AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing alternative asset managers globally

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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.
 
benchmark

Any basis of measurement (security or index), used as a reference point, against which a comparison and evaluation of performance of an investment portfolio can be made.

beta

Beta (β) of a portfolio is the portfolio’s sensitivity to market movements. It represents the change in the portfolio’s return for every 1% change in the market return. The sign of the beta (+/-) indicates whether, on average, the portfolio’s returns move in line with the market (+) or in the opposite direction (-). If β = 1.0, returns tend to mirror the market.  If β = 2.0, returns tend to be twice those of the market.  If β = -0.5, returns tend to be half that of the market.

beta neutral

Describes a fund with no sensitivity to broad market movements. Therefore, the fund's beta is close to zero.

bid

The purchase price offered for a commodity, currency, security or other asset.

Black-Scholes model
An algorithm/formula created by Fischer Black and Myron Scholes in 1973, used to estimate the fair value of a stock option at the grant date using the following variables: the expected risk-free interest rate, stock price, exercise price, volatility, and expected option term.
board of trade

A US term used to define any organized exchange or other trading facility for the trading of commodities.

bond

A debt security issued by entities such as corporations and governments in return for cash from the lender (investor). The issuer of a bond is effectively a borrower and is therefore required to pay interest to the lender throughout the life of the bond (at periodic intervals) and to repay the principal amount of the loan at maturity.

bond futures arbitrage

An approach that aims to profit from pricing inefficiencies between bonds and corresponding bond futures.

bottom-up investment process

An approach that seeks to identify investments that will produce strong returns, before assessing the influence that economic factors will have on those assets.

broker

A person paid a fee or commission for executing buy or sell orders for a customer.

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  1. Research
    1. AIMA Research
    2. Industry research
    3. Surveys
      1. 2016 Global Hedge Fund Survey with KPMG and the MFA
      2. Liquidity Pulse Check
      3. Private Credit
  2. AIMA Journal
    1. Recent issues
    2. Search AIMA Journal articles
    3. AIMA Journal archive: 2010-2012
  3. '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
  4. "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
  5. AIMA Guides to Sound Practices
  6. AIMA guides for institutional investors
  7. Transparent, Sophisticated, Tax Neutral - The Truth About Offshore Funds
  8. CAIA Association pages
    1. Fundamentals of Alternative Investments
  9. 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
  10. Certified Investment Fund Director programme
  11. Services to Start-up Managers
  12. Glossary
  13. Cyber Security Resources