AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

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Glossary

AIMA's Glossary has been developed for all those with an interest in the alternative investment industry - from the beginner to the advanced practitioner.

You will find a considerable overlap of content with the traditional fund management industry - the instruments used, the service providers employed, etc.  However, the hedge fund industry is individual in the way in which it uses these resources.

For reasons of law and accuracy, this is not a wiki.  It is a work-in-progress, however, and we invite you to submit new items for inclusion below (including the proposed definition).

  • We express our sincere thanks to Stanley Marchon, Vincent Kuhn, Nicolas Watin-Augouard, Stephen Foster and Sunil Gopalan for the creation of this resource. 
  • Special thanks are also extended to Anne Taulbut and Jennifer Nye of Katten Muchin Rosenman Cornish for the extensive legal review.
 
absolute return fund

An absolute return hedge fund has a primary objective to produce positive returns, rather than outperforming a particular benchmark.

accredited investor

An institution or high-net worth individual, to whom securities may be promoted pursuant to a private placement in reliance on the safe harbour provided by Regulation D of the US Securities Act of 1933 and defined as one of the following: (1) a bank, insurance company, registered investment company, business development company, or small business investment company; (2) an employee benefit plan, a charitable organization, corporation, or partnership or a trust not formed to acquire the securities offered with assets exceeding $5 million; (3) a director, executive officer, or general partner of the company selling the securities; (4) a business in which all the equity owners are accredited investors; (5) a person who has individual, or joint net worth with the person’s spouse, exceeding $1 million; or (6) a person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000.

accumulation index

An index in which figures (are adjusted to) account for the price movements and dividends paid by those companies included in the index.

active risk

Also known as Tracking Error. Refers to the variation between a fund's returns and a benchmark's returns. A large tracking error indicates a large variation from the benchmark, and implies a high level of manager risk.

actual assets under management

See assets under management

actuals

(1) The physical or cash commodity underlying a futures contract. (2) A term used to describe the historical volatility of a security.

administrator

An entity, usually independent of the Investment Manager, who provides a range of services to the Fund under the terms of an agreement with it (often in the form of a Service Level Agreement), including shareholder services, registrar and anti-money laundering services, reconciliation services and record-keeping functions. Some Administrators offer ''integrated'' solutions which allow Investment Managers to outsource some of their own back-office functions.

agency bond

A US debt security issued by a US government-sponsored enterprise, such as Fannie Mae or Freddie Mac, designed to resemble a US treasury bond.

agency note

A US debt security issued by a US government-sponsored enterprise, such as Fannie Mae or Freddie Mac, designed to resemble a US treasury note.

aggregation

The principle under which all futures positions owned or controlled by one trader (or group of traders acting in concert) are combined to determine reporting status and compliance with speculative position limits.

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