The purchase of one corporation by another, through either the purchase of its shares, or the purchase of its assets.
This term is used widely to indicate investments which are not mainstream assets. Examples of alternative investments include: hedge funds, real estate and real estate focused funds, private equity funds and managed futures . Alternative investments are often perceived as carrying higher risk than the traditional asset classes.
Asset class refers to a set of related investment vehicles that have similar risk and return characteristics. Different types of asset classes would include equities, fixed income, hedge funds, commodities, private equity, real estate etc.
Mutual funds which have a pre-specified maturity period and investments in these schemes can be made only at the time of the New Fund Offer. A few closed ended funds may provide exit options by getting listed on recognized stock exchanges. Investors are returned the capital plus gains thereon at the time of winding up of the fund
Any Mutual Fund scheme which invests at least 60% of its fund in debt instruments is called a debt mutual fund. Debt instruments would typically include fixed income bearing instruments such as corporate debentures, PSU bonds, gilts, treasury bills, certificates of deposit and commercial papers.
Any mutual fund scheme which invests at least 60% of its funds in Equity is called Equity mutual fund, while a fund which invests in not more than 60% in any particular asset class is called balanced mutual fund
The process of completing an order to buy or sell securities.
Investments that generate a defined set of payments, such as interest or dividend income, including bonds, debentures and preferred shares.
The person responsible for investing a mutual fund's assets, implementing its investment strategy, and managing the day-to-day portfolio trading.
The term hedge fund covers a plethora of strategies. Generically, they are collective investment funds which use derivatives to either maximise growth or minimise losses.
The use of borrowed capital to increase the potential return of an investment. The leverage can work favorably or adversely depending on the return on investment and cost of borrowed capital.
The London Interbank Offer Rate (LIBOR) is an average of the interest rates that major international banks charge each other to borrow funds (in various currencies) in the London money market.
Funds, as per their offer documents, investing only in short-term money market instruments including treasury bills, commercial paper and certificates of deposit. The objective is to provide liquidity and preserve the capital.
The combination of two or more companies, generally by offering the shareholders of one company shares in the acquiring company in exchange for the surrender of their stock.
A mutual fund brings together money from large pool of investors and invests it in stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns units, which represent a part of these holdings.
The holdings of more than one stock, bond, cash equivalent or other asset by an individual or institution. A portfolio may be designed to achieve the investor’s goals such as generating maximum returns or reducing risk through diversification.
These are collective investment schemes (like mutual funds) which generally invest a large portion of the corpus in unlisted corporates. Such underlying investments are not available to the public at large and are negotiated on a private placement basis. A private equity fund is a closed ended fund and generally invests for a longer term (five years or more).
The process whereby an investor pays or receives the funds or securities involved in a transaction. Thus, every trade executed has to be settled.
A structured product is generally a pre-packaged investment strategy which is generally based on derivatives. Structured products are created to meet specific needs that cannot be met from the standard financial instruments available in the markets. Structured products can be used as an alternative to a direct investment, as part of the asset allocation process to reduce risk exposure of a portfolio, or to capitalize on the current market trend. It is a synthetically created instrument which has various traditional asset classes and derivatives there on as its underlying and it tracks the performance of those asset classes and derivatives.
Practice whereby one person (the grantor) transfers the legal title to an asset, called the principle or corpus, to another person (the trustee), with specific instructions about how the corpus is to be managed and disposed.
Venture funds are typical private equity funds which invest into start up entities providing them with seed capital. A Venture fund would normally take a higher risk as the nature of the entity is that of a start up which can succeed as well as make losses.