization of
each security times the security’s corresponding portfolio weight and then summing the results from all
securities. This should be calculated using US dollars and expressed in millions of US dollars.
Median Market Cap ($Mil) – Compute this measure by rank ordering the stocks in the portfolio in
descending order. Next count the total number of stocks in the portfolio, find the exact middle stock (or
average of two middle stocks) in the portfolio and input the corresponding market capitalization.
Cap Range (Minimum & Maximum at Purchase) – This is a measure of how low and high in the
market capitalization scale a portfolio manager will go when purchasing equity securities. For example,
if a portfolio manager will not purchase stocks with a capitalization of less than $1 billion and will not
purchase stocks that have a capitalization greater than $20 billion, then the market cap range at
purchase would be $1,000 - $20,000 ($ in millions).
Fundamental Characteristics
Current Dividend Yield – The yield is determined by dividing the amount of the annual dividends per
share by the market price per share of the stock.
Current P/E (12-month Trailing) – Trailing P/E is determined by using the stock price per share on
the last day of the most recent quarter as the numerator and dividing by the earnings per share for the
past four quarters.
Current P/E (12-month Forward) – Forward P/E is found by using the stock price per share on the
last day of the most recent quarter as the numerator and dividing by the earnings per share estimates
for the next four quarters.
Current P/B – Calculated by using the stock price per share on the last day of the most recent quarter
as the numerator and dividing by the book value per share for the past four quarters.
Current P/S (12-month Trailing) – Measure is calculated by using the stock price per share on the
last day of the most recent quarter as the numerator and dividing by its per-share sales.
Current P/CF (12-month Trailing) – P/CF is determined by using the stock price per share on the
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last day of the most recent quarter as the numerator and dividing by the cash flow per share for the
past four quarters.
5 Year ROE – A trailing five year average of the product’s return on equity. ROE is calculated by
dividing net income by shareholder’s equity. It is a measure of a corporation’s profitability that reveals
how much profit a company generates with the money shareholders have invested.
Earnings Growth (Past 5 Years) – This measure represents the growth in earnings experienced by
the portfolio over the most recent five-year time period. It is calculated as a percentage of growth.
Earnings Growth (Next 5 Years) – This measure represents the forecasted growth in earnings to be
experienced by the portfolio over the next five-year time period. It is calculated as a percentage of
growth.
Non-US Security Utilization
% in ADRs – Compute this measure by taking the number of total ADRs, and dividing by the total
number of securities in the portfolio. American Depositary Receipts are a negotiable certificate issued by
a U.S. bank representing a specified number of share(s) in a foreign stock that is traded on a U.S.
exchange. They are denominated in U.S. dollars, with the underlying security held by a U.S. financial
institution overseas.
% in Ordinary Shares – Calculate this percentage by taking the number of stocks that are considered
‘Ordinary Shares’ and dividing by the total number of securities in the portfolio. An Ordinary Share is
any share that is not a preferred share and does not have any predetermined dividend amount.
Ordinary shares are entitled to receive dividends if any are available after dividends on preferred shares
are paid. They are also known as ‘common stock.”
% Foreign Ordinary Shares - Stocks bought by investors in the United States in foreign companies
that are traded on their home markets, as opposed to stocks that trade in the United States. Ordinary
stocks are equivalent to common stocks traded on U.S. markets.
Policy Limits
Policy Maximum Industry Exposure – This is the maximum allocation to any one specific industry
that the investment strategy guidelines allow. For example, if the manager will not invest over 30% in
any one industry, then the Policy Maximum Industry Exposure is 30%.
Policy Maximum Sector Exposure – This is the maximum allocation to any one specific sector that
the investment strategy guidelines allow. For example, if the manager will not invest over 15% in any
one sector then the Policy Maximum Sector Exposure is 15%.
Policy Maximum Position Size – This is the maximum allocation to one specific stock that the
investment strategy guidelines allow. For example, if the manager will not invest over 5% in any one
company, then the Policy Maximum Position Size Exposure is 5%.
Characteristics :: Fixed Income
Strategy Snapshot
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Current Number of Issues – The number of bonds held in the portfolio at the end of the most recent
quarter.
Current Cash Position – This represents the amount of cash that the portfolio is currently holding
expressed as a percentage of total product assets.
Annual Turnover (By % Portfolio Weight) – This indicates the level of trading activity being
conducted in a specific investment strategy. When calculating turnover by portfolio weight, the
manager identifies the securities sold during the year and the percent that they represented in the
portfolio. It is a 4 quarter rolling calculation.
Current Weighted Average Coupon – A calculation found by taking the coupon of each bond in the
portfolio times the percent weight of that bond in the portfolio and then sum up the totals. For
example, consider a two-bond portfolio where bond A has a 6% coupon and a 60% portfolio weight and
Bond B has an 8% coupon and a 40% weight. The current weighted average coupon would be equal to
6.8%.
Yield to Maturity – The weighted average rate of return that would be earned on the portfolio if all
bonds are held to maturity.
Yield to Worst – The weighted average yield to maturity if the lowest quoted yield repayment took
place on all the bonds in the portfolio.
Current Term Structure – The way a fixed income portfolio is structured by the maturities of the
bonds held in the portfolio. If the manager tends to hold a significant amount of short and long maturity
bonds, but very little intermediate then it could be said that they have a barbell approach. The term
structure of fixed income portfolios will generally change based on the interest rate environment and
only the current term structure of the portfolio as of period end should be indicated.
Number of Countries in Portfolio – The total number of countries that are represented throughout
the portfolio’s holdings.
Maximum Allocation Guidelines Regional/Country) – This indicates whether or not there have
been limits placed on the amount of the portfolio that can be invested in any one region or country.
Estimated Value Added (Historical Sources) - There are a series of six characteristics that must
allocate to 100% based upon what methods were used when creating/maintaining the particular
strategy. The characteristics are: Duration Decision, Yield Curve Structure, Sector Selection, Security
Selection, Trading/Execution, and Currency Management.
Portfolio Sector Allocations
US Govts/Agencies – US government and government-sponsored agencies’ issues of bonds.
US Investment Grade Corporates – Long-term debt issued by private corporations typically paying
semi-annual coupons and returning the face value of the bond at maturity.
US High Yield Corporates – Corporate bonds rated below investment grade by the credit rating
agencies.
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Non-Agency ABS – Securities issued by a non-government organization that are backed by a loan,
lease or receivables against assets. These securities must be grouped in one of the top two ratings as
determined by a credit rating agency, and usually pay period payments that are similar to coupons.
Non-Agency MBS – A type of asset-backed security that is secured by a mortgage, or a collection of
mortgages and issued by a non-government organization. These securities must be grouped in one of
the top two ratings as determined by a credit rating agency, and usually pay period payments that are
similar to coupons.
Mortgage-Passthrus (TBA Market) – To be announced (TBA) is a term used to describe a forward
mortgage-backed securities trade. Pass-through securities issued by Freddie Mac, Fannie Mae and
Ginnie Mae all trade in the TBA market. The mortgage-backed security that will be delivered to fulfill a
TBA trade is not designated at the time the trade is made and are “to be announced” 48 hours prior to
the established trade settlement date.
Private Placements – Securities sold, or “placed”, directly with an institutional investor. A private
limited partnership would also be considered a private placement. A private placement does not have to
be registered with the Securities and Exchange Commission, unlike a public offering, if the securities are
purchased solely for investment and not for resale by a qualified investor.
144As – A 144A is a private securities transaction that involves a limited SEC registration process.
Companies typically issue 144A securities for one or more of the following factors: (1) Cost: Registration
and legal cost; credit ratings may be supplied by one rating agency. (2) Information: Private companies
may wish to limit the amount of information disseminated to the market. (3) Esoteric Structure: Some
private placements have esoteric cash flow structures. Issuers do not want the general public to buy
certain securities which are not in a "plain vanilla" structure. The magnitude of these factors will
determine whether the securities are priced expensively or at a discount.
Municipals – A bond issued by a state, U.S. Territory, city, local government, or their agencies.
Interest income received by holders is often exempt from federal income tax and from the income tax of
the state in which they were issued, although municipal bonds issued for certain purpose may not be tax
exempt.
Convertibles – Corporate bonds that are exchangeable for a set number of another security (usually
common stock) at a pre-stated price. Convertibles are designed for investors who want higher income
than is usually available from common stock, but with greater appreciation potential than regular bonds
typically offer. From the issuer’s standpoint, the convertible feature is usually designed as an incentive
to enhance the marketability of the security.
Non-Dollar Bonds – Non-dollar denominated bonds are typically traded outside of the United States.
All cash flows from non-dollar denominated bonds are designated in a foreign currency or a basket of
foreign currencies.
Yankees – Dollar denominated debt issued in the U.S. by foreign banks and corporations. These bonds
are issued in the U.S. when market conditions there are more favorable then on the Eurobond market or
in domestic markets overseas.
Brady Bonds – Public issue, US Dollar denominated bonds that are issued by the governments of
developing countries.
Emerging Market Debt – Bonds issued by emerging markets. It does not include borrowing from
government, supranational organizations or private sources, though loans that are securitized and issued
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to the markets would be included.
Emerging Markets – Countries included: Argentina, Brazil, Chile, China, Colombia, Czech Republic,
Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru,
Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
Developed Markets – Countries included: Australia, Austria, Belgium, Canada, Denmark, Finland,
France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, and United States.
Developed Market ex-US Sovereigns – Bonds issued by developed, sovereign nations, outside of
the US.
Emerging Market Sovereigns – Bonds issued by a sovereign, emerging market nation.
Developed Market ex-US Corporates – Corporate bonds from developed countries other than the
United States.
Developed Market ex-US MBS/ABS – MBS/ABS bonds from developed markets other than the
United States.
Maturity & Duration
Average Maturity (years) – The average time to maturity of all securities held in the product.
Changes in interest rates have greater impact on funds with longer average life.
Modified Duration (years) – A calculation that expresses the measurable change in the values of the
securities in response to a change in interest rates.
Effective Duration (years) – A duration calculation for bonds with embedded options. It is the
percentage change in bond price per change in the level of market interest rates.
Duration Around Appropriate Benchmark – This deviation of a fixed income portfolio’s duration
around an appropriate benchmark or index. For example, if the index has a duration of 5.0 years and a
portfolio’s duration is typically within a year of the benchmark then the Duration Around Appropriate
Benchmark is +/-20%.
Currency Hedging Exposure
Approach Towards Hedging – This indicates how currency risk is managed within an international,
global, or emerging market strategy. Investment managers can take very different approaches to
hedging currency risk. They can use currency hedging as a means of seeking added value, they can be
defensive and use hedging to protect invested principal or they can choose to not hedge at all. Many
firms that do not explicitly engage in any form of currency hedging do typically factor currency risk into
the purchase decision of their securities.
Portfolio Quality
Average Quality Issue – The average investment quality of all the bonds held in the portfolio,
determined by private independent rating agencies (Standard & Poor’s, Moody’s and Fitch). Investment
grade bonds are only those with ‘AAA’, ‘AA’, ‘A’, and ‘BBB’ investment quality.
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Minimum Quality Issue – The minimum investment quality permitted within the portfolio.
Target Date / Target Risk
Vintage Year – The individual retirement year associated with a lifecycle series.
Income Fund – These are very conservative funds, typically with an equity allocation of 20% or less.
Many Target Date funds become Income Funds after their retirement date has been reached.
Today Fund – These funds fall in between Income and Conservative Funds. Generally, those who feel
that the Income Fund is too conservative will opt for a Today fund after their target retirement date has
been met. They have a slightly higher equity allocation than Income Funds.
Glide Path – The product’s variable asset allocation as the investors approach their retirement date.
Dedicated Fund Allocation – The exposure to an asset class as a direct result of a specific
fund/product.
Indirect Fund Allocation – The exposure to an asset class generated indirectly (ex. exposure to REIT's
via a US Equity Fund, or Emerging Markets via an International Equity Fund).
Risk Tolerance – The risk level and aggressiveness of a product within a lifestyle series.
Conservative – A type of lifestyle fund that typically has an equity allocation of 35% or less.
Moderate – Lifestyle funds with a 50% allocation to equity.
Aggressive – Lifestyle funds with an 80% or greater allocation to equity.
401(k) – A qualified plan established by employers to which eligible employees may make salary
deferral (salary reduction) contributions on a post-tax and/or pretax basis. Employers may make
matching or non-elective contributions to the plan on behalf of eligible employees.
403(b) – A plan for employees of 501(c)(3) non-profit institutions (such as colleges and universities,
hospitals, museums, research institutes, and foundations) and public schools. Employees can set aside
money for retirement on a pre-tax basis through a plan offered by their employer.
401(a) – Types of retirement plans which may include profit-sharing plans, pension plans and money
purchase plans. In this type of plan, your employer defines the amount of money that they may
contribute on your behalf each year, the requirements that you must meet to receive these contributions
and under what circumstances this money may be made available to you.
457 – A type of retirement plan made available to employees of state or local governments, their
agencies and tax-exempt employers. Employees of these organizations can set aside money for
retirement on a pre-tax basis through a 457 plan sponsored by their employer.
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Private Real Estate
Limited Partnership – An organization comprised of a general partner, who manages a fund, and
limited partners, who invest money but have limited liability and are not involved with the day-to-day
management of the fund.
Private REIT – A privately held Real Estate Investment Trust. REIT products invest in real estate,
either through properties (equity REITs) or mortgage REITs.
Insurance Variable Annuity – An insurance contract in which at the end of the accumulation stage the
insurance company guarantees a minimum payment. The remaining income payments can vary
depending on the performance of the managed portfolio.
General Partner – The partner in a limited partnership responsible for all management decisions. The
general partner has a fiduciary responsibility to act for the benefit of the limited partners and is fully
liable for its actions.
Limited Partner – An investor in a limited partnership with no management of the partnership. Limited
partners have limited liability and usually have priority over general partners upon liquidation.
Core – Investment style consisting of functioning, institutional grade operating properties that are wellmaintained and are valuable for their income producing characteristics.
Opportunistic – Investing in raw land, development, and niche property sectors that can include
ground-up development and highly leveraged purchases.
Value Added – An investment style that generally involves the acquisition of property with the intent to
make improvements. These property types may initially display operational problems, require physical
improvements, and suffer from capital constraints.
Open-End – A type of commingled fund in which the investor has the right to withdraw from the fund.
This fund structure has infinite life. Cash that is generated from investment is either reinvested in new
properties or distributed through dividends.
Closed End – A type of commingled fund where the investor does not have the ability to withdraw from
the fund. The strategy’s life is limited and cash that is generated is typically distributed directly to the
investor.
Target First Close Date – The date in which the first round of financing is finalized, at which point the
fund manager can begin deploying capital to property investments.
Target Final Close Date – The date at which the last round of financing takes place.
Target Investment Period – The period of time in which the fund deploys capital to property
investments and manages them until the point of liquidation.
Legal Life of Vehicle – The legal length of the agreement between the invested/managing parties that
defines the point in which all fund investments would be ceased.
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Discretionary Separate Accounts – In a discretionary separate account, pension plan trustees
establish certain investment guidelines for the fund, but delegate responsibility for making all investment
decisions to the investment manager.
Non-Discretionary Separate Accounts – A non-discretionary separate account is the granting of
authority to a real estate investment manager to engage in the acquisition, asset management, and
disposition of real estate investments on behalf of the pension plan, but with controls imposed on what
actions the investment manager can or cannot take without prior approval of the trustees of the pension
plan.
Committed Capital – Refers to the total dollar amount of capital pledged to a particular fund. The
amount of committed capital is different from capital that is currently invested.
Drawdown – When the firm has decided where it would like to invest, it will approach its investors in
order to draw down the money. The money which has already been pledged to the fund is transferred
so that it reaches the investment target.
Invested Assets – Amount of assets that are currently deployed (invested) into the underlying
properties of the portfolio.
Uncommitted Cash – Refers to the cash amount difference between the fund’s committed capital and
its invested assets.
Maximum Allowable Leverage Ratio – The maximum debt to equity ratio permitted within the fund.
Unleveraged Equity – The ownership of property funds that were acquired without the borrowing of
capital.
Leveraged Equity – The ownership of property funds acquired through the borrowing of capital.
Conventional Mortgage –Type of mortgage in which the underlying terms and conditions meet the
funding criteria of Fannie Mae and Freddie Mac. Loans may be fixed-rated or adjustable-rate.
Convertible Debt – A mortgage that gives the lender an option to purchase a full or partial interest in
the property at the end of some specified period of time. This purchase option allows the lender to
convert its mortgage to equity ownership.
Mezzanine Debt – A type of loan that bridges the gap between the first mortgage debt on the property
and the equity investment. This is similar to a second mortgage but it is not secured by the property.
Instead, it is secured by the investor’s equity in the property. Mezzanine financing provides the lender
with the right to convert to an ownership or equity interest in the company if the loan is not paid back in
full and in a timely manner. Generally, it is subordinated to debt provided by the lenders.
Hybrid Debt – A type of loan with adjustable rates that blends the characteristics of a fixed-rate loan
with that of an adjustable-rate loan. Hybrid debt instruments have an initial fixed rate period followed by
an adjustable rate period. The date at which the loan changes from the fixed rate to the adjustable rate
is referred to as the reset date.
Purchase Options – An agreement in which the management firm has purchased the right, but not the
obligation, to buy or sell a property at an agreed-upon price within a certain time period or on a specific
date.
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Carried Interest – The term used to denote the profit split of proceeds to the general partner. This is
the general partners’ fee for carrying the management responsibility plus all the liability and for providing
the needed expertise to successfully manage the investment. Carried interest is normally expressed as a
percentage of the total profits of the fund.
Clawback Features – Clawback provisions are designed to preserve the economic deal agreed to by
the General Partner (fund manager) and the Limited Partners (investors) by ensuring that the General
Partner does not receive performance-based payments in excess of that which was agreed upon.
Generally, this means that the general partner may not keep distributions representing more than a
specified percentage of the fund’s cumulative profits.
Key Man Provisions – If a certain number of key executives fail to dedicate a specified amount of time
to the Partnership, which may also include time spent on other funds managed by the manager during
the commitment period, the "key man" clause provides that the manager of the fund is prohibited from
making any further new investments (either automatically or if so determined by investors) until new
replacements of key executive(s) are assigned. However, the manager will usually be allowed to make
any investments that had already been agreed on prior to such date.
Indemnification Provisions – Protects parties against potential third party claims that may arise
during the performance of a contractual relationship.
Coinvestment Rights – The right of a limited partner to invest with the general partner. If a limited
partner in a fund has co-investment rights, they can invest directly in a company that is also backed by
the private fund. The institution therefore ends up with two separate stakes in the company - one
indirectly through the fund and one directly in the company.
Parallel Funds – In order to avoid some of the difficulties of the Limited Partnership structure, a fund
may utilize a parallel fund structure wherein two partnerships (Fund LP and Fund LP II) are controlled by
a common general partner. This structure is often used to accommodate tax-exempt investors that do
not want to incur Unrelated Business Income Taxation (UBIT).
Fee Reversion – For the calculation of management fees, committed capital serves as the industry
standard for the initial capital base. However, after the end of the investment period, many fund
managers offer fee reversion features in which only paid-in capital, paid-in capital less return of principle
or scale-downs are utilized as the capital base to calculate management fees.
‘For Cause’ Rights – In order to mitigate the potential damages to the parties in connection with an
early termination of a strategic partnership, the parties must take the time during the negotiation of the
partnership agreement to determine what will happen in the event of such a termination. The parties
should predict the events that could adversely affect the partnership and then carefully define the
termination rights to anticipate such events. For cause termination rights can include breach of contract,
change of control, insolvency and many others. There are varying degrees of "for cause" terminations,
and thus, the agreement can be drafted to provide less severe consequences to the non-terminating
party for less severe "for cause" events.
Side Letter Agreements – Agreements that are not part of the fund’s general offering memorandum
and can run the gamut from providing increased liquidity to lowering management fees.
Rotation Allocation/Policy – Describes any investment rotation (sectors) or allocations to certain real
estate properties. This policy should outline the frequency of Rotation/Allocation to various types of real
estate.
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Advisory Committee – The advisory committee is a group that advises on employee benefit plans as to
amount of benefits to be paid, how benefits are to be financed, and how employees are to qualify for
benefits.
Capital Call Date – The date when an investment firm or an insurance firm can exercise their legal right
to demand a portion of the money promised by an investor.
Dispositions – The amount of assets or securities that are no longer in a firm’s possessions resulting
from a direct sale or a different method of disposal.
Equity Mortgage – A mortgage where funds are loaned against the value of the property.
Expected Capital Contribution – The expected contribution that will increase the equity capital for a
company, but does not increase the amount of outstanding shares.
Fixed Rate Debt – Debt which has a clearly defined cash flow schedule as stated at the time of issue;
the coupon rate does not change throughout its life.
Floating Rate Debt – Debt whose rate is indexed to the reference rate periodically. Investors only
know the actual payments they will receive for the next payment date.
Investment Limitation – Limitations imposed on some types of investments to a defined percentage of
assets or capital.
Leverage Ratio – The degree to which an investor is utilizing borrowed money.
Non-Partisan Sources – Organizations that do not declare or are formally linked to a political party in
order to maintain a “Non-profit” designation.
Outside Professionals – A member of a company’s board of directors who is not an employee of the
company.
Preferred Return – Minimum return to investors that must be achieved before the profits are shared
according to the carried interest arrangement.
Weighted Average Cost of Debt – The weighted average cost of the different sources of debt.
Performance
Monthly/Quarterly Performance – This is the monthly/quarterly return series presented Gross or
Net of Fees for the specified product. Please enter the return as a number with two decimal places.
For example, if the return is 25.45% for the period, then enter 25.45 in the field provided. You do not
need to include the percent sign (%).
Separate Account (SA) – is the performance of the separate account composite. This differs from a
mutual fund because the investor directly owns the securities instead of owning a share in a pool of
securities.
Commingled Fund ERISA (PFE) – is the performance of the commingled or pooled vehicle
composite that will accept ERISA qualified money.
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Commingled Fund Non-ERISA (PF) – is the performance of the commingled or pooled vehicle
composite that will not accepts ERISA qualified money.
Representative Account (RA) – is the performance of one account that is representative of the
strategy.
Institutional Mutual Fund (MF:I) – is the performance of a mutual fund with an minimum account
size greater than $250,000.
Retail Mutual Fund (MF:R) – is the performance of a mutual fund with a low minimum account size.
Legal Vehicle Structures
3c1 (U.S. Only) – A type of commingled (pooled) fund under section 3c1 of the Investment Company
Act of 1940 which allows for the exclusion of standard SEC registration requirements if there are fewer
than 100 investors and proposal to make a public offering of the securities is prohibited.
3c7 (U.S. Only) – A type of commingled (pooled) fund under section 3c7 of the Investment Company
Act of 1940 which allows for the exclusion of standard SEC registration requirements if all investors
have been deemed ‘accredited investors’ or ‘qualified purchasers.’
Anlagefonds (Common fund) – An open-ended Swiss investment fund.
Collective Fund – A fund operated by a trust company or a bank that handles a pooled group of trust
accounts.
Common Contractual Fund (CCF) – An unincorporated body established by a management
company under which the participants by contractual arrangements participate and share in the
property of the fund as co-owners (specifically tenants in common) originating in Ireland.
Common Trust Fund – A collective investment fund managed by a bank trust department.
Participation is limited to those with trust accounts.
Company Limited by Guarantee (LLC) – A private limited liability company whose members are
guarantors instead of shareholders. Limitation of liability takes the form of a guarantee from members to
pay a nominal sum while they are a member or within one year of ceasing to be a member.
Corporation – A separate legal entity having its own privileges and liabilities distinct from those of its
members, limited liability, and rights and responsibilities like natural persons.
Delaware Business Trust – An unincorporated business association used to hold assets for the benefit
of the trust owners. It permits limited liability, creditor protection, and valuation discounts.
Exempted Company (EC) – A collective investment vehicle which must not do local business and is
exempted from local taxes.
Exempted Limited Partnership (LP) – A limited partnership vehicle which is used to establish a
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mutual fund in the Cayman Islands with the same speed and flexibility as an open-ended investment
company or a unit trust. The limited partners’ interest may be redeemed at any time without requiring
dissolution of the LP, partnership interests may be used as collateral by limited partners, and limited
partners may lend an exempted LP.
Fond Commun de Placement (FCP) – An open ended collective investment fund based vehicle which
is neither trust or company law based. Similar to an open partnership, they have no independent legal
status but exist as a set of defined relationships between investors, managers, and custodians.
Originates in France and Luxembourg.
Fonds voor Gemene Rekening – A co-ownership of assets established under Dutch law. There is no
separate legal entity and investor liability is limited to contribution and capital commitment.
General Partnership – An association of persons or an unincorporated company where the partners
share equally in both responsibility and liability.
Group Trust – An arrangement under which qualified retirement plan trusts, individual retirement
accounts and certain other tax exempt retirement plans or accounts pool their assets for investment,
usually for the purpose of achieving diversification of investments.
Income Trust – An investment that may hold equities, debt instruments, royalty interests, or real
properties. The trust can receive interest, royalty, or lease payments from an operating entity carrying
on a business, as well as dividends and a return of capital. Most common in Canada.
Insurance Bond – A single premium life insurance policy for the purposes of investment. Also called an
investment bond.
International Business Corporation – An offshore company formed under the laws of some
jurisdiction as an untaxed company which is not permitted to engage in business within the jurisdiction in
which it is incorporated. Formed in Antigua, Anguilla, the British Virgin Islands, the Bahamas, Belize,
Gibraltar, Nevis, and Seychelles.
Investment Bond- *see Insurance Bond
Investment Company (IC) – A company whose main business is holding securities of other companies
purely for investment purposes.
Investment Company with Fixed Capital (BEVAK) – An investment company with a fixed number
of shares originating in the Netherlands and Belgium.
Investment Company with Variable Capital (BEVEK) – An open ended investment company which
is required to repurchase its shares at the net asset value from the investors upon request originating in
the Netherlands and Belgium.
Investment Company with Variable Capital (ICVC/OEIC) – An open ended collective investment
vehicle similar to a unit trust except an ICVC company rather than a trust, so investors have shares, not
units. Exists in the UK.
Investment Trust – A closed-end fund constituted as a public company found mostly in the United
Kingdom.
Kommanditgesellschaft für Kapitalanlagen (Limited Partnership) – A Swiss limited partnership
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for collective investments.
Labour Sponsored Fund – A fund managed by investment professionals that is invested in small to
mid-sized Canadian companies.
Limited Liability Company (LLC) – A corporate structure whereby the shareholders of the company
have limited liability to the company’s actions.
Limited Partnership (LP) – A business unit of two or more persons in which one or more of the
partners are liable only to the extent of the money that partner has invested.
Listed Investment Company (LIC) – An Australian closed-end collective investment scheme which is
traded as other securities on the Australian stock market, similar to investment trusts in the UK.
Master Limited Partnership – A publicly traded limited partnership. To qualify as an MLP, a
partnership must generate at least 90% of income from IRS “qualifying” sources.
Public Limited Company (PLC) – A limited liability company that sells shares to the public in United
Kingdom company law, in the Republic of Ireland, and UK Commonwealth. It can be either an unlisted or
listed company on the stock exchanges.
Real Estate Investment Trust (REIT) – An investment trust that owns and manages a pool of
commercial properties, mortgages, and other real estate assets in which shares can be bought and sold
in the stock market.
SEC-Registered 1940 Act Mutual Fund (U.S. Only) – A regulated investment company with a pool
of assets that regularly sells and redeems its shares created by the Investment Company Act of 1940.
Société à Responsabilité Limitée (SARL) – A private limited liability company in France, Switzerland,
and Luxembourg.
Société Civile (General Partnership) – A general partnership/civil company (may only carry out civil
activities) in France and Luxembourg where all the partners are fully liable for the partnership’s debts and
obligations.
Société d'Investissement à Capital Fixed (SICAF) – A bound company with bound capital, which
operates as an open or closed fund in France and Luxembourg.
Société d'Investissement à Capital Variable (SICAV) – A type of open-ended investment fund in
France and Luxembourg in which the amount of capital in the fund varies according to the number of
investors. Shares are bought and sold based on the fund’s current NAV.
Société en Commandité par Actions (LP) – A corporation partnership limited by shares. It must
have a minimum of one general partner and three limited partners. Limited partners hold shares and can
participate in the management of the SCA unlike a limited partnership.
Trust – A fiduciary relationship in which one party, trustor, gives another party, trustee, the right to hold
title to property of assets for the benefit of a third party, beneficiary.
Undertakings For The Collective Investment Of Transferable Securities (UCIT) – A public
limited company that coordinates the distribution and management of unit trusts among countries within
the European Union. UCITS can be offered to all countries that are a part of the European Union,
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provided that the fund and fund managers are registered within the respective domestic country. The
regulation recognizes that each country within the European Union may vary on their specific disclosure
requirements.
Unit Investment Trust (UIT)- Limited Duration – An SEC- registered investment company that
purchases a limited selection of bonds and/or equity securities according to a specific investment
objective and follows a “buy and hold” strategy for a specified period of time.
Unit Trust – An open-ended investment constituted under a trust deed, which has a specified
investment objective to determine the management aims and limitations.
Unitised Insurance Fund – An open-ended investment through a life insurance company. There is no
independent body tasked with safe guarding the assets. The company may manage, promote, and hold
the assets on behalf of the policyholders. The policyholders have rights to the assets but do not own the
units, nor are they readily redeemable.
Unitized Insurance Account - *see Unitized Insurance Fund
With- Profits Policy – An insurance contract that participates in the profits of a life insurance company.
Performance Disclosures
Asset-Only and Asset-plus-cash returns: Under Composite Returns you will indicate whether your
composite uses a Reporting type of Asset-Only Returns or Asset-plus-Cash Returns. Asset-only return
reports the value added in your composite beyond cash returns. Asset-plus-Cash return includes Fixed
Income components and those returns generated from Cash Accounts.
Asset Weighted – When creating the composite returns, each portfolio’s returns are weighted
based upon the relative assets in each underlying account within the composite.
Composite Dispersion – The difference in returns between a manager’s best and worst performing
accounts within a strategy. The figures collected are the highest, median, and lowest return percentages
for a particular strategy.
Equal Weighted – When creating the composite returns, each portfolio’s returns are equally weighted
regardless of the asset size of each account.
Equity/Fixed Income Accounting Method – This is a method of accounting whereby a corporation
will document a portion of the undistributed profits for an affiliated company in which they own a
position. You can select either Accrual (profits accounted for over a period of time) or Cash (all profits
gained at time of acquisition).
Dollar Weighted – portfolio accounting method that measures changes in the total dollar value,
treating intra-period additions, withdrawals, capital gains/losses, and income as all part of the return.
Rate of Return Weighting Method– For fixed income securities, take the dividend rate and divide by
the purchase price. This can also be calculated for common stock by dividing the annual dividend by the
purchase price.
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Securities Lending Activity – When a security holder lends securities owned by its clients to short
sellers to gain extra income.
Time Weighted – Portfolio accounting method where the effect of varying cash inflows are discounted
based on the timing of the cash flows within the period.
Valuation Frequency – is a measure of how often the value of a portfolio is valued. Most common
frequencies are daily, monthly or quarterly.
Fee Schedules
Absolute Performance - Absolute performance is the measure of the change in value of a product over
a period of time. This is calculated by dividing the change in value by the starting value, which will result
in your value as a percentage.
Separate Account Availability – This indicates to the user whether your separate account is open or
closed to new investors.
Hurdle Rate – The required rate of return in a discounted cash flow analysis. The hurdle rate should be
equal to the incremental cost of capital.
Liquidity on Purchase – The amount of time it takes for funds to be invested in a portfolio.
Liquidity on Sale – The amount of time it takes for an investor to receive funds once a sale is made
within a portfolio.
Minimum Account Size – This indicates to the user what the minimum investment required is to
receive separate account management. If you do not have a separate account minimum, please enter
“0”.
Minimum Annual Fee – This indicates to the user whether your firm imposes a minimum fee for
managing an account on a separate account basis. Some firms choose to impose a minimum fee rather
than a minimum account size. For instance, a client may wish to place $5 million in a product that has a
$10 million account minimum, but the manager still accept the account if the client agrees to pay the
minimum fee.
Custody – This indicates to the user whether or not the fee schedule shown includes custody charges.
Performance-Based Fee Arrangements – Does your firm manage accounts on a performance basis
or will you only accept accounts on a flat-fee structure? A performance-based arrangement may stipulate
that the client’s account performance exceed some hurdle rate before any fees are due.
“Most Favored Nation” Arrangements – Ensures clients that they are paying the lowest investment
fees that the manager offers to “similarly situated” clients.
Available to Accept ERISA Qualified Assets – This indicates to the user that your
commingled/pooled vehicle will accept ERISA-qualified money. ERISA-qualified assets are governed by
the 1974 Employee Retirement Income Security Act, which most commonly refers to company-sponsored
pension assets managed on behalf of retirees. If the commingled/pooled fund will accept ERISA qualified
as well as Non-ERISA Qualified assets, then the manager should indicate that in the Fee Disclosure
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section of the input form.
Available to Accept Non-ERISA Qualified Assets – This indicates to the user that your
commingled/pooled vehicles will accept assets that are not governed by ERISA. Some examples of NonERISA assets would be Prepaid Tuition, Operating Assets, Self-Insurance Assets, Foundation &
Endowment Assets or any other assets that are not subject to ERISA regulation.
Redemption Fees – Fees charged by a mutual fund to shareholders who sell some or all of their
position within a specified period of time. The time limit and size of the fee vary among funds.
Fee Disclosure – This section allows the manager to input any additional information that the user
would need to fully evaluate the fees associated with the specified investment product.
Relative Performance – A comparison between a strategy’s performance and the index performance
from the beginning of a given time period. Positive values indicate a strategy has done better than the
benchmark’s overall performance for that time period.
Scaled Fee Schedule – A fee structure that charges one rate based on the total amount of the
investment. For example, investments less than 5 million are charged 70 bps, 5-10 million at 60 bps, and
anything over 10 million at 50 bps.
Sliding Fee Schedule – A tiered fee structure that charges incremental management fees based on the
size of the investment. For example, the first 5 million is charged at 70 bps, the next 10 million at 60
bps, the next 10 million at 50 bps, etc.
Up Front/Entry Fees – Any fees that must be paid prior to investing in a particular strategy.
Highwater Mark - The highest peak in value that an investment fund/account has reached.
Team Description
Professionals Gained/Lost – Enter the number of Portfolio Managers, Research Analysts, Traders, and
Marketing/Client Service professionals that have been gained or lost during the requested time periods.
GIPS Compliance & Insurance Information
Date Compliance Began – The date in which the investment management firm claimed compliance
according to the Global Investment Performance Standards (GIPS). GIPS Compliance Verification is
performed by a third party on a firm-wide basis. This third party verifier must attest that (1) the firm has
complied with all GIPS requirements for composite construction on a firm-wide basis and (2) the firm’s
processes and procedures are established to present performance in accordance with the calculation
methodology required by GIPS, the data requirements of GIPS, and in the format required by GIPS.
Performance Audited & Attestation Firm – This indicates to the user that an independent
organization, such as an outside accounting firm, has audited the management firm’s performance
history and when that audit took place.
Errors & Omissions Insurance – This is insurance that an investment management firm would
purchase to cover any damages that may be caused as a result of errors made in the management of
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client accounts. For example, if a stock that does not meet the investment guidelines is erroneously
placed into a client’s account and damage is caused to the portfolio, then Errors & Omissions Insurance
would cover the manager if the client decided to sue.
Fiduciary Liability Insurance – This type of insurance is very similar to Errors & Omissions, but
covers an investment firm if a client sues them because they believe that they did not act in a fiducially
responsible manner in the management of their account. Investment management firms are held to a
“higher standard of care” when accepting fiduciary responsibility, typically based on the Prudent
Investor Rule. The difference between Errors & Omissions and Fiduciary Liability insurance is that
fiduciary liability may exist, even in the absence of gross investment errors, if a client believes that a
manager has not acted prudently in the management of an account.
Firm Bonded – In order for an investment management firm to be bonded, they typically put up some
sum of money that would cover them in the case of having a judgment placed against them and usually
only covers ERISA clients. For the firm to collect on the bond, they would usually have to have a
judgment placed against them and not simply show that they made a mistake, which would instead
typically be covered by Errors & Omissions insurance.
Pending Litigation – Indicate if the investment management firm has any legal litigation currently
pending against the organization, regardless of the allegations, the perceived merit of the charges or the
predictions for any possible outcome or settlement.
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