Familiar words can hide different calculations. These short explanations help frame a conversation; the definitions in an actual agreement remain important.
Capital, return and yield
Capital is the amount committed to an investment. Return describes a change in value or an investment result, but its calculation must specify period, cash flows and costs. Yield commonly describes income relative to a stated value; it should not automatically be treated as total return.
Valuation and realised results
Valuation is an assessment of worth at a stated time and on a defined basis. An unrealised gain or loss reflects a change while an asset is still held. A realised result follows a disposal or settlement. A cash distribution may include different components; read its stated source.
Liquidity, lock-ups and custody
Liquidity concerns how readily an asset can be converted into cash and on what terms. A lock-up restricts exit for a period under the agreement. Custody concerns safeguarding and access arrangements; it does not by itself establish a guarantee of value or repayment.
Counterparties and diversification
Counterparty risk concerns another party failing to meet an obligation. Diversification spreads exposures, but different holdings can still share risks. A benchmark is a reference used for comparison; its relevance depends on the strategy, period and currency being compared.