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.
 
collateralised fund obligation

A type of collateralized debt obligation (CDO) that is backed by zero-coupon bonds to fund the purchase of shares in hedge funds, private-equity funds or multi-manager vehicles known as funds of funds. From the fund manager's standpoint, such issues serve as a source of long-term capital and behave much like funds of funds that purchase shares of their vehicles. Fund managers can earn arbitrage profits on the returns that are left after CFO holders have been made whole. CFOs are often structured as zero-coupon bonds that make lump-sum payments by redeeming the underlying fund-of-fund shares at maturity. Others have been arranged as convertible issues.

collateralised loan obligation

Collateralised loan obligation (CLO) similar in structure to the Collateralized Mortgage Obligation. See Collateralized Mortgage Obligation for analogous terms -the only difference here being that the securities issued on behalf of the originating bank are backed by receivables from loans, rather than bonds.

collateralised mortgage obligation

A mortgage-backed bond that separates mortgage pools into short-, medium-, and long-term portions. Each class is paid a fixed rate of interest at regular intervals.

commercial paper

Unsecured short-term promissory notes issued by corporations, with maturities ranging from 2 to 270 days.

commission

(1) A fee charged by a broker or agent for his/her services in facilitating a transaction; (2) The charge made by a commission house for buying and selling commodities; or (3) the fee charged by a futures broker for the execution of an order. Note: when capitalised, the Commission usually refers to the CFTC.

commodity

A commodity, as defined in the Commodity Exchange Act, includes the agricultural commodities enumerated in Section 1a(4) of the Commodity Exchange Act and all other goods and articles, except onions as provided in Public Law 85-839 (7 U.S.C. § 13-1), a 1958 law that banned futures trading in onions, and all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in.

commodity pool

An investment trust, syndicate, or similar form of enterprise operated for the purpose of trading commodity futures or option contracts.

commodity pool operator

A person engaged in a business similar to an investment trust or a syndicate and who solicits or accepts funds, securities, or property for the purpose of trading commodity futures contracts or commodity options. The CPO either itself makes trading decisions on behalf of the pool or engages a commodity trading advisor to do so.

commodity price index

Index or average, which may be weighted, of selected commodity prices, intended to be representative of the markets in general or a specific subset of commodities, e.g., grains or livestock.

commodity trading adviser

Individuals or organizations that directly or indirectly advise others as to the value or advisability of buying or selling futures contracts. In the US, certain commodity trading advisers are required to, or elect to, register with the CFTC and are generally required to be members of the National Futures Association.

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