CalPERS

Investment & Risk Management Glossary

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 Investment & Risk Management Investment Policy term or phrase. You'll also find information about the related policies and asset classes for each term.

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L


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


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


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


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


Leverage - The use of debt, derivative instruments, reinvestment of cash collateral, or other means to acquire more assets than the capital employed.

Related Policies


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


Liquidity - The ability to quickly convert a particular investment into cash at a low transaction cost.

Related Policies


Liquidity Lines - See Lines of Credit.

Related Policy


Liquidity Risk - The inability to trade a position at a price approximating fair value.

Related Policy