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CFA Prep > GIPS Glossary > Flashcards

GIPS Glossary Flashcards

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1
Q

Accrual Accounting

A

The recording of financial transactions as they come into existence rather than when they are paid or settled.

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2
Q

Additional information

A

Information that is required or recommended under the GIPS standards and is not considered supplemental information.

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3
Q

Administrative fee

A

All fees except for trading expenses and investment management fees. For example Legal fees, consultation

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4
Q

All-in fee

A

A client specific type of bundled fee

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5
Q

Benchmark

A

A point of reference against which the composite’s performance and/or risk is compared.

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6
Q

Benchmark description

A

General info on investment structure. Name and key feature must be present

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7
Q

Bundled fee

A

Investment Management + Trading Expense + Custody + Admin Fees. 2 types exist

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8
Q

Capital employed

real estate

A

Weighted Average Equity, No income return or capital return measured

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9
Q 
Capital return 
(real estate)
A

The change in value of assets held through meusrement period. Represented as a percentage of Capital Employed

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10
Q 
Carried interest
(real estate and private equity)
A

The profits that general partners are allocated from the profits on the investments made by the investment vehicle. Also known as “carry” or “promote.”

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11
Q

Carve-out

A

A portion of a portfolio that is by itself representative of a distinct investment strategy. It is used to create a track record for a narrower mandate from a multiple-strategy portfolio managed to a broader mandate.

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12
Q

Closed-end fund

real estate and private equity

A

Committed Capital, # of investors and life of fund are fixed.

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13
Q

Committed capital

real estate and private equity

A

Pledges of capital to an investment vehicle by investors or firms

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14
Q

Compliant Presentation

A

A presentation aimed for a composite which includes GIPS standard and supplementary material

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15
Q

Composite

A

An aggregation of one or more portfolios managed according to a similar investment mandate, objective, or strategy.

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16
Q

Composite creation date

A

The date when firms group one or more portfolios

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17
Q

Composite inception date

A

The initial date of composite performance record

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18
Q

Composite definition

A

Detailed criteria that determine the assignment of portfolios to composites. Asset class, target risk metrics, taxes

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19
Q

Composite description

A

Must include key features. Prospective client must understand investment mandate, objective and strategy

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20
Q

Composite termination date

A

The date that the last portfolio exits a composite.

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21
Q

Custody fee

A

The fees payable to the custodian for the safekeeping of portfolio assets. Can be based per transaction. Additional charges regarding safekeeping can be included

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22
Q

Direct investments

private equity

A

Investments made directly in private equity investments rather than investments made in fund investment vehicles or cash and/or cash equivalents.

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23
Q

Distinct business entity

A

A unit, division, department, or office that is organizationally and functionally segregated from other units, divisions, departments, or offices and that retains discretion over the assets it manages and that should have autonomy over the investment decision-making process.

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24
Q

Distribution

real estate and private equity

A

Cash or stock distributed to limited partners (or investors) from an investment vehicle. Distributions are typically at the discretion of the general partner (or the firm).

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25
Q

Evergreen fund

private equity

A

An open-end fund that allows for on-going subscriptions and/or redemptions by investors.

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26
Q

Ex-ante

A

Before the fact.

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27
Q

Ex-post

A

After the fact.

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28
Q

External cash flow

A

Capital (cash or investments) that enters or exits a portfolio.

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29
Q

External valuation

real estate

A

An assessment of value performed by an independent external third party who is a qualified, professionally designated, certified, or licensed commercial property valuer/appraiser.

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30
Q

Fair value

A

The amount at which an investment could be exchanged in a current arm’s length transaction between willing parties in which the parties each act knowledgeably and prudently. Must include accrued income

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31
Q

Fee schedule

A

The firm’s current schedule of investment management fees or bundled fees relevant to the particular compliant presentation

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32
Q

Final liquidation date

real estate and private equity

A

The date when the last portfolio in a composite is fully distributed.

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33
Q

Fund of funds

private equity

A

An investment vehicle that invests in underlying investment vehicles.

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34
Q

General partner

real estate and private equity

A

A class of partner in a limited partnership. The general partner (GP) retains liability for the actions of the limited partnership. usually fund manager and earns a fee from LP

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35
Q

Gross-of-fees

A

The return on investments reduced by any trading expenses incurred during the period

36
Q

Gross-of-fees

real estate and private equity

A

The return on investments reduced by any transaction expenses incurred during the period.

37
Q 
Income return 
(real estate)
A

The investment income earned on all investments during the measurement period net of all non-recoverable expenditures, interest expense on debt, and property taxes. Percentage of Capital Employed

38
Q

Internal dispersion

A

A measure of the spread of the annual returns of individual portfolios within a composite. Can be high/low range and standard deviations

39
Q

Internal valuation

real estate

A

A firm’s best estimate of value based on the most current and accurate information available under the circumstances. Can include DCF and sales comparison

40
Q

Investment management fee

A

A fee payable to the firm for the management of a portfolio. Can be asset/performance based

41
Q

Large cash flow

A

The level at which the firm determines that an external cash flow may distort performance if the portfolio is not valued

42
Q

Limited partner

real estate and private equity

A

limited partners are generally protected from legal actions and any losses beyond their committed capital.

43
Q

Limited partnership

real estate and private equity

A

Limited partnerships are usually fixed life investment vehicles. The general partner manages the limited partnership pursuant to the partnership agreement.

44
Q

Market value

A

The price at which investors can buy or sell an investment at a given time X by the quantity held + any accrued income.

45
Q

Must

A

A provision, task, or action that is mandatory or required to be followed or performed

46
Q

Must not

A

A task or action that is forbidden or prohibited.

47
Q

Net-of-fees

A

The gross-of-fees return reduced by investment management fees (including performance-based fees and carried interest).

48
Q

Open-end fund

(real estate and private equity

A

Another term for Evergreen Fund

49
Q

Paid-in capital

real estate and private equity

A

Capital inflows to an investment vehicle. Equal to the amount of committed capital that has been drawn down since inception. Also includes re-distributions !

50
Q

Performance-based fee

A

Type of fee based a benchmark

51
Q

Performance examination

A

A detailed examination of a specific composite’s compliant presentation by an independent verifier.

52
Q

Periodicity

A

The length of the time period over which a variable is measured

53
Q

Pic multiple

real estate and private equity

A

Since inception paid-in capital divided by cumulative committed capital.

54
Q

Portfolio

A

An individually managed group of investments. A portfolio may be an account or pooled investment vehicle.

55
Q

Primary fund

private equity

A

An investment vehicle that makes direct investments rather than investing in other investment vehicles.

56
Q

Private equity

A

nvestment strategies include, but are not limited to, venture capital, leveraged buyouts, consolidations, mezzanine and distressed debt investments, and a variety of hybrids, such as venture leasing and venture factoring.

57
Q

Proprietary assets

A

Investments owned by the firm, the firm’s management, and/or the firm’s parent company that are managed by the firm.

58
Q

Prospective client

A

Person/Entity expressed interest in composite and is eligible

59
Q

Public market equivalent (pme)

private equity

A

The performance of a public market index expressed in terms of an internal rate of return (IRR), using the same cash flows and timing as those of the composite over the same time period. Can be a benchmark

60
Q

Real estate

A

Wholly owned, partial operated, REITs, REOCs, Equity-oriented debt

61
Q

REITs

A

Real Estate Investment Trusts

62
Q

REOCs

A

Real Estate Operating Companies

63
Q 
Realization multiple (dpi)
(real estate and private equity)
A

Since inception distributions divided by since inception paid-in capital.

64
Q

Recommendation

A

A suggested provision, task, or action that should be followed or performed. Best practice not requirement

65
Q

Residual value

private equity and real estate

A

The remaining equity that limited partners (or investors) have in an investment vehicle at the end of the performance reporting period.

66
Q

RVPI

real estate and private equity

A

Residual value divided by since inception paid-in capital.

67
Q

Secondary fund

private equity

A

An investment vehicle that buys interests in existing investment vehicles.

68
Q

Settlement date accounting

A

Recognizing the asset or liability on the date when the exchange of cash and investments is completed.

69
Q

Significant cash flow

A

The level at which the firm determines that a client-directed external cash flow may temporarily prevent the firm from implementing the composite strategy. Must be a determined fixed amount

70
Q

Since inception

real estate and private equity

A

From the initial cash flow of a composite.

71
Q

Since inception internal rate of return (SI-IRR)

A

The SI-IRR is always annualized except when the reporting period is less than one year, in which case the SI-IRR is not annualized. A special case IRR that equates PV of cash flows

72
Q

Standard deviation

A

A measure of the variability of returns. As a measure of historical risk, standard deviation quantifies the variability of the composite and/or benchmark returns over time

73
Q

Sub-advisor

A

A third-party investment manager hired by the firm to manage some or all of the assets for which a firm has investment management responsibility.

74
Q

Temporary new account

A

An account for temporarily holding client-directed external cash flows until they are invested according to the composite strategy or disbursed. Used to reallocate Significant Cash Flows

75
Q

Time-weighted rate of return

A

A method of calculating period-by-period returns that negates the effects of external cash flows

76
Q

Total firm assets

A

Total firm assets includes assets assigned to a sub-advisor provided the firm has discretion over the selection of the sub-advisor. Includes discossairy and non-discossairy

77
Q

Total return

A

The rate of return that includes the realized and unrealized gains and losses plus income for the measurement period.

78
Q 
Total return 
(real estate)
A

The rate of return, including all capital return and income return components, expressed as a percentage of the capital employed over the measurement period.

79
Q

Total value

real estate and private equity

A

Residual Value + Distributions

80
Q

Trade date accounting

A

Recognizing the asset or liability on the date of the purchase or sale and not on the settlement date. 3 day window for entry OK with GIPS

81
Q

Trading expenses

A

The actual costs of buying or selling investments. Broker, Bid-Offer spread.

82
Q

Transaction expenses

real estate and private equity

A

All actual legal, financial, advisory, and investment banking fees related to buying, selling, restructuring, and/or recapitalizing portfolio

83
Q

Verification

A

An independent verifier asses if firm follows Composite Construction and Present Performance with GIPS standards

84
Q

Vintage year (Method 1)

A

the year of the investment vehicle’s first drawdown or capital call from its investors;

85
Q

Vintage year (Method 2)

A

the year when the first committed capital from outside investors is closed and legally binding.

86
Q

Wrap fee

A

Type of bundled fee and are specific to a particular investment product. includes trading expenses that cannot be identified separately

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