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.
 
principal-protected products

See Principal-protected note.

principal-protected securities

See Principal-protected note.

Private Investments in Public Entities

Private Investments in Public Entities are typically made by funds following a so-called “Regulation D” investment strategy. There are two main types of PIPEs - traditional and structured. A traditional PIPE is one in which stock, either common or preferred, is issued at a set price to raise capital for the issuer: a private investment firm, mutual fund or other qualified investor will purchase a stock in a company at a discount to the current market value per share, for the purpose of raising capital. A structured PIPE, on the other hand, issues convertible debt (common or preferred shares).

private placement

The offer and sale of any security other than by way of public offer to a limited number of investors and which, if made in the US, is exempt from the registration requirements under the US Securities Act of 1933, as amended. See Regulation D.

proforma

A representation of a track record (see ‘Track Record’) that is developed to show the effect on actual performance of intended or potential adjustments for different fee structures, portfolio allocations or other variations in the investment structure upon which the original track record is based. It is important to note that a proforma is based on actual trading results and differs from a simulation, which models the hypothetical performance of a portfolio or investment approach that has yet to be applied or implemented in actual trading.

program trading

The purchase (or sale) of a large number of stocks contained in or comprising a portfolio. Originally called program trading when index funds and other institutional investors began to embark on large-scale buying or selling campaigns or "programs" to invest in a manner that replicates a target stock index, the term now also commonly includes computer-aided stock market buying or selling programs, and index arbitrage.

proprietary account

An account that a Futures Commission Merchant carries for itself or a closely related person, such as a parent, subsidiary or affiliate company, general partner, director, Associated Person, or an owner of ten percent or more of the capital stock. The FCM must segregate customer funds from funds related to proprietary accounts.

prospectus

The official document issued by a fund prior to its launch to describe the shares being offered to prospective investors. The information provided in the prospectus will be prescribed by regulators according to the type of investor to whom the fund is being promoted and the investment strategy proposed. A prospectus must generally include the characteristics of the proposed fund, such as investment objective and policies, services and fees. Investors are encouraged to read and understand a fund's prospectus before purchasing its shares.

put

An option contract that gives the holder the right but not the obligation to sell a specified quantity of a particular commodity or other interest at a given price (the "strike price") prior to or on a future date.

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