Glossary

Throughout the publication, you will note certain words and terms are highlighted. The glossary on this page provides the definitions for these words and terms, which you can refer to as you work through the publication.

GLOSSARY

• Angel investors are individuals who offer promising start-up companies funding in exchange for a share of the business, usually in the form of equity or royalties. Angel investors may or may not be accredited investors, a classification given only to investors with very high incomes or net worth.

• Bootstrapping refers to the process of starting a company with only personal savings, including borrowed or invested funds from family or friends, as well as income from initial sales.

• Collective Investment Scheme (CIS): A scheme where funds from various investors are pooled together for investment purposes, with each investor entitled to a proportional share of the net benefits of ownership of the underlying assets. The governing statute is the Collective Investment Schemes Control Act 2002 (CISCA).

• Correlation is a statistical measure that expresses the extent to which two variables are linearly related (meaning they change together at a constant rate).

• Execution risk: The risk that a project or businesses plans are not successful when put into action.

• Future: An exchange-traded contract for delivery of a standard quantity of a specific underlying asset (such as a soft commodity) at a predetermined price and date in the future.

• Greenfield projects: Investment into new infrastructure, such as new development and construction projects.

• Impact investments are investments made to generate positive, measurable social and environmental impact alongside a financial return. The wider definition also includes private sector infrastructure projects and therefore allows for a larger number of projects that retirement funds can consider for investment.

• Intrinsic value is a measure of what an asset is worth. This measure is arrived at by means of an objective calculation or complex financial model, rather than using the currently trading market price of that asset.

• Liquidity risk: The risk that assets will generate enough cash flow to service debt payments and any other obligation. Also, the risk associated with pricing assets where market prices are not observable.

• Long: Going long on a stock or bond is the more conventional investing practice in the capital markets, especially for retail investors. With a long-position investment, the investor purchases an asset and owns it with the expectation that the price is going to rise.

• Look-through principle provides that a fund cannot use an asset structure to circumvent the limits [of Regulation 28], if an asset comprises less than 5% of the aggregate fair value of the assets of the fund, then the fund need only disclose the categories of underlying assets making up the investment, and not each underlying asset.

• Market-neutral strategy: With many investment strategies, the whims of the market can drive returns, rather than the investor’s decisions. A market-neutral investment strategy aims to avoid these broader market forces and instead provide returns that do not correlate with the overall market. By taking an approximately equal position in long investments (hoping the price goes up) and short investments (hoping the price goes down), a market-neutral investor hedges against market swings in either direction.

• Mean reversion is a financial term for the assumption that an asset's price will tend to converge to the average price over time.

• Option: A contract that gives the holder the right, but not the obligation, to buy or sell an underlying instrument at an agreed price.

• Shorting: In short selling, an investor borrows stock shares that they believe will drop in price, sells those borrowed shares at market price, then buys back the shares at a lower price. To complete the short sale, the investor returns the shares to the original lender and profits the difference between the buy and sell prices.

• Spot market: The market where financial instruments and tangible commodities are traded for immediate settlement, and where there is an actual physical exchange of the underlying instrument or commodity.

• Spot price: The spot price is the current market price of a security, currency, or commodity available to be bought/sold for immediate settlement. In other words, it is the price at which the sellers and buyers value an asset right now.

• Venture capitalist: a person or company that invests in a business venture, providing capital for a start-up or expansion.

You can also visit our website to read more about alternative asset classes and infrastructure investment, as covered in the following educational publications: