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Hedge Fund High Water Market Definition

Below please find a definition of “Hedge Fund High Water Market”

Financial Analysis Training & Glossary TermsHedge Fund High Water Market: A provision serving to ensure that a fund manager only collects incentive fees on the highest net asset value previously attained at the end of any prior fiscal year — or gains representing actual profits for each investor. For example, if the value of an investor’s contribution falls to, say, $750,000 from $1 million during the first year, and then rises to $1.25 million during the second year, the manager would only collect incentive fees from that investor on the $250,000 that represented actual profits in year-two.

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Hedge Fund Strategies Definition

Below please find a definition of “Hedge Fund Strategies”

Financial Analysis Training & Glossary TermsHedge Fund Strategies: There are some hedge fundstrategies with over $50 or $100 billion dollars already being put to work while others are only employed by a small handful of firms. In 5-7 years there will be some new hedge fund strategiesthat will take hold and propel small emerging hedge fund managers into the world of $1B + hedge funds.

Here is a list of what I see as the top 5 hedge fund strategies that will explode in popularity over the next 5-7 years:

  1. 130/30
  2. Carbon Credit Trading
  3. Socially Responsible & Green Hedge Funds
  4. Litigation Funding
  5. Intellectual Property (Patents, Domains and Licensing Rights)

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

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Tags:  Hedge Fund Strategies, Top Hedge Fund Strategies, Top Hedge Fund Strategy, Top Hedge Fund Manager Strategies, hedge fund strategy details, hedge fund strategy examples, top 10 hedge fund strategies, hedge fund strategies list, hedge fund strategies descriptions, hedge fund strategies explanations

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Inception Date Definition

Below please find a definition of “Inception Date”

Financial Analysis Training & Glossary TermsInception Date: The day on which a fund starts trading.

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

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Hedge Fund Redemptions Definition

Below please find a definition of “Hedge Fund Redemptions”

Financial Analysis Training & Glossary TermsHedge Fund Redemptions: After investing in hedge funds some accredited investors have a much harder time getting their money out of a hedge fund then into them. While this is often preventable it is usually the result of:

  • Preset lockup periods where investors must keep their money in the fund for a minimum of 6 months to 3 years depending on the fund mandate but negotiable
  • The liquidity of the asset classes the hedge fund deals with. Some hedge funds work in such illiquid markets that they will have redemption clauses in their contracts that allow them to wait 3-12 months for more liquid markets before being forced to sell a position.
  • Arbitration. The process of going through arbitration and looking at which funds have been through it before can vary widely and be difficult. While a definate exception to the rule if you get invested with a rogue hedge fund manager you might have to chase them through arbitration or other legal means to redeem your initial investment.

All of this lends to making sure you have your investment goals and expectations clearly defined so they can included in research a hedge fund consultant does for you and so you can just keep these extra thing in mind while doing research yourself. Many hedge funds do not have lockup periods of more than 3-6 months and the majority work in relatively liquid markets. As the Financial Times put it, “The salutary lesson for those wanting to invest directly in hedge funds is that, under the commonly used limited partnership framework, they are, in effect, going into business with a managing partner, not just investing.”

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

Expand Your Financial Vocabulary: Read more finance terms and definitions

Tags:  Hedge Fund Redemption, Hedge Fund Managing Partner, Hedge fund Liquidity, Hedge Fund Asset, Hedge Fund Market, Hedge Fund Accredited Investors, Hedge Fund Due Diligence, Hedge Fund Investing

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Sovereign Wealth Funds Definition

Below please find a definition of “Sovereign Wealth Funds”

Financial Analysis Training & Glossary TermsSovereign Wealth Funds: No longer to be ignored sovereign wealth funds seem to be popping up in the WSJ as often as Ipod advertisements and pink slips for CEOs. These are pools of fully discretionary capital that are controlled by the government an often times but a small financial committee of close political allies to the president or leader of the respective nation where the funds are based. Many of these funds range in the tens to hundreds of billions of dollars and some have estimated that this pool of capital will grow from $3 trillion to over $12 trillion by 2012.

Many of these sovereign wealth funds have made headlines by taking large long-term positions in western companies such as Citigroup. Below are some of the recent transactions involving hedge funds and banks who invest in hedge funds:

  • UBS sold a 9% stake to the Government of Singapore Investment Corporation and another $1.77B stake to a undisclosed investor from the Middle East
  • Abu Dhabi Investment Authority the sovereign fund of the Gulf Arab state acquired a 4.9% state in Citigroup for $7.5B
  • Central Hujin Investment Co. acquired 71% of China Everbright Bank for $2.7B
  • Dubai International Capital, ran by Dubai’s ruler Sheikh Mohammed bin Rashid Al Moktoum acquired 9.9% stake in Och-Ziff Capital Management Group for $1.1B
  • China’s Citic Securities and Bear Stearns agree to invest $1B in each other and run a 50/50 JV in Hong Kong
  • Abu Dhabi-based Mubadala Development Co. of the Abu Dhabi government regime paid $1.35B for a 7.5% stake in Carlyle Group
  • Dubai International Capital took a 2.87% in ICICI Bank of India for $750M
  • China state investment company paid $3B for a 10% stake in Blackstone
  • Dubai International Capital bought an undisclosed stake in HSBC Holdings

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

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Tags:  Sovereign Wealth Funds, Foreign Wealth Funds, Superfunds, Government Investment Company, Sovereign Wealth Fund Investment, Middle East Fund, hedge fund

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Agricultural Commodities Definition

Below please find a definition of “Agricultural Commodities”

Financial Analysis Training & Glossary TermsAgricultural Commodities: (First published on Commodities and Futures Guide.com) An Agricultural Commodity can be defined as grain, livestock, poultry, fruit, timber or any other items produced from agricultural activities. The general price level of an agricultural commodity, whether at a major terminal, port, or commodity futures exchange, is influenced by a variety of market forces that can alter the current or expected balance between supply and demand. Many of these forces emanate from domestic food, feed, and industrial-use markets and include consumer preferences and the changing needs of end users; factors affecting the production processes (e.g., weather, input costs, pests, diseases, etc.); relative prices of crops that can substitute in either production or consumption; government policies; and factors affecting storage and transportation.

Worldwide, there are 48 major commodity exchanges that trade over 96 commodities. The trading of commodities consists of direct physical trading and derivatives trading. Most trading is done in futures contracts, that is, agreements to deliver goods at a set time in the future for a price established at the time of the agreement. Futures trading allows both hedging to protect against serious losses in a declining market and speculation for gain in a rising market.

Some of the most well known agricultural commodities that are traded are; Corn, Mini-Corn, Wheat, Mini-Wheat, Soybean, Mini-Soybean, Soybean Meal, Soybean Oil, Soybean Crush, Oats, Rough Rice, Milk Class III, Milk Class IV, Nonfat Dry Milk, Deliverable Nonfat Dry Milk, Dry Whey, Butter, Cheese Spot Call, Random Length Lumber, Wood Pulp, Live Cattle, Lean Hogs, Feeder Cattle, and Frozen Pork Bellies.

The commodities markets have seen an upturn in the volume of trading in recent years. In the five years up to 2007, the value of global physical exports of commodities increased by 17% while the notional value outstanding of commodity OTC derivatives increased more than 500% and commodity derivative trading on exchanges more than 200%. The notional value outstanding of banks’ OTC commodities’ derivatives contracts increased 27% in 2007 to $9.0 trillion.

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

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Tags:  commodities, futures, agricultural commodities, definition of an agriculture commodity, commodities and futures, agricultural commodities definition, CTA Fund, CTA Funds

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Credit Default Swaps Definition

Below please find a definition of “Credit Default Swaps”

Financial Analysis Training & Glossary TermsCredit Default Swaps: The evaporation of the collateralized loan obligation market may be the other shoe dropping. The risks posed by credit default swaps (CDSs) may be not just the other shoe, but the neutron bomb. The rating cut by S&P of ACA Financial Guaranty Corporation (from A to CCC), discussed in this article in today’s NY Times, may portend deep trouble.

Credit default swaps originated as a form of credit protection that the holder of a credit risk could purchase as a hedge against a borrower’s default. A holder of General Motors bonds, for example, can effectively insure against a default by GM by purchasing protection in the form of a CDS from a willing counterparty. Many holders of collateralized debt obligations that have recently plummeted in value had hedged their positions through CDSs, and ACA Financial has been a major seller of such protection. An accompanying article in the Times describes possible efforts by some of ACA’s insureds, including Merrill Lynch, CIBC and Bear Stearns, to help bail out ACA in order to avoid a write-down of billions of dollars of insured securities.

As with so many other types of innovative financial products, CDSs have exploded in the past few years. They have become a simple way for investors to take long or short positions on particular companies or industries without having to buy or sell the actual underlying bank debt or securities. The notional amount of underlying obligations covered by CDSs now exceeds $40 trillion, up from less than $2 trillion in 2002.

In a low default environment, selling default risk through CDSs presented huge revenue opportunities. ACA more than doubled its CDS business over the past 12 months, and others have undoubtedly done likewise. However, if the events of the past several months have proven one thing, it is that investors have done a very poor job recently of accurately assessing and pricing risk. It is more likely than not that many CDS sellers have not properly gauged their exposure, or set aside sufficient reserves against it.

The potential ramifications are difficult to overstate. S&P contends that ACA is facing close to $3 billion of losses on its CDS exposures, for which it has only $650 million of reserved capital. There is no way to tell right now how many other banks, funds, and other insurers are similarly exposed. Of equal concern are the exposures of the CDS purchasers who believe themselves to be properly hedged against losses, but who may instead find their protection to be worthless because of their counterparty’s inability to pay.

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

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Tags:  credit default swaps, cds, ACA, cedit default swap meltdown, collateralized loan obligation market

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Multi-Family Offices Definition

Below please find a definition of “Multi-Family Offices”

Financial Analysis Training & Glossary TermsMulti-Family Offices: Family offices are exclusive wealth management firms that usually only accept clients with at least $10-$25M of investible securities. They typically have less total clients but spend more time with each client often assisting with tax, estate planning, charitable giving, foundation, and even budget issues in addition to traditional wealth management services. The costs are typically a little higher than a traditional wealth management office but you get more personal comprehensive service and usually a more sophisticated view of portfolio construction with access to alternative investments.

Family office professionals will take the time to ensure your separately managed acocunt investments and Hedge Funds are balanced and in line with your 401k or IRA investments. Their employees are often experienced and sophisticated enough to understand unified managed accounts (umas), and will be able to explain them to clientele so they may be employed where appropriate. While many family offices use hedge fund of funds, family office professionals will often find an individual hedge fund manager that fits you best if they do not already have one that they work with, and ultimately they are known for working harder to make you happy because they only work with a smaller group of core clients. Many high net worth individuals belong to health groups where doctors will take the time to set down with you for a couple hours each quarter or year and talk about your health and habits. This type of highly personal attention is equivelant to what you get in a financial sense at the best family offices.

AUM of Family Offices

While many family offices have $1B or less under management the top ten have over $5B each with largest ones advising $15-$22B of assets.

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

Expand Your Financial Vocabulary: Read more finance terms and definitions

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High Water Mark Definition

Below please find a definition of “High Water Mark”

Financial Analysis Training & Glossary TermsHigh Water Mark: If you look at many hedge fund memorandums or marketing materials you have probably seen that many hedge funds offer high water mark protections for the investor. These are the status quo within the industry now and they assure investors that profit sharing will be calculated based on a fair valuation of returns earned. Many hedge funds collect a 2% fee on all assets and then a 20% performance fee, meaning that if the fund gains 100% in one year the hedge fund gets to keep 20% of those profits and the investor keeps the other 80%. A high water mark is the highest net asset value previously seen at the end of the fiscal year.

High Water Mark Example: An investor gives a hedge fund $500k in 2006 and that investment’s value falls to $300k. In 2007 the hedge fund produces 100% returns and that investment is now worth $600k. This individual would only have to pay performance fees on that gain between the $500k and $600k, not the full 100% gain ($300k) for that year.

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

Expand Your Financial Vocabulary: Read more finance terms and definitions

Tags:  High Water Mark, Hedge Fund High Water Mark, Hedge Fund of Fund High Water Mark, Hedge Fund Investor Protections, Hedge Fund High Water Mark Definition, Hedge Fund Definitions, Hedge Fund Definition, Hedge Fund Explanation

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Master-Feeder Fund Structure Definition

Below please find a definition of “Master-Feeder Fund Structure”

Financial Analysis Training & Glossary TermsMaster-Feeder Fund Structure: The Master-Feeder fund structure is a common way that hedge funds are set up to accept assets from both foreign and domestic investors in the most tax and trading efficient manner possible. It helps route assets from investors who may be from say the EU along with US tax exempt and taxable investors all into one central fund. The “master” or central fund is usually located somewhere offshore in somewhere like Bermuda.

While setting up a master-feeder fund may appear complex the first time a hedge fund works through the process the result is a more efficient method of raising assets internationally in a manner that allows flexibility to adapt to country-specific regulations.

Free MP3 Download:  To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

Expand Your Financial Vocabulary: Read more finance terms and definitions

Tags:  Master Feeder Fund, Master-Feeder Funds, Master-Feeder Fund Structure, Master Feeder Fund Setup, Master-Feeder Fund Options

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