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P

pairs trading investment strategy
A methodology that seeks to identify similar companies whose securities are trading at a wide differential. The manager of such a fund would assume a short position in the overvalued security, while taking a long position in the undervalued one.

performance month to date (MTD)
Performance since the beginning of the month (i.e., the relative performance for monthly P&L portfolios).

performance since inception
Performance of the portfolio since the creation date.

performance year to date (YTD)
Performance since the beginning of the year.

pip (or points)
The term used in currency market to represent the smallest incremental move an exchange rate can make. Depending on context, normally one basis point (0.0001 in the case of EUR/USD, GBD/USD, USD/CHF and .01 in the case of USD/JPY).

portfolio turnover rate
The rate of trading activity in a hedge fund or mutual fund, expressed as a percentage of the portfolio's size, that is bought or sold each year. Calculated by dividing the lesser of purchases or sales by average assets during that year.

positions
Transactions can open and close positions on a security. The position relates to security transactions, it combines purchases and sales of shares for a given security. The combination is computed to follow a FIFO method, providing the ability to measure the realized gain for the closed positions and the unrealized gain for open positions that are marked to market. The positions are liquidated at the redemption value date.

prime broker
A broker who acts as settlement agent, provides custody for assets, provides financing for leverage, and prepares daily account statements for its clients, who are money managers, hedge funds, market makers, arbitrageurs, specialists and other professional investors. Hedge funds establish prime brokerage relationships to minimize operational and accounting-related issues and to curb costs through consolidated financing, while maintaining the benefits of executing with any number of brokers. When a fund designates a prime broker, it instructs all its executing brokers to settle its trades for cash with a single firm. After the fund executes a trade, it reports the details to its prime broker. The prime broker clears the trade, custodies the securities, provides margin financing, lends stock to cover short sales, and provides cash and position reports and technology.

 

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