Glossary
The terms every NZ fund investor meets.
Plain-English reference for the 84 New Zealand managed-fund terms an investor or adviser is most likely to encounter. Every entry is sourced from FMA, IRD or the Financial Markets Conduct Act 2013 — no opinions, no recommendations.
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ACCUMULATION-UNITS
Accumulation vs distribution units
Accumulation units reinvest income inside the unit price. Distribution units pay income out as cash and the unit price reflects capital only.
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ALPHA
Alpha
A fund's return in excess of what its benchmark exposure would predict, after adjusting for the beta of the strategy. Often shorthand for "skill-driven excess return".
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ALTERNATIVES
Alternatives
A catch-all for asset exposures outside listed equities, listed bonds and cash: hedge funds, private equity, private credit, infrastructure, commodities, gold. Small allocation in most NZ retail mandates.
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AML/CFT Act 2009
AML/CFT (Anti-Money-Laundering / Counter-Financing of Terrorism)
NZ's statutory regime requiring fund managers to verify investor identity and source of funds before accepting investment. Administered by the FMA, RBNZ and DIA.
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AFC · Total fund charge · MER
Annual fund charge
The total ongoing percentage charge paid out of a NZ managed fund each year — covering management fees, supervisor/custodian fees, audit, and other operating costs.
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ASSET-ALLOCATION
Asset allocation
The percentage split of a fund's portfolio across asset classes: equities, fixed interest, listed property, cash, alternatives. Drives the fund's risk and return profile more than security selection.
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AUDITOR
Auditor
The independent licensed audit firm that audits a NZ managed-investment scheme's financial statements annually. Identity disclosed in the OMI.
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BETA
Beta
A measure of how much a fund moves in response to its benchmark. Beta of 1 means the fund moves one-for-one with the benchmark; beta of 0.7 means it moves 30% less.
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related-party transactions
Birthright/related-party transactions disclosure (BIRC)
A scheme's related-party transactions — investments managed by an affiliate, brokerage routed through a related broker, fees paid to a related-party administrator — must be disclosed in the OMI under FMC Regulations 2014.
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transaction spread
Buy/sell spread
A fixed percentage applied at the point of order to cover the transaction costs of investing inflows or liquidating to meet outflows. Charged once, not annually.
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CV · Comparative Value
Comparative Value (CV) method
A Foreign Investment Fund calculation method that taxes closing market value minus opening market value, plus distributions received, less contributions made — used when it produces a lower result than FDR.
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CONCENTRATED-PORTFOLIO
Concentrated portfolio
An active strategy that holds a small number of positions (typically 15–30 stocks) with high conviction in each. Higher idiosyncratic risk than a broad-diversified portfolio, higher tracking error against any benchmark.
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HEDGING-COST
Currency hedging cost
The recurring cost of running forward currency contracts to neutralise foreign-currency exposure on a hedged-to-NZD fund. Usually 0.05–0.20% per year, embedded in the annual fund charge.
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CUSTODIAN
Custodian
The independent entity that physically holds a fund's securities and cash in segregated client accounts. Disclosed in the OMI; separate from the fund manager.
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DRP · reinvestment
Distribution reinvestment plan (DRP)
A standing election that automatically reinvests cash distributions back into the fund's units rather than paying them out. Default on most NZ retail accumulation-style PIE funds.
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DISTRIBUTION-YIELD
Distribution yield
The cash income a fund has distributed to unit holders over the past 12 months, expressed as a percentage of the current unit price. Distinct from total return.
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multi-asset · multi-sector · balanced
Diversified-multi-asset fund
A fund that holds multiple asset classes in a single product — typically NZ shares, international shares, fixed interest, listed property, and cash — in target asset-allocation ranges.
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DOWNSIDE-DEVIATION
Downside deviation
The standard deviation of a fund's negative-return periods only. Input to the Sortino ratio. Captures asymmetric downside that total standard deviation hides.
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ETF-VS-MANAGED-FUND
ETF vs managed fund
An exchange-traded fund (ETF) is a managed fund whose units trade on a stock exchange like a share. A traditional unit-priced managed fund is bought and sold directly with the manager or platform at the fund's daily NAV.
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smart beta · factor tilts
Factor investing
A strategy that systematically tilts portfolios toward documented return factors — value, size (small-cap), momentum, quality, low-volatility — based on academic empirical research.
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FDR
Fair Dividend Rate (FDR)
The default Foreign Investment Fund calculation method for most foreign shares — taxes a deemed 5% return on the opening market value of the FIF interest, regardless of actual gain or loss.
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fair-dealing · ss129–138
Fair-dealing provisions (FMC Act Part 2)
The misleading- and deceptive-conduct rules in Part 2 of the Financial Markets Conduct Act 2013. Apply to all financial-product communication regardless of audience or channel.
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FIF threshold · de minimis
FIF NZ$50,000 de minimis exemption
NZ-resident individuals who hold less than NZ$50,000 at cost of FIF-type investments at all times during the year are exempt from applying FIF rules personally.
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FAP · Adviser firm
Financial Advice Provider (FAP)
A New Zealand entity licensed by the FMA to give regulated financial advice to retail clients under the Financial Markets Conduct Act 2013.
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FMA · Te Mana Tātai Hokohoko
Financial Markets Authority (FMA)
New Zealand's integrated financial-markets conduct regulator. Licenses fund managers, supervisors and financial-advice providers; enforces the Financial Markets Conduct Act; runs the Disclose register.
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FMC Act
Financial Markets Conduct Act 2013 (FMC Act)
The principal NZ statute governing the issue, supervision and conduct of managed-investment schemes, securities offers, and financial-product disclosure.
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FIRST-HOME-WITHDRAWAL
First-home withdrawal (KiwiSaver scheme)
A statutory withdrawal ground under the KiwiSaver Act 2006 that lets eligible members access their KiwiSaver scheme money toward purchasing a first home, subject to retaining a minimum balance.
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Disclose register · disclose-register.companiesoffice.govt.nz
FMA Disclose register
The official New Zealand register of every retail managed-investment scheme — the primary public source for fund PDSs, SIPOs, OMIs, Quarterly Fund Updates and full-portfolio holdings disclosures.
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FIF rules
Foreign Investment Fund (FIF)
A New Zealand tax regime that taxes NZ-resident individuals on the holding of most foreign shares and non-PIE foreign funds above a NZ$50,000 cost-basis de minimis threshold.
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FUND-OF-FUNDS
Fund of funds
A managed fund that invests primarily in other managed funds rather than directly in shares, bonds or other assets. Common in diversified-multi-asset products.
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HEDGED-VS-UNHEDGED
Hedged vs unhedged (NZD)
A hedged fund neutralises foreign-currency movements back to NZD using forward currency contracts. An unhedged fund leaves foreign-currency exposure in place — returns include the NZD/foreign-currency move.
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HWM · high water mark
High-water mark (HWM)
The highest historical unit price a fund has reached after performance-fee crystallisation. A manager can only earn a new performance fee on gains above this mark — preventing double-charging on the same return.
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hurdle benchmark · performance-fee benchmark
Hurdle rate
The benchmark return that a fund's performance must beat before a performance fee can be charged. Common NZ shapes: OCR + a margin, an equity index, or an absolute % per year.
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franking credit (Australia)
Imputation credit
A tax credit attached to a NZ company dividend that represents company tax already paid on the underlying profit, used by the shareholder to offset their personal tax on the dividend.
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INDEX-VS-ACTIVE
Index fund vs active fund
An index fund mechanically tracks a published market index. An active fund's manager makes discretionary buy/sell decisions trying to beat or differ from a benchmark.
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INFRASTRUCTURE
Infrastructure (listed and unlisted)
Investment in long-life physical assets — toll roads, airports, power transmission, water utilities. Listed-infrastructure access via global indexes; unlisted infrastructure via specialist funds.
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global equities · offshore shares
International equities
Listed shares in companies outside NZ. The largest growth-asset sleeve in most NZ diversified-multi-asset funds, typically held via passive or active offshore-equity sub-funds.
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global bonds
International fixed interest
Offshore-issued debt securities — sovereign and corporate bonds outside NZ. Typically held in NZD-hedged form to neutralise currency volatility on the defensive sleeve.
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KIWISAVER-DEFAULT-FUND
KiwiSaver scheme default fund
A KiwiSaver scheme fund designated by the government as the receiving fund for members who do not actively choose a scheme. Default settings are set out under the KiwiSaver Act 2006.
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KIWISAVER-VS-MANAGED-FUND
KiwiSaver scheme vs managed fund
A KiwiSaver scheme fund is a tax-advantaged retirement savings product with employer/government contributions and lock-in until age 65. A managed fund has no lock-in and no contribution incentives — but lets you withdraw at any time.
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glide path · age-based fund
Lifestages glide path
An investment approach where a fund automatically reduces growth-asset allocation as the investor ages, shifting from Growth-profile in younger years to Conservative-profile near retirement.
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LIQUIDITY-MANAGEMENT
Liquidity management
The tools a fund manager uses to meet redemption requests in stressed markets: cash buffers, redemption gates, in-specie transfers, and dilution adjustments.
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REITs · A-REITs
Listed property
Listed shares in property trusts and property-investment companies (REITs). Treated as a growth asset in NZ retail diversified-fund SIPOs, with higher dividend yield than broad equities.
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MANAGED-FUND
Managed fund
A pooled investment vehicle where many investors' money is combined and managed collectively against a stated investment objective by a professional fund manager.
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MIS · Scheme
Managed Investment Scheme (MIS)
The legal vehicle under the Financial Markets Conduct Act 2013 that holds investor money in a pooled fund. Every NZ retail managed fund is part of a registered MIS.
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MER · expense ratio
Management expense ratio (MER)
A US/Canada/AU disclosure term for a fund's ongoing operating expenses as a percentage of fund value. In NZ, the equivalent disclosure is the FMA-standardised annual fund charge in the Quarterly Fund Update.
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max DD · drawdown
Maximum drawdown
The largest peak-to-trough percentage decline in a fund's unit price over a measurement window. Captures worst-case past loss in a way standard deviation does not.
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Manager licence
MIS Manager licence
The FMA-issued licence required to act as Manager of a registered Managed Investment Scheme in New Zealand under section 388 of the Financial Markets Conduct Act 2013.
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NFI
Notified Foreign Investor (NFI)
A PIE-tax sub-regime for eligible non-resident investors. Foreign-sourced income inside the PIE is taxed at 0%; NZ-sourced income is taxed at the relevant non-resident withholding-tax rate.
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New Zealand shares
NZ equities
Listed shares in NZX-quoted companies. A core asset class for NZ diversified-multi-asset and single-asset funds, with the S&P/NZX 50 as the most-cited benchmark.
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NZ bonds
NZ fixed interest
NZ-issued debt securities — NZ government bonds, NZ corporate bonds, and NZ residential mortgage-backed securities. Used as the income/defensive sleeve of diversified NZ retail funds.
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OMI
Other Material Information (OMI)
A supplementary FMA-required disclosure document containing material information about a fund or scheme — typically conflicts of interest, related-party transactions, fee waivers, auditor/trustee/custodian identities — that is not included in the PDS.
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PDS-FEE-TABLE
PDS fee table
The standardised fee disclosure table required in section 4 of a NZ retail Product Disclosure Statement. Lists annual fund charge, performance fee, transaction fees and any other charges in a prescribed format.
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PDS-REPLACEMENT
PDS replacement and lodgement
A Manager must lodge an updated PDS on the FMA Disclose register whenever a material change occurs to a scheme, and at minimum annually. Each lodgement is dated and replaces the prior version.
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PERFORMANCE-FEE
Performance fee
An additional fee a fund manager charges only when fund performance exceeds a defined benchmark or hurdle rate, typically subject to a high-water mark.
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PERFORMANCE-FEE-CAP
Performance fee cap
A maximum performance fee a manager can earn in a single period, expressed as a percentage of average net asset value. Limits investor downside from a strong outperformance year.
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PLATFORM-FEE
Platform fee
A separate fee charged by a fund-distribution platform such as InvestNow, Sharesies or Kernel — paid on top of the fund's own annual fund charge.
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PIE fund · PIE
Portfolio Investment Entity (PIE)
A tax-efficient New Zealand fund structure where investor tax is capped at the investor's Prescribed Investor Rate (PIR), with a maximum of 28%.
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PIR
Prescribed Investor Rate (PIR)
The tax rate applied to your share of a PIE fund's taxable income. NZ has three PIRs for resident individuals — 10.5%, 17.5% and 28% — chosen using a two-year look-back of taxable + PIE income.
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PRIVATE-CREDIT
Private credit
Debt financing provided by non-bank lenders to private companies, typically with negotiated bilateral terms. An alternative-asset sleeve in some NZ wholesale and select retail mandates.
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PDS
Product Disclosure Statement (PDS)
The headline legal document a NZ managed fund or KiwiSaver scheme provides to retail investors, summarising the fund, fees, risks, and how to invest.
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QFU · Fund Update
Quarterly Fund Update (QFU)
A standardised FMA-mandated quarterly report each NZ retail managed fund publishes, summarising fees, returns, risk indicator, asset mix, top-10 holdings and fund size.
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R² · coefficient of determination
R-squared
The percentage of a fund's return variability explained by its benchmark. R² of 0.95 on a NZ-equity benchmark means 95% of the fund's movement tracked that benchmark.
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REGISTRY
Registry / Unit registry
The provider that maintains the official record of investor unit holdings, processes orders, and handles distribution payments. Operationally separate from the manager.
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RWT
Resident Withholding Tax (RWT)
Tax that NZ banks and bond issuers deduct at source from interest payments to NZ-resident investors, at the investor's nominated RWT rate.
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RI · ESG · ethical investment · sustainable investment
Responsible investment (RI / ESG / ethical)
A fund that applies environmental, social and governance (ESG) screening criteria — typically excluding sectors such as tobacco, controversial weapons, fossil fuels, or applying positive sustainability tilts.
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FMA risk indicator
Risk indicator (1–7 scale)
A standardised 1–7 risk score every NZ retail managed fund must publish, calculated from the fund's price volatility (standard deviation of weekly returns) over the past five years.
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SHARPE-RATIO
Sharpe ratio
A risk-adjusted return measure: excess return (fund return minus the cash rate) divided by the standard deviation of returns. Higher means more return per unit of volatility.
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HARDSHIP-WITHDRAWAL
Significant financial hardship withdrawal
A KiwiSaver scheme early-withdrawal ground for members suffering severe financial hardship — minimum-living-costs, mortgage default, medical, funeral expenses — subject to supervisor approval.
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SOFT-CLOSE
Soft close vs hard close
A soft close restricts new investors but allows existing unit holders to keep contributing. A hard close stops all new contributions, including from existing investors.
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SOFT-DOLLAR
Soft-dollar arrangements
A historical industry practice where a fund manager directs brokerage to a counterparty in return for research, market data, or other services. In NZ retail PIE schemes the practice is disclosed and increasingly limited under current FMA expectations.
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SORTINO-RATIO
Sortino ratio
A downside-only variant of the Sharpe ratio: excess return divided by the standard deviation of negative returns only. Penalises losses but not symmetric upside volatility.
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volatility · σ
Standard deviation (volatility)
The statistical measure of how widely a fund's returns vary around their average. The input to the FMA risk indicator: weekly returns over five years, mapped to a 1–7 band.
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SIPO
Statement of Investment Policy and Objectives (SIPO)
The fund-manager document setting out the fund's investment objectives, strategy, asset-allocation ranges, derivative use, hedging, rebalancing and exclusion rules — filed on FMA Disclose and binding on the manager.
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MIS supervisor · Trustee
Supervisor
A licensed independent entity that holds the assets of a managed-investment scheme in trust and supervises the manager's compliance with the SIPO and FMC Act.
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SWING-PRICING
Swing pricing
A unit-pricing mechanism where the fund's unit price is adjusted up on net inflow days and down on net outflow days to pass transaction costs onto entering/exiting investors rather than the existing pool.
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SWITCHING-FEE
Switching fee
A fee charged when an investor moves money between funds within the same scheme. Most NZ retail PIE schemes do not charge switching fees but reserve the right under the PDS.
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THEMATIC-FUND
Thematic fund
A fund that invests in companies aligned with a specific theme — clean energy, AI, robotics, healthcare innovation. Higher concentration and higher single-sector volatility than a broad-diversified equity fund.
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TFC
Total fund charge (TFC)
An older NZ disclosure term for the all-in annual percentage cost of being invested in a fund. Largely replaced by "annual fund charge" under current FMA Quarterly Fund Update formatting.
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TRACKING-ERROR
Tracking error
The standard deviation of a fund's return differences against its benchmark. For an index fund, low tracking error means tight replication; for an active fund, high tracking error means more active risk relative to benchmark.
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TRUST-DEED
Trust deed
The foundational legal document of a NZ Managed Investment Scheme. Sets out the contractual relationship between Manager, Supervisor and unit holders.
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NAV · Net asset value
Unit price (NAV)
The price of one unit in a managed fund — the fund's net asset value divided by the number of units on issue. The unit price is what you transact at when buying or selling.
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VaR
Value-at-Risk (VaR)
A statistical estimate of the maximum loss a portfolio is expected to suffer over a defined horizon at a given confidence level — e.g. "1-day 95% VaR of 1.2%" means a 5% chance of losing more than 1.2% in one day.
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WHOLESALE-INVESTOR
Wholesale investor
An investor who meets statutory financial, professional or experience tests under Schedule 1 of the FMC Act and can therefore access fund offers without the retail-PDS disclosure regime.
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