Find your place in the Buy-Side Ecosystem.

The total market value of all assets a firm manages on behalf of clients. BlackRock manages ~$10T AUM. AUM is the primary revenue driver in asset management — fees are charged as a percentage of AUM (typically 0.03%–1.5% depending on strategy).

Beta measures how much a portfolio moves with the market (beta of 1 = moves in lockstep with the S&P 500). Alpha is the return above and beyond what the market gave you — the part attributable to skill. Every buy-side role is ultimately about generating or managing alpha.

In private markets (PE, VC, private credit), the GP is the fund manager who makes investment decisions. LPs are the investors — pension funds, endowments, sovereign wealth funds — who commit capital. Understanding LP/GP dynamics is essential for PE, VC, and hedge fund roles.

The GP's share of profits above a hurdle rate — typically 20% of gains. If a PE fund returns 3x, the GP earns 20% of the profit above the initial return of capital. Carry is how senior PE and HF professionals make their real money; it can be worth millions per partner per fund.

The annualised return on a private markets investment, accounting for the timing of cash flows. A PE fund returning capital in 3 years vs 7 years produces very different IRRs even if the total multiple is the same. IRR is the primary performance metric in PE and private credit.

A simpler PE performance metric — if you invest $100M and exit for $300M, your MOIC is 3x. Used alongside IRR because IRR can be manipulated by holding period. Top PE funds typically target 2.5–3x+ MOIC.

The per-share value of a fund — total assets minus liabilities, divided by shares outstanding. For public funds (ETFs, mutual funds), NAV is calculated daily. For private funds, NAV is a quarterly estimate. Fund operations teams spend significant time calculating and reconciling NAV.

Committed but undeployed capital sitting in a PE or VC fund waiting to be invested. Global PE dry powder exceeded $1.2T in 2024. High dry powder creates pressure to deploy — it affects deal volumes, valuations, and how aggressively funds compete for assets.

The traditional hedge fund fee structure — a 2% annual management fee on AUM plus 20% of profits (performance fee). Now largely compressed to 1.5 and 15 for most strategies. Multi-strat platforms like Citadel and Millennium charge pass-through expenses that often exceed the management fee.

Going long means buying an asset expecting it to rise. Going short means borrowing and selling an asset you don't own, hoping to buy it back cheaper. Long/short equity is the classic hedge fund strategy — taking simultaneous long positions in stocks you like and short positions in stocks you think are overvalued.

Two meanings: (1) In performance — the peak-to-trough decline in a portfolio's value during a specific period. A fund that falls 30% from its high has a 30% drawdown. Risk managers obsess over maximum drawdown. (2) In PE — a capital call when the GP requests LPs to send committed capital for a specific investment.

Return divided by volatility (technically: excess return over the risk-free rate divided by standard deviation). A Sharpe of 1.0 is considered adequate; above 2.0 is excellent. Used to compare strategies that produce similar returns but with different risk profiles. Quant funds are often judged on Sharpe as much as raw return.

Valuing a position at its current market price rather than its purchase price or book value. Public securities are marked daily. Private investments are marked quarterly using valuation models. The difference matters enormously — public hedge funds get real-time feedback; PE investors can go years before knowing if a bet paid off.

The suite of services large banks (Goldman Sachs, Morgan Stanley, JPMorgan) provide to hedge funds — securities lending (for short selling), leveraged financing, trade execution, and custody. Prime brokerage relationships are critical to hedge fund operations; switching prime brokers is a major operational event.

The investment guidelines a fund or portfolio manager must follow — what they can and cannot invest in. A fixed income mandate might restrict the portfolio to investment-grade bonds only. Mandates are set by the investment committee or by the LP agreement. Violating a mandate is a serious compliance event.

The deep investigation process before making an investment — reviewing financials, management, legal documents, market position, and risks. In PE, DD can take 3–6 months and involve dozens of professionals. In public markets, it's the research process before building a position. "DD" is used as both a noun and a verb in buy-side settings.

The senior decision-making body that approves or rejects investment decisions. Junior analysts and associates present recommendations to the IC, which scrutinises the thesis. Getting your first IC presentation right — tight, defensible, and with clear downside analysis — is a rite of passage in buy-side careers.

The year a private fund made its first investment. Vintage year comparisons matter because funds raised in 2008 (financial crisis) or 2021 (peak valuations) faced very different market conditions. When comparing PE fund performance, always compare funds of the same vintage year.