Alternative Investments Essentials Flashcards
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Terms in this set
- Private Equity Equity investment in companies not traded on public markets, typically held through a limited-partnership fund.
- Venture Capital Early-stage private capital invested in startups in exchange for equity, expecting most positions to fail and a few to return the fund.
- Buyout Acquisition of a controlling stake in a mature company, typically funded with significant debt (a leveraged buyout).
- Carried Interest The share of fund profits paid to the general partner, typically 20% above a hurdle rate.
- Mezzanine Hybrid financing that sits between senior debt and equity in the capital structure, often debt with equity warrants.
- Commodity A basic, interchangeable good — energy, metals, agriculture — traded mainly through standardized futures contracts.
- Real Estate Investment in physical property for rental income and capital appreciation, accessed directly or through REITs.
- Infrastructure Investment in long-lived physical assets — toll roads, airports, utilities, pipelines — that generate stable, often inflation-linked cash flows.
- Lockup A contractual period during which investors cannot redeem their capital from a fund.
- Vintage The year a private fund makes its first investment, used to compare performance across funds raised in the same market environment.