Reference
Glossary
The vocabulary of the institutional world, defined in plain language. Each term links to the article — and the video — where the concept actually matters.
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AT1 bond (Additional Tier 1)
An AT1 bond is a perpetual bank bond built to absorb losses before taxpayers do. What the triggers are, why the yield is high, and where AT1s sit in funds.
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Behaviour gap
The behaviour gap is the difference between what an investment returned and what its average investor earned — caused by timing, not by the asset.
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CET1 ratio (Common Equity Tier 1)
The CET1 ratio measures a bank's highest-quality capital against its risk-weighted assets — and why a healthy ratio does not guarantee a bank survives.
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CoCo bond (contingent convertible)
A CoCo bond converts to equity or is written down when a defined trigger fires. How CoCos relate to AT1 bonds, and why the distinction matters in a fund.
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Credit spread
The credit spread is the extra yield a bond pays over a government bond for taking default risk — and a market-wide stress gauge you can read for free.
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Duration (interest-rate sensitivity)
Duration measures how much a bond's price moves when interest rates move. The approximation: duration of 7 means roughly a 7% price fall per 1-point rate rise.
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Forced deleveraging
When volatility spikes, risk models order institutions to cut positions — selling that feeds on itself. The mechanism behind crashes that have no headline.
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Free cash flow yield
Free cash flow yield measures the cash a business generates against its price — the valuation lens institutions use where retail reaches for the P/E ratio.
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Fund domicile
A fund's domicile decides which tax treaties apply to its dividends. For US equity exposure, the Ireland-vs-Luxembourg choice quietly changes your return.
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Investment Policy Statement (IPS)
An IPS is the short written document institutions run money by — goal, risk limits, rules. Why it beats resolutions, and what a personal one contains.
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Notional value
Notional value is the face amount a derivative contract references — not the money at risk. The difference between notional, market value and real exposure.
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Payment for order flow (PFOF)
PFOF is the fee a market maker pays a broker to execute its customers' orders. What it is, why it exists, and why it explains less than the debate assumes.
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Rebalancing
Rebalancing restores a portfolio to its target weights — mechanically selling what grew and buying what lagged. Why institutions treat it as governance.
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Repo (repurchase agreement)
A repo is a loan dressed as a sale: securities go out, cash comes in, and tomorrow it reverses. The funding market banks live on — and misuse made famous.
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Securities lending
Funds lend their holdings to short sellers for a fee, against collateral. Why your ETF can cost less than its TER — and what the risk actually is.
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Street name (beneficial ownership)
Shares bought through a broker are registered in 'street name' — a nominee holds legal title while you hold the economic claim. What that means in practice.
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TER (total expense ratio)
The total expense ratio is the annual fee a fund promises to charge, taken silently from the fund's value. What it covers, and what it leaves out.
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Total return swap (TRS)
A total return swap gives one party an asset's full return without owning it — the instrument behind Archegos and inside every synthetic ETF, explained.
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Tracking difference
Tracking difference is the gap between an index's return and the fund's actual return — the cost an ETF really charged you, as opposed to the TER it promised.
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UCITS
UCITS is the EU regulatory framework most European ETFs operate under — diversification rules, counterparty caps, and segregated custody, explained.
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Value at Risk (VaR)
Value at Risk estimates how much a portfolio should lose on a bad day within a confidence level — and systematically fails at the moment it matters most.
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Viability event trigger
The clause that lets an AT1 bond be written down or converted. The mechanical trigger is automatic; the regulatory trigger is a judgement call. Both explained.
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This glossary grows with the channel — terms are added as the articles that give them context are published. Missing one? It is probably on the way.