Rent that would be received on a property if it were leased on the open market. The current rent may be greater or less than the rack rent depending on the terms of the lease and how the market has moved since the last rent review.
Considerable and sustained increase in the price of a security or value of a market.
Random walk theory
Theory that the price of an asset follows a random path and therefore past price movements cannot be used to predict future price movements.
See credit rating.
Asset whose value is linked (directly or indirectly) to inflation. Equities, property, forestry, venture capital and inflation- linked bonds are often considered to be real assets. (See also fixed interest asset.)
Property in land, building or housing, as distinct from personal property (e.g. cars); also known as physical property, to distinguish itself from property trusts.
Real interest rate
Interest rate adjusted for inflation. If the nominal interest rate is 6% and inflation is expected to be 2% then the real interest rate is 4%. The definitions of real yield, real rate of return, etc., are similar.
Making adjustments to a portfolio to counteract the fact that different assets have performed differently over a period, and thus comprise different percentages of the portfolio than originally intended.
Two or more consecutive quarters of negative GDP growth in an economy.
Repayment of an investor’s principal in a security, such as a bond, at or prior to maturity.
See maturity date.
Calculation of the return that an investor will earn on a bond if he or she holds it to redemption, taking into account income and any capital gain or loss that will be made at the maturity date.
Organisation appointed to record the issue and ownership of company securities.
Means by which a prime broker gains access to bank loans. The prime broker’s clients (predominantly hedge funds) are required to post collateral with the prime broker for services such as securities lending or leveraged investment transactions. Rehypothecation occurs when the prime broker subsequently reuses the collateral that was originally posted by its client(s) to obtain a loan itself from a bank.
Asset’s or portfolio’s return over a period of time relative to that of a chosen benchmark. Calculated as the difference between the asset’s absolute return and the benchmark’s performance.
Using the dividends, interest or profits from an investment to buy more of that investment.
REIT (real estate investment trust)
Particular type of pooled fund that invests in the property sector.
Rental value growth
Growth in the rent of a property that could be charged if the unit was let in the open market on the valuation date.
Replacement ratio (defined contribution)
Amount of income (actual or projected) that can be secured by an individual’s accumulated retirement savings at retirement, expressed as a proportion of his or her income before retirement.
See repurchase agreement.
Repurchase agreement (REPO)
Agreement to sell securities, usually bonds, to another party and to buy them back at a specified date and price.
Integration of environmental, social and corporate governance (ESG) considerations into investment management processes and ownership practices in the belief that those factors can have an impact on financial performance.
Responsible investment policy statement
General (usually public) statement on responsible investment adopted by boards of trustees or directors that directs investment staff practices and decisions. This can be included within a broader investment policy statement and/or developed as a standalone responsible investment policy statement.
Assets managed on behalf of the direct public in the form of a pooled fund.
Retail Prices Index (RPI)
Measure of price inflation in the UK. It measures the average change from month to month in the prices of goods and services purchased by most households in the United Kingdom. Used for uprating state pensions and benefits and calculating payments due on index-linked gilts. (See also Consumer Prices Index.)
Company earnings that are not paid out as dividends.
Increase in value of an investment over a period of time, expressed as a percentage of the value of the investment at the start of the period. (See also money-weighted rate of return, time-weighted rate of return.)
Return on equity (ROE)
Company earnings divided by shareholders’ funds. Provides an indication to shareholders of how effectively their money is being used by the company.
Return seeking assets (RSA)
A generic term which refers to the proportion of a scheme’s assets invested in securities whose value is expected to increase over time, at a faster rate, compared to its liabilities.
Reversionary yield (real estate)
Estimated market rental value divided by the property value (market value of rent may differ from actual rental currently being earned).
Issue by a company of rights to sell new shares to existing shareholders in
proportion to their holdings. For example, a one-for-two issue allows each shareholder to buy one new share for every two held. Rights issues are a means of raising additional funds to finance acquisitions, capital investment or reduce debt.
Act of separating investors’ assets from those assets used to determine an investment bank’s net value. The
ring-fenced assets are usually held in separate offshore accounts and are therefore protected from claims by creditors of the investment bank in the event of the bank’s failure.
a.Likelihood of a return different from that expected and the possible extent of the difference. Downside risk is the likelihood of a loss, or a return less than expected on an investment.
b.Also used to indicate the volatility of different assets. (See also cash flow risk, funding risk, investment risk, market risk, solvency risk.)
Any measure of the return earned by an investment that is adjusted to take into account the level of risk taken to achieve it.
Preference of an individual or entity for avoiding risk, however defined. In terms of returns a risk-averse investor would seek a less volatile return unless he or she were adequately compensated for the risk.
Risk-free rate of return
Yield on a riskless investment (generally one that has a government-backed guarantee and a known rate of return). For example, the yield on a government- issued three-month security is often taken as a measure of the three-month risk-free return against which other riskier assets are measured.
Additional return relative to the risk-free return expected from a risky asset to compensate for the additional risk. (See also equity risk premium.)
Amount of expected return that must be sacrificed in order to reduce risk.
Extent to which an investor is prepared to accept volatility or risk in a portfolio.
See return on equity.
Rolling period returns
Annualised returns over a given period ending with the date stated. This allows investors to compare the returns achieved over a specified period of time leading up to various dates over the holding period of their investments.
System for settling share transactions under which bargains are settled a number of days after being transacted.
See Retail Prices Index.
Annual income on an investment divided by its current market value, for example the dividend yield on equities.
The price span during a given trading session, week, month, year, etc.
Reciprocal of European Terms
One method of quoting exchange rates, which measures the U.S. dollar value of one foreign currency unit, i.e., U.S. dollars per foreign units. See European Terms.
Repurchase Agreements ( or Repo)
An agreement between a seller and a buyer, usually in U.S. government securities, in which the seller agrees to buy back the security at a later date.
The minimum amount of cash and liquid assets as a percentage of demand deposits and time deposits that member banks of the Federal Reserve are required to maintain.
A level above which prices have had difficulty penetrating.
The reopening the following day of specific futures and options markets that also trade during the evening session at the Chicago Board of Trade.
Reverse Crush Spread
The sale of soybean futures and the simultaneous purchase of soybean oil and meal futures. See Crush Spread.
Transferring a trade that is near expiry into the next contract period.
Messengers who rush orders received by phone clerks to brokers for execution in the pit.