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Term | Description |
|---|---|
Asset | An asset is any possession that has value in exchange. |
Simple Asset | A simple asset can be adequately implemented as one dB row in a Security Master and Security Analytics for any given point in time. Examples: Stock, Bond, or Cash |
Compound Asset | A compound asset is created from one or more financial instruments. A compound financial instrument can be composed of any combination and number of simple and/or compound assets. A compound asset is often called or can be thought of as a Derivative (for example, Swap, Mutual Fund), Collection, or Portfolio (for example, ETF, Mutual Fund). Compound financial instruments are often treated as simple financial instruments in current systems. Doing so results in a loss of full analysis capability. |
Positions and Portfolios | Based on the investor's assessment, the investor can take a position in assets - assets that are "trading cheap" are candidates for purchase. Assets that are overvalued, "trading rich" can be considered for sale, or if the asset is not already owned it can be "sold short." Positions can be taken - long or short. When an investor takes a position in one or more assets they create a portfolio. |
Composites | A composite is just a collection of portfolios. As such, a composite is also a portfolio. The essential difference with a composite is that the investor (firm) does not actually take positions in the composite. The investor (firm) actually holds the positions that are in the underlying portfolios. |
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