Redemption charge

A fee charged upon a voluntary redemption from an investment fund designed to discourage short-term trading of an investment fund.

Relative return

The return that an asset achieves over a period of time compared to a benchmark. The relative return is the difference between the absolute return achieved by the asset and the return achieved by the benchmark.

Relative value

Relative value strategies generate profits by capturing the spread between two closely related securities. For example, an investor can buy a relatively undervalued off-the-run U.S. Treasury Bill and simultaneously short a relatively overvalued on-the-run U.S. Treasury Bill with the same duration.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage increase over the initial investment cost.

Risk arbitrage

See Merger arbitrage

Risk premium

The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is a form of compensation for investors who tolerate the extra risk - compared to that of a risk-free asset - in a given investment.