The fund-ops vocabulary, defined properly.

A structure where one or more feeder funds pool investor capital into one master fund that holds all positions — commonly paired onshore and offshore feeders.

A fund legally organized outside investors’ home country — commonly Cayman or BVI — for tax-neutral treatment and regulatory flexibility, not to evade tax.

The jurisdiction under whose law a fund vehicle is legally organized, which fixes its corporate law, tax treatment, and regulatory regime.

The entity in a limited partnership that manages the fund, makes all investment decisions, and bears unlimited liability for the partnership’s obligations.

A passive investor in a limited partnership whose liability is capped at their committed capital and who takes no role in managing the fund.

A legal structure with a general partner who manages the fund and limited partners who invest passively with liability capped at their capital.

A standalone legal entity created for a single, narrow purpose — typically to isolate a specific asset or exposure from the rest of a fund’s balance sheet.

A single corporate entity that creates multiple statutorily ring-fenced cells, each with its own assets and liabilities, without a separate entity per cell.

Open-end funds accept ongoing subscriptions and redemptions at NAV; closed-end funds raise a fixed capital pool upfront with no ongoing redemption right.

The highest NAV per unit a fund has reached and crystallized — performance fees apply only above this level, never on a recovery from a prior loss.

A recurring fee — commonly 1-2% annually of NAV or committed capital — a fund charges to cover operating costs, independent of investment performance.

A fee — commonly 15-20% — charged on a fund's investment gains, typically only above a high-water mark or hurdle rate, not on every dollar of NAV growth.

The minimum annual return a fund must clear before any performance fee accrues — a hard hurdle exempts only the gain up to it, a soft hurdle none once cleared.

The ordered sequence — return of capital, preferred return, GP catch-up, then a profit split — in which a fund's proceeds are paid out to LPs and the GP.

The general partner's share of a fund's investment profit — commonly 20% — paid as compensation for performance rather than for managing the fund day to day.

The defined date on which a fund's accrued performance fee is locked in and charged, and its high-water mark is reset — not a continuous, real-time charge.

A provision requiring a fund's general partner to return carried interest received in excess of what the fund's actual lifetime performance justified.

A provision crediting some or all of certain other fees a manager earns against the management fee LPs would otherwise owe, to prevent double-charging.

A fund's total annual operating costs — commonly including the management fee — expressed as a percentage of AUM, used to compare overhead across funds.

A fund's total assets minus total liabilities at a point in time — the single figure every fee, subscription, and redemption is struck against.

A fund's net asset value divided by units or shares outstanding — the price used to strike new subscriptions and redemptions.

Tracking capital that entered a fund at different times as separate series, each with its own NAV per unit and high-water mark.

A single-NAV alternative to series accounting that charges performance fees fairly using a credit or holdback at subscription.

An independent, parallel NAV and ledger a manager runs alongside the official books to catch errors before investors see them.

An independent third-party firm that maintains a fund's official books, calculates NAV, and processes subscriptions and redemptions.

A segregated sub-account isolating an illiquid or hard-to-value asset from a fund's main NAV, so redeeming investors aren't diluted by it.

A fund's documented methodology for pricing every asset it holds — which sources take priority, at what cadence, and who can override a price.

A three-level classification ranking how reliable the inputs behind an asset's fair value are, from quoted market prices to manager models.

A discrepancy between what a fund's books expect an asset or NAV figure to be and what an independent source confirms it actually is.

The ledger tracking one investor's ownership stake in a fund — contributions, allocated P&L, fees, and distributions — summing to fund NAV.

A prime broker bundles custody, financing, execution, and securities lending into one relationship for an institutional trading client.

A custodian holds a fund's assets in segregated, bankruptcy-remote accounts, separate from a broker's own financing and trading activity.

OTC derivatives are privately negotiated contracts traded directly between two counterparties, governed by a bilateral master agreement rather than an exchange.

Initial margin is collateral posted upfront to open a leveraged position; variation margin settles gains and losses on it as the position is marked.

Rehypothecation is when a broker or lender re-uses a client's pledged collateral for its own financing or lending, rather than holding it untouched.

Mark-to-market values a position at its current market price rather than its original cost, recording the difference as an unrealized gain or loss.

Slippage is the gap between a trade's expected execution price and the price it actually fills at, driven mainly by order size versus available liquidity.

Counterparty risk is the risk that the entity on the other side of a trade or deposit fails to meet its obligations, independent of market performance.

Securities lending is the temporary transfer of a security or token to a borrower, often to cover a short sale, in exchange for collateral and a fee.

A fund's core disclosure document — strategy, risks, fees, and terms — given to prospective investors before they subscribe under a private-placement exemption.

The binding contract governing a fund's operations — capital commitments, fees, distributions, and the rights and duties of the general and limited partners.

The contract an investor signs to actually commit capital to a fund — including eligibility representations, subscription amount, and wiring instructions.

A separate agreement between a fund and one investor that modifies or adds to the standard fund terms just for that investor.

The standard-form contract, published by ISDA, that governs over-the-counter derivative trades between a fund and a counterparty.

A standardized set of questions institutional investors send a fund to evaluate its operations, risk controls, and service providers before investing.

The identity verification and source-of-funds screening a fund runs on investors before accepting a subscription, satisfying anti-money-laundering obligations.

A credit facility, secured against LP capital commitments, that lets a fund draw cash to invest before actually calling capital from its investors.

A general partner's formal notice requiring limited partners to fund a portion of capital they previously committed but have not yet paid in.

An LP's request to withdraw some or all of its capital from an open-end fund, priced at NAV per unit as of a scheduled dealing date.

A contractual cap on the percentage of a fund's NAV that can be redeemed on a single dealing date, used to prevent a forced-selling spiral.

The minimum period an investor's capital must remain in a fund before it becomes eligible for redemption, sometimes with an early-redemption fee instead.

The ongoing disclosures — performance, portfolio, risk, and commentary — a fund sends its limited partners, commonly monthly or quarterly.

The discount rate at which the net present value of a fund's cash flows to an investor equals zero — a money-weighted return sensitive to cash-flow timing.

The multiples LPs use to measure fund performance in dollars returned per dollar invested: DPI (realized), RVPI (unrealized), and TVPI/MOIC (their sum).

A breakdown of a fund's NAV change into its drivers — price moves, new/exited positions, flows, and fees — so a return can be explained, not just reported.

A statistical estimate of the loss a portfolio is not expected to exceed over a given time horizon at a given confidence level, under normal market conditions.

The largest percentage decline from a prior peak NAV to a subsequent trough — the standard measure of the worst loss an investor would have experienced.

A risk-adjusted return measure — annualized excess return over the risk-free rate, divided by annualized volatility — showing return earned per unit of risk.

Gross exposure sums every long and short position to measure total market risk; net exposure nets longs against shorts to measure directional bias.

Repricing a fund's current positions through a hypothetical or historical adverse scenario to estimate the resulting loss — a complement to VaR for tail risk.