Find another term. Follow an explanation link; use Back to return here. None of these investments is required for a simple long-term plan.
Backwardation
Later futures cheaper than nearer contracts, or futures below comparable spot price. This current relationship guarantees neither positive futures-investment returns nor an eventual sale price.
Capital call
A request to fund part of an agreed commitment, commonly for investments/expenses. Terms govern amount, notice and default consequences. Calls can coincide with market losses or poor liquidity; deadlines need accessible funding.
Capital commitment
Agreed investment funding, often paid over time on request. It differs from transferred cash and current valuation. Check funding period, fees and additional obligations before treating the first payment as the whole commitment.
Commitment versus initial payment
Contango
Later futures dearer than nearer contracts, or futures above comparable spot. Financing/storage/market conditions can contribute. It establishes neither negative investment return nor a separate cash fee for replacing contracts.
Crypto custody
Control of transaction-authorising keys. Self-custody retains security/recovery duties; third parties add provider dependence. A balance establishes neither control, segregation nor recovery rights. Secure access does not reduce asset-price risk.
Exchange-traded note (ETN)
An unsecured issuer debt linked to an index/benchmark under stated terms. Exchange trading grants no underlying fund ownership. Fees, payment terms and issuer credit matter; benchmark gains cannot remove non-payment risk.
Factor
In equities, a characteristic/common influence explaining risk/return differences. Research/fund definitions vary; no label identifies one universal portfolio. Broad share funds already carry several factor exposures.
How the characteristic is defined
Factor premium
A historical difference or hypothesised extra return associated with a defined factor. Research may compare two portfolios unlike a cost-bearing fund’s holdings. A past average promises no investor premium.
Factor tilt
Deliberate weights favouring defined characteristics relative to a reference allocation. It can be stable policy, not a short-term forecast, and can lag for years. An added label supplies no independent safety.
Interval fund
In the US structure here, a closed-end fund periodically offering limited share repurchases. Excess requests can receive partial acceptance; exits are not on demand. Reported value establishes no immediate access.
Investment factor
An equity factor comparing company investment activity, such as slower/faster asset growth under specified rules. It is not your account contribution or a universal business-quality measure.
Low-volatility factor
Favouring lower-measured-volatility shares or constructing lower-estimated-volatility portfolios. Rules/other exposures differ; lower estimated fluctuation establishes neither cash stability, maximum loss nor inflation protection.
Momentum factor
Favouring relatively strong past performers under defined comparison rules, unlike following each market’s own direction. Methods affect holdings; strength may reverse. This delegated process supplies no personal trading signal.
Relative versus own-price direction
Private equity
Ownership in non-public businesses, often through funds with active business involvement. Expenses, uncertain valuations, restricted exits and further commitments matter. Delegation removes neither business/financing nor liquidity risk.
Quality factor
A label for selected profitability, financial-strength or earnings-consistency measures. Metrics vary; broad quality need not equal a specific profitability factor. The label certifies neither price, future return nor suitability.
REIT
Real estate investment trust holding income-producing property/related assets under its structure. Listings, exit restrictions and local legal/tax rules vary. It differs from owning a building; distributions alone omit the total result.
Roll yield
A label for a return contribution associated with maintaining and replacing futures exposure. Check the index or study’s exact attribution method, including its comparison price and collateral treatment, before using a reported number. In this handbook’s hypothetical contract examples, a replacement-price gap is not a separately billed fee; subsequent contract prices and the amount of exposure determine the result.
Returns versus replacement prices
Size factor
An equity factor based on company market values relative to a universe, not low share price or small account size. Research small-minus-large returns differ from a small-company fund’s net result.
Company size and research measures
Spot price
Price for prompt delivery of a commodity with grade/location/terms identified, unlike later futures. Spot changes alone describe neither producer shares nor a futures fund’s or ETN’s return.
Which price does the product follow?
Stablecoin
A cryptoasset targeting a reference value, often currency, through backing/mechanism/redemption terms. The label establishes neither deposit protection nor prompt reference-price conversion. Reward programmes add separate funding sources and risks.
Reference value and redemption
Staking
Tokens committed to proof-of-stake validation, directly or through providers. Networks/methods set rewards/penalties; services add custody/contract/access risks. More units guarantee no spending-currency gain. Staking differs from lending.
Unfunded commitment
Agreed funding still payable under contract, not another asset or evidence of available cash. Amounts depend on terms, including distributions/recall rights; assess alongside prospective calls.
Future payments, current resources
Value factor
Favouring lower prices relative to fundamentals such as book value/earnings, not low unit prices. Metrics produce different portfolios; low ratios establish neither mispricing nor eventual outperformance.
Price relative to fundamentals
Related materials
- Withdrawals and spending: investing glossary
- Portfolio constructions and derivatives: investing glossary
- What factor investing changes in your portfolio
- How much evidence a factor needs
- Read the fund behind the factor label
- Property and REITs in the rest of your finances
- Commodity prices and the investment you actually own
- Cryptoassets and the risks behind the price
- What you give up when money is locked away