A vehicle in which an investor gives a commodity trading advisor
-- usually a manager or broker -- discretion or authority to buy and sell
futures contracts, either unconditionally or with restrictions. A type
of discretionary account
The charge that a fund manager assesses to cover operating expenses.
Investors are typically charged separately for costs incurred for outsourced
services. The fee generally ranges from an annual 0.5% to 2% of an investor's
entire holdings in the fund, and it is usually collected on a quarterly
Market-neutral investment strategy
An approach that aims to preserve capital through any of several methods
and under any market conditions. The most common followers of the market-neutral
strategy are funds pursuing a long/short investment strategy. These seek
to exploit market discrepancies by purchasing undervalued securities and
taking an equal, short position in a different and overvalued security.
Market-neutral funds typically employ long-term holding periods and experience
A hedge-fund manager that selects asset allocations in anticipation of
movements in the broad market.
A common hedge-fund structure through which a manager sets up two separate
vehicles -- one based in the U.S. and an offshore fund that is domiciled
outside the U.S. -- which serve as the only investors for a third non-U.S.
fund. The two smaller entities are known as feeder funds, while the large
offshore vehicle acts as the master fund. The purpose of such an arrangement
is to create a single investment vehicle for both U.S. and non-U.S. investors.
Merger arbitrage investment strategy
Trading the stocks of companies that have announced acquisitions or are
the targets of acquisitions. Seeks to exploit deviations of market prices
from proposed exchange formulas.
Mortgage-backed securities arbitrage investment strategy
An approach that seeks to exploit pricing differentials between various
issues of mortgage-related bonds.
An investment style that combines several different approaches. The term
often applies to funds of funds