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
P
Paper Trade - Testing an investment strategy by engaging in a real time stream of activity simulating the actual analysis and execution required to implement the strategy.
Related Policy
- Developmental Investment Fund (PDF, 211 KB)
Related Category
Partial Duration Analysis - A method that measures the price sensitivity of a security or a portfolio to changes in different parts of the yield curve.
Related Policy
- Low Duration Fixed Income Program (PDF, 326 KB)
Related Category
Partial Interest - Divided or undivided rights in an asset that represent less than the whole (or less than 100% of the rights).
Related Policies
- Appraisal of CalPERS Real Estate Interests (PDF, 52 KB)
- Real Estate - Accounting (PDF, 32 KB)
Related Category
Participant - An individual that takes part in, or contributes to, one of the CalPERS Supplemental Income Plans.
Related Policy
- Supplemental Income Plans (PDF, 31 KB)
Related Category
Participant - A person that takes part in, or contributes to, one of the CalPERS Supplemental Income Plans.
Related Policy
Related Category
Participating Mortgage - An investment structure where the lenders (CalPERS) return consists of mortgage interest plus potential contingent interest expressed as a percentage of property operating cash flow and/or property appreciation upon sale or refinancing.
Related Policy
- No related policies
Related Category
Participation Shares in CalPERS Construction Loan Program - LIBOR or prime-based floating rate construction loans targeted for low- to moderate-income housing located in California. The projects are managed by BRIDGE Housing Corporation and underwritten by leading financial institutions. CalPERS then purchases participation shares in the underwritten construction loans.
Related Policy
- Low Duration Fixed Income Program (PDF, 326 KB)
Related Category
Partner - A partner is a member of a partnership and is responsible for all aspects of portfolio management as set forth in the investment partner?s contract with CalPERS.
Related Policy
- Corporate Governance Program (PDF, 594 KB)
Related Category
Partnership Agreement - Legal document that sets forth the terms and conditions of an investment vehicle. The partnership agreement also establishes the roles of general and limited partners.
Related Policies
- No related policies
- Corporate Governance Program (PDF, 594 KB)
Related Category
Partnership Investment - An investment in a Limited Partnership.
Related Policy
- Private Equity Program (PDF, 164 KB)
Related Category
Passive Investment - Investing in a manner that attempts to replicate the characteristics and performance of a market index. In theory, passive investing/management assures investment performance is neither worse nor better than the market as a whole. In practice, actual results differ from the results reported for the index due to transactions costs and tracking error.
Related Policy
- No related policies
Related Category
Passive Investment - Investing in a manner that attempts to replicate the characteristics and performance of a market index or benchmark. In theory, passive investing/management assures investment performance is neither worse nor better than the market as a whole. In practice, actual results differ from the results reported for the index due to transactions costs and tracking error.
Related Policies
- Internally Managed Global Enhanced Equity Strategies (PDF, 219 KB)
- Global Equity Sub-Asset Class Allocation Ranges (PDF, 132 KB)
Related Category
Passive Portfolio - Investing in a manner that attempts to replicate the characteristics and performance of a market index. In theory, passive investing/management assures investment performance is neither worse nor better than the market as a whole. In practice, actual results differ from the results reported for the index due to transactions costs and tracking error.
Related Policy
- Real Assets (PDF, 450 KB)
Related Category
Payment versus Delivery Repurchase Agreement - A short-term, often overnight, sale of securities with an agreement to repurchase the securities at a slightly higher price. In a Delivery Versus Payment Repurchase Agreement, the securities used as collateral are delivered to the custody bank of the investor.
Related Policy
- Low Duration Fixed Income Program (PDF, 326 KB)
Related Category
Performance Attribution - The process of attributing portfolio returns to causes. It decomposes past performance into separate components or factors contained within a multi-factor model.
Related Policies
- Internally Managed Global Equity Index Funds (PDF, 221 KB)
- Internally Managed Global Enhanced Equity Strategies (PDF, 219 KB)
- Internally Managed Affiliate Equity Index Funds (PDF, 94 KB)
Related Category
Related Policy
- Developmental Investment Fund (PDF, 211 KB)
Related Category
PIK (Payment in Kind) - Bonds or preferred stock whose interest is paid in the form of additional bonds or preferred stock.
Related Policy
- Global Fixed Income Program (PDF, 190 KB)
Related Category
Related Policy
- Barclays Aggregate Program (PDF, 92 KB)
Related Category
Placement Agent - Any person or entity hired, employed, engaged or retained by or acting on behalf of an External Manager or on behalf of another Placement Agent as a finder, solicitor, marketer, consultant, broker or other intermediary to raise money or investments from or to obtain access to CalPERS, directly or indirectly, including without limitation through a CalPERS Vehicle.
Related Policy
Related Category
Policy Asset Allocation - CalPERS' strategic asset allocation target weights.
Related Policy
- Risk Management Program (PDF, 118 KB)
Related Category
Policy Index - The Policy Index is calculated as the sum of each asset class' strategic target weight in the portfolio times its actual total return.
Related Policy
- No related policies
Related Category
Related Policy
- Total Fund Statement of Investment Policy (PDF, 41 KB)
Related Category
- CalPERS Investment Policy Statement
Policy Range - The permissible allocations of an asset class set by the Investment Committee.
Related Policy
- Asset Allocation Strategy (PDF, 160 KB)
Related Category
Pooled Funds - Funds from many individual investors that are aggregated for the purposes of investment, as in the case of a mutual or pension fund. Investors in pooled fund investments benefit from economies of scale, which allow for lower trading costs per dollar of investment, diversification and professional money management.
Related Policies
- California Employers' Retiree Benefit Trust Fund (PDF, 254 KB)
- Judges' Retirement System II Fund (PDF, 221 KB)
- Legislators' Retirement System Fund (PDF, 220 KB)
- Long Term Care Fund (PDF, 156 KB)
Related Category
Pooled Funds - Funds from many individual investors that are aggregated for the purposes of investment, as in the case of a mutual or pension fund. Investors in pooled fund investments benefit from economies of scale, which allow for lower trading costs per dollar of investment, diversification and professional money management.
Related Policies
- Supplemental Income Plans CalPERS Risk-Based and Target Retirement Date Funds (PDF, 62 KB)
- Affiliate Funds (PDF, 67 KB)
Related Category
Power Center - A larger community center retail property that typically serves customers within a 5- to 10-mile radius. Power centers typically offer general merchandise at discounted price points and often feature an array of ?category killer? retailers. The size range is typically 250,000- 600,000 square feet. The projects typically incorporate at least three anchors.
Related Policy
- No related policies
Related Category
Preferred Return - A term in the partnership agreement that describes a minimum return that is paid to the limited partners before the general partner receives any share of the profits.
Related Policy
- Real Assets (PDF, 450 KB)
Related Category
Preferred Stock - Stock shares that represent a portion of ownership in a company, with the shares normally carrying fixed dividends. Sometimes the shares have voting rights, but not generally.
Related Policy
- Barclays Aggregate Program (PDF, 92 KB)
Related Category
Related Policies
- Global Fixed Income Program (PDF, 190 KB)
- Low Duration Fixed Income Program (PDF, 326 KB)
Related Category
Premium - The cost paid or revenue received for an option.
Related Policy
- Derivatives - External Money Managers (PDF, 205 KB)
Related Category
Premium - The cost paid or revenue received for an option.
Related Policy
- Barclays Aggregate Program (PDF, 92 KB)
Related Category
Prepayment Analysis - A method that stress tests Collateralized Mortgage Obligations by varying the prepayment assumptions to understand and anticipate how the structure changes in a constantly fluctuating interest rate environment.
Related Policy
- Global Fixed Income Program (PDF, 190 KB)
Related Category
Prepayment Speed Assumption (PSA) - The PSA, also referred to as Prepayment Standard Assumption, is a percentage expression of the relationship between the actual and expected CPR based on the PSA prepayment assumption. The PSA ramp assumes the mortgages prepay slower in the first 30 months of seasoning. 100% PSA indicates a starting rate of 0.2% CPR increasing 0.2% per month for the first 30 months. A constant 6% CPR is assumed for the remaining life of the mortgage.
Related Policy
- Low Duration Fixed Income Program (PDF, 326 KB)
Related Category
Prepayment Variability Analysis - A method that stress tests Collateralized Mortgage Obligations by varying prepayment assumptions to understand and anticipate how the structure changes in a constantly fluctuating interest rate environment.
Related Policy
- Barclays Aggregate Program (PDF, 92 KB)
Related Category
Pricing Risk - The risk that the fair value of an asset cannot be established.
Related Policy
- Asset Allocation Strategy (PDF, 160 KB)
Related Category
Related Policy
- Opportunistic Investments (PDF, 83 KB)
Related Category
Primary Metropolitan Statistical Area (PMSA) - A geographic unit used by the Bureau of the Census for reporting consolidated demographic and economic information. Each PMSA consists of a large urbanized county or cluster of counties that demonstrates very strong internal economic and social links, in addition to close ties to other portions of a larger urbanized area or CMSA (Consolidated Metropolitan Statistical Area).
Related Policy
- No related policies
Related Category
Primary Obligor - The entity directly responsible for making interest and principal payments on an outstanding obligation. Investors will look to a secondary obligor (i.e., credit enhancer, fronting bank, etc.) should the primary obligor fail to make these payments.
Related Policy
- Credit Enhancement Program (PDF, 89 KB)
Related Category
Principal Borrower - A borrower with exclusive rights to borrow securities from a specified portfolio(s) for a specified length of time in return for a guaranteed fee. The principal borrower may or may not be responsible for investing the cash collateral from securities lending on behalf of the sponsor.
Related Policy
- Securities Lending (PDF, 299 KB)
Related Category
Principal Component Analysis - A method that measures the movements of the yield curve in terms of three main factors: level, slope, and curvature.
Related Policies
- Treasury Inflation Protected Securities Program (PDF, 46 KB)
- Low Duration Fixed Income Program (PDF, 326 KB)
- Global Fixed Income Program (PDF, 190 KB)
- Liquidity Program (PDF, 216 KB)
Related Category
Private Asset Class Board Investment Consultant - An individual or organization that provides specialized professional assistance to the Investment Committee related to an asset class regarding strategy and policy analysis, performance analysis and monitoring, and independent advisory service to the Investment Committee.
Related Policy
- Role of Private Asset Class Board Investment Consultants (PDF, 253 KB)
Related Category
Related Policy
- Private Equity Program (PDF, 164 KB)
Related Category
Private Equity Investments - Investments that are privately-held and illiquid. These investments are often structured as limited partnerships with strategies of investing in venture capital, growth equity, buyouts, mezzanine financing, and other investment strategies that are not based on public market activities.
Related Policy
- Private Equity Program (PDF, 164 KB)
Related Category
Privately Placed - Privately Placed is a negotiated sale in which the securities are sold directly to institutional or private investors, rather than a public offering. Such placements are not registered with the Securities and Exchange Commission.
Related Policies
- Low Duration Fixed Income Program (PDF, 326 KB)
- Global Fixed Income Program (PDF, 190 KB)
Related Category
Privately Traded Domestic Money Market Securities - For the purpose of this policy, defined as Section 4(2) commercial paper securities. Section 4(2) commercial paper is used to finance non-current transactions (i.e., acquisitions or stock buybacks). Paper issued under the 4(2) exemption is targeted to "accredited" investors (typically defined by Regulation D) who are deemed qualified to make investments by virtue of their industry or size.
Related Policies
- Low Duration Fixed Income Program (PDF, 326 KB)
- Liquidity Program (PDF, 216 KB)
Related Category
Proper Instructions - Instructions received by the custodian from CalPERS, any Investment Manager acting on CalPERS' behalf(including without limitation any securities lending agent), or any person duly authorized by either of them with respect to the pertinent asset. Such instructions may be in writing, signed by the authorized person, or may be through electronic or electro-mechanical devices, or may be through other means detailed in the custodial contract. In addition to the above forms of instructions, the custodian may accept trade affirmations or confirmations from an institutional delivery system, such as CalPERS, shall certify to the custodian, and cause each Investment Manager to similarly certify, the names and specimen signatures of persons authorized to give proper instructions. The custodian shall be entitled to rely upon the identity and authority of such persons, and upon the actions taken by such persons, until it receives notice from CalPERS or the Investment Manager to the contrary.
Related Policy
- Custody Management (PDF, 181 KB)
Related Category
Property Life Cycle - The cycle of business which a restaurant or other business experiences (i.e. newly opened, established, failing, failed).
Related Policy
- No related policies
Related Category
Property Sites - The location of a property and its physical characteristics.
Related Policy
- No related policies
Related Category
Proxy - Written power of attorney given by shareholders of a corporation authorizing a specific vote on their behalf at corporate meetings.
Related Policy
- Custody Management (PDF, 181 KB)
Related Category
Prudence Certificate - The prudence certificate includes (1) signatures of the investment officers or portfolio managers involved in reviewing the transaction; (2) their verification that the credit enhancement is a prudent use of CalPERS funds and that the transaction has been made with care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting on a like capacity and familiar with those matters would make; (3) verification that the transaction does not constitute a prohibited transaction within the meaning of the California Public Employees' Retirement Law (constituting Article XVI, Section 17 of the California Constitution); and (4) verification that the staff is unaware of any fees, compensation, agreements, or arrangements constituting a conflict of interest under the California Public Employees' Retirement Law (constituting Article XVI, Section 17 of the California Constitution) with respect to any member of the Board or any of the CalPERS employees or internal investment contractors.
Related Policy
- Credit Enhancement Program (PDF, 89 KB)
Related Category
Prudent Person Opinion - An opinion from a consultant or external resource subject to the Fiduciary Standard of Care that the proposed investment is a prudent investment consistent with Article XVI, Section 17(c) of the California Constitution and Section 20151 (c) of the California Government Code, i.e., made with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the coduct of an enterprise of a like character and with like aims.
Related Policy
- Private Equity Program (PDF, 164 KB)
Related Category
Prudent Person Opinion - An opinion from a consultant or external resource subject to the Fiduciary Standard of Care that the proposed investment is a prudent investment consistent with Article XVI, Section 17(c) of the California Constitution and Section 20151(c) of the California Government Code, i.e., made with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.
Related Policy
- Real Assets (PDF, 450 KB)
Related Category
Prudent Person Opinion - An opinion from a consultant or external resource subject to the Fiduciary Standard of Care that the proposed investment is a prudent investment consistent with Article XVI, Section 17(c) of the California Constitution and Section 20151 (c) of the California Government Code, i.e., made with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.
Related Policy
- Role of Private Asset Class Board Investment Consultants (PDF, 253 KB)
Related Category
Public Real Estate Equity Securities (PREES) - Real estate securities, including real estate investment trusts (REITs) and real estate corporations, whose stocks are publicly-traded.
Related Policy
- No related policies
Related Category
Put Option - An instrument conveying the right, but not the obligation to sell a deliverable instrument at a specified price.
Related Policy
- Derivatives - External Money Managers (PDF, 205 KB)
Related Category