A
Accrued Income
Revenue an asset manager or fund has earned but has not yet received payment for or recorded in its accounts. Under accrual accounting, this income is recognized immediately as a current asset (receivable) to reflect accurate financial standing.
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Asset Allocation
The strategic division of an investment portfolio among various asset classes to balance risk and reward according to specific investment goals, risk tolerance, and time horizons, with the overall goal of maximizing returns while managing volatility.
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Audit Trail
A chronological record of financial data that captures who made any change, what data was changed, and when the change occurred. Audit trails give firms the ability to trace a transaction back to its original source, which can be critical for verifying accuracy.
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Automated Data Management
Using software to automatically acquire, store, validate, govern, and distribute financial data throughout the enterprise.
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B
Buy-Side Accounting
The management, reporting, and analysis of financial data for hedge funds, private equity firms, and asset managers.
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C
Capital Call
A capital call (also known as a drawdown) is a legally binding request made by private equity or real estate fund managers (GPs), asking investors (LPs) to provide a portion of previously committed capital in order to purchase assets, pay management fees, or cover operating expenses.
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Closing NAV
The final per-share value of a fund is calculated at the end of each trading day. The closing NAV represents the total value of the fund’s assets minus its liabilities, divided by the number of outstanding shares.
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Calculated NAV
The per-share value of a fund calculated at any point in time, not necessarily the end of the trading day as with the closing NAV. The calculation is the same: assets less liabilities, divided by shares outstanding.
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D
Derivatives Valuation
The process of determining the fair value of financial instruments like options, futures, and swaps that are based on an underlying asset’s price, volatility, and interest rates.
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Data Governance
The framework of rules, processes, and roles that ensure the accuracy, security, and compliance of financial data throughout its lifecycle from acquisition to disposal.
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E
Expense Allocation
Distributing shared business expenses across various departments, projects, or entities in order to ensures accurate financial reporting, cost tracking, and profitability analysis.
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F
Fund Accounting
A specialized system asset managers use to track investor capital, calculate NAV, and allocate income/expenses. Unlike corporate accounting, it focuses on transparency to ensure capital management aligns with legal agreements and enables accurate reporting.
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Fund Performance
A measurement of the returns of a specific portfolio of investments for a specific period, relative to cost, risk, and benchmarks. Fund performance is an indicator of how well (or how poorly) a fund manager is meeting strategic objectives.
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Full Shadow NAV
An independent valuation of a fund’s NAV, typically produced in parallel to the official NAV generated by the fund administrator, for purposes of comparison and error detection.
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G
General Ledger
The authoritative, centralized book of record for all financial activity and economic events in a fund’s lifecycle.
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H
Hedge Fund NAV
The total value of a hedge fund’s assets less its liabilities, or the net worth of the portfolio. Hedge fund NAV is calculated monthly or quarterly rather than daily.
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I
Internal Rate of Return (IRR)
A measure of an investment’s expected annual compound growth rate, accounting for the time value of money. IRR calculates the discount rate where the Net Present Value (NPV) of all cash flows equals zero. Higher IRR indicates a more attractive investment.
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Investment Valuation
The process of quantifying the intrinsic value of an asset in order to make investment decisions. Valuation involves analyzing fundamental metrics to establish a fair value.
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Investor Reporting
The process of sharing financial performance, operational metrics, and strategic updates with investors (such as stakeholders, limited partners, or lenders). Provided quarterly or monthly, investor reports help ensure transparency, establish and maintain trust, and support compliance.
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Investment Book of Record (IBOR)
A centralized, real-time repository asset managers use to get an accurate, intraday view of portfolio positions, cash, and trade activity. The IBOR primarily supports front-office decision-making, enabling portfolio managers to see current exposures and trade accurately throughout the day, as opposed to accounting systems that primarily support the back office.
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L
Leverage Monitoring
The process of tracking debt assumed by a fund. Leverage monitoring involves tracking loan-to-value ratios, debt-to-equity, and margin requirements to manage risk and ensure asset managers can meet financial obligations.
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Liquidity Management
The proactive process asset managers use to ensure they have enough cash (liquid assets) to meet financial obligations and trade requirements without incurring significant losses.
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M
Market Value Adjustment
A feature in fixed annuities that adjusts the payout if money is withdrawn before the surrender period ends, based on interest rate changes. If rates rise, the MVA reduces the value. If rates fall, the MVA increases the value.
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Multi-Fund Reporting
Consolidating financial data from multiple funds into a comprehensive, unified report in order to track performance, expenses, and compliance more easily across diverse portfolios.
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N
Net Asset Value (NAV)
The per-share value of a fund’s assets minus liabilities, often derived using automated pricing and valuation outputs.
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NAV Oversight
The independent validation process that asset managers and fund boards use to ensure the NAV produced by a fund administrator is accurate, timely, and compliant.
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NAV Validation
A control process that verifies the accuracy of a fund’s daily NAV before it is released to investors. NAV oversight helps ensure that share prices are correct, that they comply with regulations, and that they mitigate financial or reputational risks caused by calculation errors.
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NAV Anomalies
Unexpected or inaccurate deviations in the per-share value of a fund compared to its expected value, or deviations in the market price of a closed-end fund relative to underlying assets.
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O
Offsets
Risk management strategies funds use to reduce, neutralize, or hedge the risk of an existing position by taking an opposite position in the same or a related asset.
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Operational Risk
Potential financial loss or reputational damage caused by operational failures, or failures of a fund’s people, processes, and systems. It focuses on risks related to the execution of trades as opposed to risks related to how the market moves.
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P
Private Fund NAV
The total market value of all assets held by a private fund (private equity, real estate, private credit) minus its liabilities, typically reported quarterly or annually.
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Profit and Loss (P&L)
A financial report summarizing a fund’s revenues, costs, and expenses over a specific period. The P&L report calculates net profitability by subtracting expenses from revenue, which is a vital metric for understanding financial health and operational performance.
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Partial Shadow NAV
A NAV oversight process that validates specific components of the fund administrator’s NAV calculation (such as high-level P&L or key fee calculations) rather than recalculating the entire NAV from scratch. It is a more cost-effective, top-down approach than full shadow accounting.
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R
Real-time Valuation
The instantaneous calculation of a portfolio’s current worth using live market data in order to understand immediate market sentiment, trading prices, and updated financial metrics.
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S
Securities Lending
The temporary transfer of securities from a lender to a borrower, usually a financial institution, in exchange for collateral and a fee.
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Shadow NAV
A valuation of a fund’s assets that is calculated independent, in parallel to the official NAV calculated by the fund administrator.
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T
Trade Capture
The post-execution process of recording the details of a trade (price, quantity, instrument, counterparty) in a front-office trading system or database to serve as the official, initial record of a trade for the purposes of risk management, P&L calculation, and downstream processing.
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Trial Balance
An internal accounting report listing all ledger account balances (assets, liabilities, equity, revenue, expenses) to ensure total debits equal total credits, often used to detect errors.
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U
Unrealized Gains/Losses
The potential profit/loss for an investment that has not been sold. Unrealized gains/losses are calculated as the difference between the current market value and the purchase price.
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V
Valuation Date
The point in time when the value of an investment is determined. This date serves as the official cutoff point for the source material used to estimate the investment’s value.
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Venture Fund NAV
The NAV for a venture fund, which raises capital from LPs to invest in early-stage, high-growth potential startups in exchange for equity. As with all NAV calculations, the venture fund NAV represents the total market value of the fund’s assets minus total liabilities.
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