Glossary

Terms

Balance of payments

A country's record of all transactions with the rest of the world: trade, income, and investment in and out.

Capital flows

Money moving across borders to buy assets such as shares, bonds, property or businesses.

Portfolio investment

Buying shares and bonds without taking control of the company. Easier to reverse than direct investment.

Foreign direct investment (FDI)

Investment that gives a lasting stake in a business abroad, usually 10% or more of its voting power, such as building a factory or buying a company.

Net purchases

Purchases minus sales over a period. Positive means investors bought more than they sold.

Official investors

Foreign central banks, governments and international bodies. Everyone else, including pension funds, insurers and banks, is private.

Custodian

A bank that holds securities on behalf of their owners. TIC data record the custodian's country, which may not be the owner's.

Treasury bonds and notes

US government debt that matures in more than a year. Treasury bills mature within a year.

Agency bonds

Bonds issued by US government-sponsored enterprises such as Fannie Mae and Freddie Mac.

Long-term securities

Shares and bonds with an original maturity of more than one year.

Equity and investment fund shares

Shares in companies and units in funds, the term Japan's Ministry of Finance and the ECB use.

Debt securities

Bonds, notes and bills: tradable loans to governments and companies.

Residents and non-residents

Statistics classify investors by where they live, not their nationality. A Japanese bank's London branch is a UK resident.

Foreign exchange reserves

Foreign currency assets held by a central bank, mainly government bonds, used to support its currency and pay for imports.

Allocated reserves

Reserves whose currency is reported to the IMF. Currency shares in COFER are shares of allocated reserves.

Euro area

The countries using the euro, 21 since Bulgaria joined in January 2026.

Futures contract

An agreement to buy or sell a set amount of a commodity at a fixed price on a future date. Most are closed out before delivery.

Managed money

The CFTC's category for hedge funds, commodity trading advisers and similar funds that trade futures for a return rather than to hedge a business.

Net position

Contracts held that gain if prices rise, minus contracts that gain if prices fall. Positive is a net bet on higher prices.

Open interest

The total number of futures contracts outstanding in a market at a point in time.

Exchange-traded fund (ETF)

An investment fund whose units trade on a stock exchange like a share. Most track an index.

Share buyback

A company buying its own shares, which takes them out of the market. Buybacks are a large source of demand for US shares.