Reference
Wealth Glossary
A plain-language guide to the language of private wealth. Clear definitions of the investment, family-office and compliance terms that shape how serious money is managed, written for families and advisers alike.
A
- Alpha
- Return earned above what the market or a benchmark would explain.
- Alternative investments
- Assets beyond listed equities and bonds, such as private markets, real assets and hedge funds.
- Asset allocation
- How a portfolio is divided among asset classes such as equities, bonds and alternatives.
B
C
- Capital market assumptions
- Forward-looking estimates of return, risk and correlation for each asset class.
- Capital preservation
- An objective that prioritises protecting wealth over growing it.
- Concentration risk
- The danger that arises when too much wealth sits in a single asset or exposure.
- Correlation
- The degree to which two assets move together.
- Custodian
- The institution that safekeeps a portfolio's assets.
D
- Discretionary mandate
- An arrangement in which the adviser makes investment decisions within agreed limits.
- Diversification
- Spreading capital across assets that don't move together to reduce risk.
E
- Efficient frontier
- The set of portfolios offering the highest expected return for each level of risk.
- ESG investing
- Investing that takes environmental, social and governance factors into account.
- Expected return
- The return an asset or portfolio is anticipated to earn, on average, over time.
F
- Family governance
- The structures and agreements by which a family makes decisions about shared wealth.
- Family office
- An organisation that manages the wealth and affairs of one or more wealthy families.
- Fiduciary duty
- The legal obligation to act in another party's best interest.
H
- Hedge fund
- A pooled fund that uses a wide range of strategies to seek returns across varied markets.
- Hedging
- Reducing a specific risk by taking an offsetting position.
I
- Investment Policy Statement
- The document that records a portfolio's objectives, constraints and governance.
L
M
- Maximum Drawdown
- The largest peak-to-trough fall in a portfolio's value over a period.
- Modern portfolio theory
- The framework for building portfolios by balancing risk and return through diversification.
- Monte Carlo simulation
- A technique that models thousands of possible outcomes to estimate a range of results.
P
- Private credit
- Lending to companies outside the public bond markets.
- Private equity
- Investment in companies that are not listed on a public exchange.
- Private Markets
- Investments not traded on public exchanges, such as private equity and credit.
- Pseudonymisation
- Replacing identifying data with tokens so a person can't be identified without a separate key.
R
- Rebalancing
- Trading a portfolio back toward its target allocation as markets move it off course.
- Risk capacity
- How much risk a family can afford to take, given its goals, liabilities and time horizon.
- Risk tolerance
- How much investment risk a family is willing to bear, by temperament and preference.
S
- Sharpe ratio
- A measure of the return earned for each unit of risk taken.
- Strategic Asset Allocation
- The long-term target mix of asset classes a portfolio is built around.
- Stress Test
- Estimating how a portfolio would behave under adverse market scenarios.
- Suitability
- The regulatory duty to ensure advice fits the client's circumstances and objectives.
T
- Tactical asset allocation
- Short-term, deliberate tilts away from the strategic allocation to reflect a market view.
- Time horizon
- The length of time before invested capital is needed.
V
- Volatility
- How much returns vary around their average — a common measure of risk.