The Private Allocator

The Private Allocator Glossary

Essential terms from The Private Allocator guides, each defined in plain language with the evidence behind it.

  • Accredited Investor

    An accredited investor meets a legal eligibility category for certain private offerings; that status tells you nothing about what fits your portfolio.

  • Angel Investing

    Angel investing means investing personal capital directly in startups, with responsibility for company selection and exposure to loss and uncertain exits.

  • Concentration Risk

    Concentration risk arises when employment, property and private holdings depend on a shared business, industry or geography that can face a common setback.

  • Distribution

    A cash distribution is money paid from an investment to its investor, distinct from reported asset value or cash retained within an operating business.

  • Due Diligence

    Due diligence investigates an investment case, its weaknesses and remaining questions so you understand the decision; it never removes the risk.

  • Fund of Funds

    A fund of funds invests in other funds, delegating underlying selection while you still carry the overlap and investment risk underneath.

  • Holding Period

    A holding period measures how long capital remains invested, separating elapsed holding time from a projected exit and from cash reaching you.

  • Investment Policy Statement

    An investment policy statement records your portfolio's purpose, constraints and responsibilities to guide decisions as needs and circumstances change.

  • Liquidity Risk

    Liquidity risk is the risk of being unable to access money when needed, even when a private investment has a reported value in your portfolio.

  • Lockup

    A lockup restricts when an investor may seek withdrawal from a private fund; reaching its end does not guarantee payment or immediate access to cash.

  • Redemption Gate

    A redemption gate limits withdrawals from a fund even when investors may submit requests, so permission to ask does not guarantee receipt of cash.

  • Unfunded Commitment

    An unfunded commitment is capital already promised but not yet called, so it still counts against you before any new private investment.

Missing a term?

Tell us which term you were looking for and we will add it.

Suggest a term