AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

You are:

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.
 
middle office

With the front and back offices, the middle (or mid) office completes the key best practice division of duties and responsibilities in a finance and investment operation. Its basic responsibilities include treasury activities (reporting, accounting, monitoring and internal control). Most companies may not have operations sizeable enough to require a middle office; in these cases, its role is performed by the back office or the accounting department.

mini

Refers to a futures contract that has a smaller contract size than an otherwise identical futures contract.

minimum investment

The smallest amount that an investor is permitted to contribute to a hedge fund as an initial investment. Minimum investment requirements can range from US$50,000 to $5 million, but most funds insist on $500,000 to $1 million. The amount is set by the manager and can be dependent on the manager's/fund's domicile's definition of an accredited investor.

momentum

The speed of price change over a period of time. Momentum based investment styles, notably trend following approaches, aim to capitalise on the acceleration in directional price movements, be they upward or downward.

money market

The market for short-term debt instruments.

Monte Carlo simulation
A mathematical technique used to model the price characteristics of an investment structure based on random simulations of the underlying assets or variables that affect the price of that investment. In the context of the modelling carried out at Man, the analysis involves constructing multiple NAV paths for a product, net of all appropriate fees and interest, using random samples of gross returns. The price characteristics that can be modelled using this powerful technique are known as ‘path-dependent’ characteristics, such as risk, return, and drawdowns, which depend on NAV movements over the life of an investment structure.
mortgage-backed securities

A common instrument in fixed income arbitrage strategies. MBS are created when home loans are pooled and packaged into new instruments whose holders are entitled to some share of the cash-flow received from underlying mortgage loans. A key characteristic of these instruments is prepayment risk, which relates to the uncertainty in the timing of cash-flows. Arbitrageurs may either buy MBS and attempt to hedge out their prepayment risk or exploit relative mis-pricings between different MBS.

multi-strategy (for Event driven strategy)

Deals with both Deal arbitrage and Bankruptcy.

Suggest a new term or amendment

Registered users of our site are invited to submit suggestions for new terms and amendments to existing terms. If you are a registered user, please login here

Main Menu

  1. Home
  2. About
    1. Our Core Objectives
    2. Meet the team
    3. AIMA Council
    4. Global Network
    5. Sponsoring Partners
    6. AIMA’s 25th anniversary in 2015
  3. Join AIMA
    1. Benefits of Membership
    2. Membership Fees
    3. Application form
  4. Members
    1. AIMA DDQs
    2. AIMA Annual Reports
    3. AIMA Governance
    4. AIMA Logo
      1. Policy note
    5. AIMA Members' List
    6. AIMA Review of the Year
    7. Committees and Working Groups
    8. Weekly News
    9. Update Profile
  5. Investors
    1. AIMA Investor Services
    2. AIMA Members' List
    3. Investor Steering Committee
  6. Regulation
    1. Asset Management Regulation
      1. EU Asset Management Regulation
        1. AIFMD
        2. European Capital Markets Regulation
        3. MiFID / MiFIR
        4. UCITS
        5. European Venture Capital Directive
        6. Shareholder Rights Directive
        7. European Long Term Investment Fund Regulation
        8. Loan Origination Funds
        9. Capital Raising
        10. AIFMD-Related Events
      2. US Hedge Fund Adviser Regulations
        1. Registration and Reporting
        2. Incentive-Based Compensation
        3. JOBS Act
      3. Asia Pacific Asset Management regulation
      4. Other Jurisdictions’ Asset Management Regulation
      5. Private Placement Regime
        1. Canada
        2. Dubai
        3. Finland
        4. Germany
        5. Hong Kong
        6. Japan
        7. Saudi Arabia
        8. Sweden
        9. United Arab Emirates
      6. Systemically Important Financial Institutions ('SIFIs')
      7. Remuneration
        1. UK
        2. United States
        3. CRD IV and CRR
        4. AIFMD
        5. MiFID
      8. Shadow Banking
      9. Volcker Rule
      10. Other
      11. Systemic Risk Reporting
      12. Dealing Commission
      13. Corporate Governance
      14. Securitisation
    2. Markets Regulation
      1. Algorithmic and High Frequency Trading
        1. EU Automated Trading
        2. US Automated Trading
      2. Benchmarks
      3. Capital Markets Union
      4. Derivatives/Clearing
        1. BCBS - IOSCO
        2. EMIR
        3. Dodd-Frank Act Title VII
        4. Hong Kong
        5. MiFID II / MiFIR - Derivatives
        6. Singapore
      5. Market Abuse
      6. MiFID II / MiFIR
      7. Position Limits
        1. MiFID II - Commodities
        2. CFTC Position Limits
      8. Recovery and Resolution
        1. EU
        2. CPSS-IOSCO
        3. Financial Stability Board
      9. REMIT
      10. Securities Settlement
      11. SFT reporting & transparency
      12. Short Selling
    3. Tax Affairs
      1. Automatic Exchange of Information (AEOI)
        1. FATCA
        2. EU - AEFI
        3. OECD - Global Standard on AEFI
      2. Australia - Investment Manager Regime (IMR)
      3. Base Erosion - Profit Shifting (BEPS)
      4. FIN 48 and IAS 12
      5. Financial Transaction Tax (FTT)
      6. UK Investment Management Exemption (IME)
      7. UK Offshore Funds Regime
      8. Other
    4. AIMA's Policy Principles
    5. Search
    6. Resources
      1. Guidance Notes
      2. Jurisdictional Guides
      3. Noticeboard
        1. AEOI: FATCA and other regimes
        2. AIFMD
        3. Algorithmic and High Frequency Trading
        4. Bank/Capital Regulation (including NSFR)
        5. BEPS
        6. CFTC Registration and Exemptions
        7. Corporate Governance
        8. Dealing Commission
        9. Derivatives
        10. FTT
        11. MiFID / MiFIR
        12. Other Hot Asset Management Topics
        13. Other Hot Markets Topics
        14. Other Hot Tax Topics
        15. Position Limits
        16. Trading
        17. UCITS
        18. UK Partnership Tax Review
        19. US State and Local Taxes
        20. Volcker Rule
      4. Hedge Fund Manager Training
      5. Quarterly Regulatory Update
      6. Webinar Programme
      7. Regulatory Compliance Association
        1. About the Regulatory Compliance Association
        2. RCA Curricula and initiatives for alternative investment firms
        3. Meet the regulators and Sr. Fellows
  7. Education
    1. Research
      1. AIMA Research
      2. Industry research
      3. Search research documents
    2. AIMA Journal
      1. Recent issues
      2. Search AIMA Journal articles
      3. AIMA Journal archive: 2010-2012
    3. 2016 Global Hedge Fund Survey with KPMG and the MFA
    4. '25 Years in Hedge Funds'
      1. Introduction - AIMA's global mantra
      2. How the hedge fund industry has evolved over the last 25 years
      3. How the regulatory landscape has changed for hedge funds
      4. Separating fiction from reality: The most common and persistent hedge fund myths
      5. The next five years - where is the hedge fund industry headed?
      6. Virtual roundtable - Leading figures from the hedge fund industry look ahead to 2020
      7. Learning the lessons from the past
      8. Accessing hedge funds: how ‘solutions’ are the new FoHFs
      9. 'Big data': The growth of the global hedge fund industry
    5. "The Case for Hedge Funds"
      1. Global Hedge Fund Industry Paper: The value of our industry
      2. The Value of the Hedge Fund Industry to Investors, Markets and the Broader Economy: Research commissioned by AIMA and KPMG
      3. The Evolution of an Industry: KPMG/AIMA Global Hedge Fund Survey
      4. Contributing to Communities: A global review of charitable and philanthropic activities by the hedge fund industry
      5. Beyond 60-40: The evolving role of hedge funds in institutional investor portfolios
      6. The Cost of Compliance: Global hedge fund survey by AIMA, MFA and KPMG
      7. Capital Markets and Economic Growth: Long-term trends and policy challenges
      8. Apples and Apples: How to better understand hedge fund performance
      9. The Extra Mile: Partnerships between hedge funds and investors
      10. Key articles by AIMA on the case for hedge funds
    6. AIMA Guides to Sound Practices
    7. AIMA guides for institutional investors
    8. Transparent, Sophisticated, Tax Neutral - The Truth About Offshore Funds
    9. CAIA Association pages
      1. Fundamentals of Alternative Investments
    10. Regulatory Compliance Association pages
      1. About the Regulatory Compliance Association
      2. RCA Curricula and initiatives for alternative investment firms
      3. Meet the regulators and Sr. Fellows
    11. Certified Investment Fund Director programme
    12. Services to Start-up Managers
    13. Glossary
    14. Cyber Security Resources
  8. Events
    1. AIMA Events
      1. AIMA Annual Conference
        1. 2015 Conference - Agenda
        2. 2015 Conference - Charity Dinner
        3. 2015 Conference - Videos
      2. AIMA's Global Policy and Regulatory Forum
        1. 2016 Forum
          1. 2016 Forum - Agenda
          2. 2016 - Forum - Speakers
          3. 2016 Forum - Sponsors
          4. 2016 Forum Supporting Organisations
        2. 2015 Forum
          1. 2015 Forum - Review
          2. 2015 Forum - Photos
    2. AIMA webinars
    3. Industry events
  9. Media
    1. Press Releases & Statements
    2. AIMA's blog
    3. Media Coverage
      1. Articles by AIMA
        1. Archive
      2. AIMA in the news
      3. Video interviews
      4. Industry news
    4. Media Contacts
    5. Press Materials
    6. Photos of Jack Inglis

Sub Menu

  1. Research
    1. AIMA Research
    2. Industry research
    3. Search research documents
  2. AIMA Journal
    1. Recent issues
    2. Search AIMA Journal articles
    3. AIMA Journal archive: 2010-2012
  3. 2016 Global Hedge Fund Survey with KPMG and the MFA
  4. '25 Years in Hedge Funds'
    1. Introduction - AIMA's global mantra
    2. How the hedge fund industry has evolved over the last 25 years
    3. How the regulatory landscape has changed for hedge funds
    4. Separating fiction from reality: The most common and persistent hedge fund myths
    5. The next five years - where is the hedge fund industry headed?
    6. Virtual roundtable - Leading figures from the hedge fund industry look ahead to 2020
    7. Learning the lessons from the past
    8. Accessing hedge funds: how ‘solutions’ are the new FoHFs
    9. 'Big data': The growth of the global hedge fund industry
  5. "The Case for Hedge Funds"
    1. Global Hedge Fund Industry Paper: The value of our industry
    2. The Value of the Hedge Fund Industry to Investors, Markets and the Broader Economy: Research commissioned by AIMA and KPMG
    3. The Evolution of an Industry: KPMG/AIMA Global Hedge Fund Survey
    4. Contributing to Communities: A global review of charitable and philanthropic activities by the hedge fund industry
    5. Beyond 60-40: The evolving role of hedge funds in institutional investor portfolios
    6. The Cost of Compliance: Global hedge fund survey by AIMA, MFA and KPMG
    7. Capital Markets and Economic Growth: Long-term trends and policy challenges
    8. Apples and Apples: How to better understand hedge fund performance
    9. The Extra Mile: Partnerships between hedge funds and investors
    10. Key articles by AIMA on the case for hedge funds
  6. AIMA Guides to Sound Practices
  7. AIMA guides for institutional investors
  8. Transparent, Sophisticated, Tax Neutral - The Truth About Offshore Funds
  9. CAIA Association pages
    1. Fundamentals of Alternative Investments
  10. Regulatory Compliance Association pages
    1. About the Regulatory Compliance Association
    2. RCA Curricula and initiatives for alternative investment firms
    3. Meet the regulators and Sr. Fellows
  11. Certified Investment Fund Director programme
  12. Services to Start-up Managers
  13. Glossary
  14. Cyber Security Resources