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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S


Safe Harbor Rules (IRC 503(e)) - Restricts investments to no more than 25 percent in any transaction involving the plan sponsor.

Related Policy


SEC - The Securities and Exchange Commission. This is the federal agency created by the Securities Exchange Act of 1933 to administer that act and the Securities Act of 1933, formerly carried out by the Federal Trade Commission.

Related Policy


Security - Instrument that signifies an ownership position in a corporation (stock), a creditor relationship with a corporation or governmental body (bond), or rights to ownership such as those represented by an option, subscription right, and subscription warrant.

Related Policy


Senior Investment Officer of Global Fixed Income - The Senior Investment Officer is responsible for all Global Fixed Income programs and reports directly to the Chief Investment Officer of CalPERS.

Related Policies


Short Sale - The sale of a security that is not owned by the investor but rather is borrowed from a broker. The investor eventually repays the broker in kind by purchasing the security in a subsequent transaction.

Related Policy


Sovereign Debt - A country's government debt. In event of default, recourse for payment is made to the applicable sovereign government.

Related Policy


Special Assessment Bond - A bond secured by a compulsory levy of special assessments, as opposed to property taxes, made by a local unit of government on certain properties to defray the cost of local improvements and/or services that represents the specific benefit to the property owner derived from the improvement. In California, these are usually 1915 Act or 1911 Act Bonds.

Related Policy


Special Assessment Districts - Special assessment districts may be initiated: 1) either through a resolution by city council; or 2) at the request of a property owner whose property would be included in the district to be assessed. Such districts describe a method of financing public improvements by distributing the cost of a project over those property owners who will reap a direct benefit. The types of local public improvements that are most often paid for through special assessments include sanitary sewers, storm drains, water mains, road paving, dust control, sidewalk construction, and street lighting.

Related Policy


Spin Offs - Companies which are derived from other companies and begin to trade publicly on their own.

Related Policy


Split Rated Security - A security that has a different credit classification by two rating agencies. For the purpose of this policy, a security is called a split-rated security, if Standard & Poor's and Moody's report a difference in the ratings.

Related Policy


Stand By Purchase Agreement - See Lines of Credit.

Related Policy


Standard & Poor's (S&P) - A nationally-recognized credit rating agency that grades the investment quality of bonds in a 10-symbol system. The ranges extend from the highest investment quality, which is AAA, to the lowest credit rating, which is D. Securities rated BBB- or greater are considered investment grade. Securities rated BB+ or below are considered non-investment grade.

Related Policies


Stranded Assets - The electric utility industry in California underwent restructuring in January 1998, facilitating increased competition among providers. In the transition to a more competitive environment, electricity providers generated transition costs, commonly referred to as stranded costs. The California Public Utilities Code allows the electricity provider to recover these costs by charging existing, future residential, and small commercial customers. Stranded assets are fixed income securities collateralized by the receivables of electricity providers for recovering stranded costs.

Related Policy


Strategy - A discrete investment portfolio where all the portfolio?s assets are managed with a common methodology.

Related Policy


Stress Testing - A method of risk analysis in which simulations are used to estimate the impact of worst-case situations.

Related Policy


Subscription Financing - A transaction in which a lender makes a loan to the separate account or the commingled fund, as the borrower, and the borrower transfers the right to call the capital commitment of CalPERS to the lender as security for the loan. CalPERS agrees to pay its capital commitment in cash to the lender if the borrower fails to pay the debt.

Related Policy


Substitution - Investing in an asset that replaces the risk and return characteristics of some other asset.

Related Policy


Supranational Entities - Multinational organizations usually formed for providing financial assistance to less developed countries. Examples of supranational entities include the World Bank and the International Monetary Fund (IMF).

Related Policy


Swap - Private agreement between two companies to exchange cash flows in the future according to a prearranged formula.

Related Policies