A financial instrument whose performance is linked to a specific
security, index or financial instrument. Typically, derivatives are used
to transfer risk or negotiate the future sale or delivery of an investment.
Derivative instruments come in four basic forms: forward contracts, futures
contracts, swaps and options.
Distressed securities investment strategy
Purchasing deeply discounted securities that were issued by
troubled or bankrupts companies. Also, short-selling the stocks of those
corporations. Such funds are usually able to achieve low correlations
to the broader financial markets. The approach generally involves a medium-
to long-term holding period.
The percentage loss that a fund incurs from its peak net asset
value to its lowest value. The maximum drawdown over a significant period
is sometimes employed as a means of measuring the risk of a vehicle. Usually
expressed as a percentage decline in net asset value.