glossary

Accredited Investor: this is an Investor defined under SEC Rule 501 of Regulation D/ This refers to people and entities that are permitted to buy Securities in a Private Placement. The term covers virtually all the types of institutions that are participants in the Private Placement market, and also includes people who meet certain income or net worth thresholds.

ADR: this is the abbreviation for American Depositary Receipt. An "American Depositary Receipt" is a Security that is held by a depositary institution representing a specified number of underlying ordianry shares of a non-US company.

Alpha: this represents a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha.

Angel Investor: type of investor providing capital and investing in an earlier stage company, such as a business start-up, usually in exchange for a Convertible Preferred Stock or equity ownership.

Buy-side: Buy-side is a term used in investment banking to refer to advising institutions concerned with buying investment services. Private equity funds, mutual funds, life insurance companies, unit trusts, hedge funds, and pension funds are the most common types of buy side entities. In sales & trading, the split between the buy side and sell side should be viewed from the securities exchange services. The investing community must use those services to trade securities.

Family offices: A family office or single family office (SFO) is a private company that manages investments and trusts for a single family. The company's financial capital is the family's own wealth, often accumulated over many family generations. Traditional family offices provide personal services such as managing household staff and making travel arrangements. Other services typically handled by the traditional family office include property management, day-to-day accounting and payroll activities, and management of legal affairs. More recently the term "family office" or multi family office is used to refer primarily to financial services for relatively wealthy families.

Hedge: This financial term comes from "meaning a line of bushes around a field", and this term has long been used as a metaphor for the placing of limits on risk.

Hedge fund: A hedge fund is a pooled investment vehicle administered by a professional management firm, and often structured as a limited partnership, limited liability company or similar vehicle. Hedge funds are generally distinct from mutual funds as their use of leverage is not capped by regulators and from private equity funds as the majority of hedge funds invest in relatively liquid assets.

Investment management: This is the professional "asset management" of various securities (shares, bonds and other securities) and other assets (e.g. real estate) in order to meet specified investment goals for the benefit of investors. Investors may be institutions (insurance companies, pension funds, corporations, charities and educational establishments) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds).

Mutual fund: A mutual fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities. While there is no "legal" definition of the term "mutual fund", it is most commonly applied only to those collective investment vehicles that are regulated and sold to the general public. They are sometimes referred to as "investment companies" or "registered investment companies". Most mutual funds are "open-ended", meaning stockholders can buy or sell shares of the fund at any time by redeeming them from the fund itself, rather than on an exchange. Hedge funds are not considered a type of mutual fund, primarily because they are not sold publicly.

Portfolio Manager: A portfolio manager is a professional making investment decisions using money other people have placed under his or her control or a person who manages a financial institution's portfolios. On the investment side, they work with a team of analysts, and are ultimately responsible for establishing an investment strategy, selecting appropriate investments and allocating each investment properly for a fund or other asset management vehicle. Portfolio managers are presented with investment ideas from internal buy-side analysts and sell-side analysts from investment banks. It is their job to sift through the relevant information and use their judgment to buy and sell securities. Throughout each day, they read reports, talk to company managers and monitor industry and econmic trends looking for the right company and time to invest the portfolio's capital.

Research analyst: A financial analyst, securities analyst, research analyst, equity analyst or investment analyst is a person who performs financial analysis for external or internal clients as a core part of the job. Writing reports or notes expressing opinions is always part of "sell-side" (brokerage) analyst job and is often not required for "buy-side" (investment firms) analysts. Traditionally, analysts use fundamental analysis principles but technical chart analysis and tactical evaluation of the market environment are also routine. Often at the end of the assessment of analayzed securities, an analyst would provide a rating recommeding an investment action, e.g. to buy, sell, or hold the security.

Sell Side: In the capacity of a broker-dealer, "sell side" refers to firms that take orders from buy side firms and then "work" the orders. This is typically achieved by splitting them into smaller orders which are sent directly to an exchange or to other firms. Sell side firms are intermediaries whose task is to sell securities to investors (usually the buy side i.e. investing institutions such as mutual funds, hedge funds, pension funds and insurance companies). Sell side firms are paid through commissions charged on the sale price of the stock. Sell side firms employ research analysts, traders and salespeople who collectively strive to generate ideas and execute trades for buy side firms, enticing them to do business. Part of the research analyst's job includes publishing research reports on public companies, these reports analyze their business and provide recommendations on the purchase or sale of the stock.

Ticker: A stock symbol or ticker symbol is an abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market. A stock symbol may consist of letters, numbers or a combination of both. "Ticker symbol" refers to the symbols that were printed on the ticker tape of a ticker tape machine. Stock symbols are unique identifiers assigned to each security traded on a particular market. For example, AAPL is for Apple Inc.; PFE is for Pfizer Inc.; and GE for General Electric Company. A stock symbol which consist of letters, numbers or a combination of both is a way to uniquely identify that stock. The symbols were kept as short as possible to reduce the number of characters that had to be printed on the ticker tape and to make it easy to recognize by traders and investors.