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M

Macroeconomic factors

A factor that is relevant to a broad economy at a regional or national level. For example, such factors include economic output, unemployment, inflation, savings and investment.

Managed futures

The segment of the alternative investment industry which actively trades and manages futures instruments [see Futures]. The advisers that focus their asset management efforts on futures are known as CTAs [see Commodity Trading Adviser]. They invest on both the long and short side of the market and usually employ quantitative or technical analysis [see Quantitative analysis] and systematic investment processes.

Margin

The amount of capital that has to be deposited as collateral in order to gain full exposure to an asset.

Market neutral

Denotes an approach to investment where the emphasis is on the value of securities relative to each other and the use of arbitrage techniques [see Arbitrage], rather than market direction forecasting. By emphasising the relative value of securities and the exploitation of pricing anomalies between related securities, practitioners of market neutral approaches aim to generate profits regardless of the overall direction of broad market prices. Market neutrality is generally achieved by offsetting, or hedging, long and short positions or maintaining balanced exposure in the market. The term market neutral can be applied with some justification to the majority of alternative investment styles because of their ability to capitalise on both upward and downward price moves or to profit in a wide range of market environments.

Monte Carlo simulation

A mathematical technique used to model the price characteristics of an investment structure based on random simulations of the underlying assets or variables that affect the price of that investment. In the context of the modeling carried out at Man, the analysis involves constructing multiple NAV paths for a product, net of all appropriate fees and interest, using random samples of gross monthly returns. The price characteristics that can be modeled using this powerful technique are known as 'path-dependent' characteristics, such as risk, return, and drawdowns, which depend on NAV movements over the life of an investment structure.

Momentum

The speed of price change over a period of time. Momentum-based investment styles, notably trend following approaches, aim to capitalise on the acceleration in directional price movements, be they upward or downward.

MSCI world

A widely used composite index of capital-weighted stocks developed by Morgan Stanley Capital International, which can act as a proxy for world stocks when assessing the relative performance of any portfolio with global asset exposure.

Multi-Asset Class

An investment that combines a number of asset classes, for example stocks and bonds.

N

Net new highs

A net new high is reached when the net asset value of an investment exceeds the previous peak level in the net asset value (also known as the 'high watermark'). Performance fees [see Performance fee] are levied on net new highs.

O

Open-ended product/fund

An investment product with no defined lifespan. New units (e.g. shares, bonds, units, notes) are created or dissolved as required. Investors can subscribe (buy) or redeem (sell) these units at the prevailing net asset value per unit in accordance with the details set out in the relevant product prospectus.

Option

A derivative instrument [see Derivatives] that gives the holder the right, without obligation, to buy (call) or sell (put) a security or asset at a fixed price within a specified period or at a particular future date.
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