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See Leverage


High watermark

See Net new highs

Hurdle rate

The level of return (often the risk-free interest rate) which investment managers sometimes stipulate net new highs must exceed in order for performance fees to be charged. 


Incentive fee

See Performance fee


Hedge fund products which pay an income stream are a type of structured product which continues to grow in popularity. The benefit of this type of structure is that it provides a transparent payoff profile through regular (for example semi-annual) defined income payments for a fixed term.

Industry loss warranties

An option contract on industry-wide insurance claims that exceeds a predefined amount (e.g. hurricane Katrina, $ 40 billion).

Investment Regions

An investment region is the primary geographic region a fund is focused on. For example, an emerging markets fund will invest exclusively in emerging economies, such as Brazil, India, Mexico and Russia.

Typical investment regions include
  • Asia 
  • Emerging Markets 
  • Europe 
  • Global 
  • Japan 
  • United Kingdom
  • United States

Investment strategy

See Strategy

Investment style

See Style


One refers to an `initial public offering (IPO)` when a private company sells shares of its stock to the general public for the first time via a securities exchange. Through this process, a private company transforms into a public company.



Leverage and gearing effectively mean the same thing: the process or effect of ‘gearing up’ or magnifying exposure to an investment strategy, manager or asset. Leverage can be achieved by borrowing capital or using derivatives. A leveraged investment is subject to a multiplied effect regarding the profit or loss that results from a comparatively small change in price. Thus leverage offers the opportunity to achieve enhanced returns, but at the same time typically involves greater risk and can result in a loss that is proportionally greater than the amount invested.


A relative term to describe the speed at which an asset or assets can be converted into cash (liquidated) and vice versa. Common terms include
  • Daily
  • Weekly
  • Monthly
  • Other - such as quarterly or ad hoc.

Lock-up period

An interval during which an investment may not be sold.

Long investments

Buying securities that are considered undervalued in the expectation that they will rise in value.


Profits from taking long and offsetting short positions in undervalued and overvalued securities with a fixed or variable underlying net long or short exposure.
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