Complete Glossary of Investment Policy Terms
This Glossary identifies, defines, and clarifies the meaning of investment terms used by CalPERS in our investment policies. The purpose of the Glossary is to establish a uniform vocabulary of terms for users of these policies.
Choose from the letters below to find a specific CalPERS Investment Policy term or phrase. You'll also find information about the related policies and asset classes for each term.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z # ALL
L
Land - Generally entitled vacant land held for potential development or resale.
Related Policy
- No related policies
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Land Development - Land development refers to properties that are acquired with the intention to develop or construct infrastructure, including all forms of acquisition and infrastructure development for single family housing, such as condominiums, town homes, zero lot line developments, planned unit developments with and without common area, and standard subdivisions.
Related Policy
- No related policies
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Land Entitlement Risk - Land entitlement risk reflects the risks assumed by an investor when purchasing a parcel of land prior to the tentative map and other discretionary political approvals being granted by the appropriate regulatory bodies.
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- No related policies
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Leasehold - The right to use and occupy real estate for a stated term and under certain conditions. Leasehold interest is conveyed by a lease.
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- No related policies
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Legacy Commitments - With regard to the Securities Lending Investment Policy, legacy commitments refers to commitments held in the cash collateral reinvestment portfolio prior to adoption of the Securities Lending Investment Policy dated February 16, 2010.
Related Policy
- Securities Lending (PDF, 299 KB)
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Lending Agents - An agent hired by the sponsor for locating demand, negotiating premiums, and investing the cash collateral from securities lending on behalf of the sponsor.
Related Policy
- Securities Lending (PDF, 299 KB)
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Letter Agreement - An agreement between CalPERS and its external partner specific to each investment made under the internal Relational Program. The agreement will include items specific to the investment, such as purchasing and selling shares, reporting requirements, expenses, confidentiality, and termination.
Related Policy
- Corporate Governance Program (PDF, 594 KB)
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Letter of Credit - A form of supplement or, in some cases, direct security for a municipal bond, under which a commercial bank or private corporation guarantees payment on the bond under certain specified conditions. The legal obligation to fund these instruments is "unconditional" (irreversible instrument).
Related Policy
- Credit Enhancement Program (PDF, 89 KB)
Related Category
Leverage - A condition where a portfolio's market obligation may exceed the market-value-adjusted capital commitment by the amount of borrowed capital (debt).
Related Policies
- No related policies
- Internally Managed Global Enhanced Equity Strategies (PDF, 219 KB)
- Internally Managed Global Equity Index Funds (PDF, 221 KB)
- Internally Managed Affiliate Equity Index Funds (PDF, 94 KB)
- Corporate Governance Program (PDF, 594 KB)
Related Category
Related Policies
- Global Fixed Income Program (PDF, 190 KB)
- Low Duration Fixed Income Program (PDF, 326 KB)
- Currency Overlay Program (PDF, 233 KB)
- Liquidity Program (PDF, 216 KB)
Related Category
Related Policies
- Derivatives - External Money Managers (PDF, 205 KB)
- Development of Derivatives Strategies (PDF, 32 KB)
- Developmental Investment Fund (PDF, 211 KB)
- Risk Management Program (PDF, 118 KB)
- Multi-Asset Class Partners Program (PDF, 46 KB)
Related Category
Related Policy
- No related policies
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Leverage - The use of debt, derivative instruments, reinvestment of cash collateral, or other means to acquire more assets than the capital employed.
Related Policy
- Private Equity Program (PDF, 164 KB)
Related Category
Leverage - A condition where a portfolio's market obligation may exceed the market-value-adjusted capital commitment by the amount of borrowed capital (debt).
Related Policy
- Barclays Aggregate Program (PDF, 92 KB)
Related Category
Related Policy
- Asset Allocation Strategy (PDF, 160 KB)
Related Category
Leverage - The use of debt, derivative instruments, reinvestment of cash collateral, or other means to acquire more assets than the capital employed.
Related Policies
- Leverage (PDF, 48 KB)
- Opportunistic Investments (PDF, 83 KB)
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Leverage - The use of borrowed money to make an investment, including all forms of debt and financing structures.
Related Policy
- Real Assets (PDF, 450 KB)
Related Category
Leverage - A condition where a portfolio's market obligation may exceed the market-value-adjusted capital commitment by the amount of borrowed capital (debt).
Related Policy
- No related policies
Related Category
Related Policy
- Absolute Return Strategies Program (PDF, 66 KB)
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Leverage Ratio - CalPERS' share of consolidated debt divided by CalPERS' share of value or cost of gross assets. The Leveraged Ratio can be measured in terms of: Loan to Value (LTV) - Debt divided by fair market value of assets. Loan to Cost (LTC) - Debt divided by cost of development. Development costs include hard and soft costs.
Related Policy
- No related policies
Related Category
Leveraged Bank Loans - Loans made by banks that are typically partially secured by assets and are made to non-investment grade companies with a debt/EBITDA ratio greater than 3.5 and have a spread to LIBOR of greater than 250 basis points.
Related Policy
- Global Fixed Income Program (PDF, 190 KB)
Related Category
Related Policy
- Barclays Aggregate Program (PDF, 92 KB)
Related Category
Leveraged Equity Investment - Refers to investments in real estate in which the investor (CalPERS) has an equity interest and the purchase or ownership of the investment is or partially financed with debt.
Related Policy
- No related policies
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LIBOR - An acronym for London Interbank Offer Rate. These rates are based on rates quoted by 16 (for U.S. dollars) British Bankers' Association designated banks as being in their view, the offered rate at which deposits are being quoted to prime banks in the London Interbank Market at 11:00 a.m. London time. Of the 16 contributors, the four highest and four lowest rates are eliminated. An average of the remaining eight is taken.
Related Policies
- Global Fixed Income Program (PDF, 190 KB)
- Low Duration Fixed Income Program (PDF, 326 KB)
- Liquidity Program (PDF, 216 KB)
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Related Policy
- Inflation Assets (PDF, 148 KB)
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Limited Liability Companies - A company, authorized by statute in some states, that is characterized by limits on members' liability, management by members or managers, and limitations on ownership transfer.
Related Policy
- Real Assets (PDF, 450 KB)
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Limited Liability Company - An alternative structure to a Limited Partnership. It is often described as a hybrid between a corporation and a partnership because it offers limited liability like a corporation and single taxation on income like a partnership.
Related Policies
- No related policies
- Monitoring Externally Managed Portfolios (PDF, 134 KB)
- Manager Development Program I and II (MDP) Policy and Manager Transition Policy (PDF, 40 KB)
- Corporate Governance Program (PDF, 594 KB)
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Limited Liability Company - An alternative structure to a Limited Partnership. It is often described as a hybrid between a corporation and a partnership because it offers limited liability like a corporation and single taxation on income like a partnership.
Related Policy
- Absolute Return Strategies Program (PDF, 66 KB)
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Limited Partner - The Limited Partner in a limited partnership.
Related Policy
- Real Assets (PDF, 450 KB)
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Limited Partner - An investor in a limited partnership. Limited partners provide the capital, but have no direct involvement in the day-to-day management of the fund. Limited partners have limited liability, but also have limited control over the management of the fund.
Related Policy
- Restricting PE Investments in Public Sector Outsourcers (PDF, 192 KB)
Related Category
Limited Partner - An investor in a limited partnership. Limited partners provide the capital but have no direct involvement in the management of the fund. Limited partners have limited liability but also have limited control over the management of the fund.
Related Policy
- No related policies
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Limited Partner - An investor in a limited partnership. Limited partners provide the capital, but have no direct involvement in the day-to-day management of the fund. Limited partners have limited liability, but also have limited control over the management of the fund.
Related Policy
- Inflation Assets (PDF, 148 KB)
Related Category
Limited Partnership - The most common format used in structuring private equity investments. Limited partners provide the capital but have no direct involvement in the management of the fund. Limited partners have limited liability but also have limited control over the management of the fund.
Related Policies
- No related policies
- Corporate Governance Program (PDF, 594 KB)
Related Category
Related Policy
- Private Equity Program (PDF, 164 KB)
Related Category
Limited Partnership - An investment vehicle with the General Partner and Limited Partner(s). The Limited Partner's liability is generally limited to its capital invested.
Related Policy
- Real Assets (PDF, 450 KB)
Related Category
Lines of Credit - These are also referred to as Standby Bond or Note Purchase Agreements and Liquidity Lines. These are designed to provide liquidity (as opposed to credit enhancement) in the event of financial market disruption. The legal obligation to fund under these instruments is "conditional" (revocable instruments).
Related Policy
- Credit Enhancement Program (PDF, 89 KB)
Related Category
Liquidity - The ability to quickly convert a particular investment into cash at a low transaction cost.
Related Policy
- Global Equity Sub-Asset Class Allocation Ranges (PDF, 132 KB)
Related Category
Related Policies
- Developmental Investment Fund (PDF, 211 KB)
- Leverage (PDF, 48 KB)
- Multi-Asset Class Partners Program (PDF, 46 KB)
Related Category
Liquidity - The ability to quickly convert a particular investment into cash at a low transaction cost.
Related Policy
Related Category
Liquidity - The ability to quickly convert a particular investment into cash at a low transaction cost.
Related Policy
- No related policies
Related Category
Related Policy
- Absolute Return Strategies Program (PDF, 66 KB)
Related Category
Liquidity Lines - See Lines of Credit.
Related Policy
- Credit Enhancement Program (PDF, 89 KB)
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Liquidity Risk - The inability to trade a position at a price approximating fair value.
Related Policy
- Asset Allocation Strategy (PDF, 160 KB)
Related Category
Liquidity Risk - Liquidity Risk is the ease with which an issue or specified amount can be sold at or near prevailing market prices.
Related Policies
- Currency Overlay Program (PDF, 233 KB)
- Low Duration Fixed Income Program (PDF, 326 KB)
- Global Fixed Income Program (PDF, 190 KB)
- Liquidity Program (PDF, 216 KB)
Related Category
Related Policy
- Barclays Aggregate Program (PDF, 92 KB)
Related Category
Liquidity Risk - The inability to trade a position at a price approximating fair value.
Related Policy
- Opportunistic Investments (PDF, 83 KB)
Related Category
Local Currency Debt - Debt issued by a national government, subnational entity or corporation denominated in local currency and issued in the local market, under local laws.
Related Policy
- Global Fixed Income Program (PDF, 190 KB)
Related Category
Related Policy
- Inflation Assets (PDF, 148 KB)
Related Category
Long/Short Credit - This investment style is comprised of hedge funds that seek to arbitrage between the different debt instruments within a company's capital structure. The hedge fund seeks to realize returns from shifts in the credit spreads between the debt instruments.
Related Policy
- Absolute Return Strategies Program (PDF, 66 KB)
Related Category
Long/Short Equity - This investment style is comprised of hedge funds that take both long and short equity positions to extract the maximum value from their investment information/analysis.
Related Policy
- Absolute Return Strategies Program (PDF, 66 KB)
Related Category