Definition, Meaning & Synonyms

tranche

noun

/ˈtrɒnʃ/

Definition

A portion or installment of something, typically used in finance to describe a specific segment of a larger investment.

Examples

The investment was divided into several tranches based on the risk level.
Each tranche of the loan was disbursed as the project progressed.
Investors can choose to purchase a specific tranche that fits their risk appetite.

Meaning

In finance, a tranche refers to a part of a pool of securities that shares similar characteristics. It is commonly used to divide structured finance products, such as mortgage-backed securities, into different classes based on risk and return.