A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

L

Large-cap securities

Stocks with a market capitalization over approximately $1 billion in Canada. For example, Royal Bank.

Largest monthly gain

An investment's highest monthly gain since inception.

Largest monthly loss

An investment's highest monthly loss since inception.

Leverage

Involves borrowing money to invest in the hopes of earning a greater rate of return than the rate at which the additional monies were borrowed.

Liability

A financial obligation, or the cash outlay that must be made at a specific time to satisfy the contractual terms of such an obligation.

Limited partnership (L.P.)

A partnership that includes one or more partners who have limited liability.

Liquidity

An asset is said to be "liquid" or "have liquidity" when it may be converted into cash quickly with no reduction in price.

Lock-up period

A period of time when investors are unable to exit an investment. Lock-ups are common for funds that are designed as mid-to-long-term investments.

Long exposure

The percentage of a fund's assets that are invested in long positions. For example, a manager may be 100-per-cent long and 60-per-cent short, giving him a market exposure of 40 per cent net long. The higher the long exposure, the more a fund is exposed to the market.

Long position

A long position is established when an investor buys a security. For example, an owner of 1,000 shares of stock is said to be "long the stock".

Longest drawdown in months

The longest drawdown period for a particular investment. It is not necessarily the length of the maximum drawdown.

Longest recovery in months

The most months an investment's net asset value has taken to recover from the lowest point of a drawdown back to the NAV it had when the drawdown first began.

Long/short equity

This strategy buys undervalued stocks and short sells overvalued stocks. Long/short funds typically benefit from variable exposure (they can be net long, market neutral or even net short) and the use of leverage. This is the most common type of hedge fund today.