Glossary of Fund Accounting Terms

A method of allocating taxes that tracks a partner's share of each security tax lot. When a security is sold, its realized gains/losses are allocated to partners based on their historic unrealized gain or loss.

Institutions or individuals that contribute capital to an investment fund.

A measure of an investor's performance, presented as a compounded rate of return. Calculated as: (1+ra) * (1+rb) * (1+rn) - 1 where ra, rb, rn are returns for the investor for each break period of the fund.

Limits withdrawals to a percentage of a fund's assets so that only a proportionate share each investor's capital can be redeemed.

Fees, usually in the range of 1–6%, charged by some funds when the investor enters the fund.

Time-based restriction an investor's ability to exit a fund (usually 1 year).

Current year's net operating losses are applied to future years' profits in order to reduce tax liability. See also: high-water mark

Used with master / feeder structures to drill down into each investor's capital available to determine the feeder's investment in the master fund.