Hedging

An investment strategy that attempts to reduce the risk of losses by taking offsetting positions in related securities. An example would be to simultaneously buy a stock and a put option on the same stock that would enable you to sell the security at a given price.

Hedge Fund

An investment vehicle wherein the investment manager is allowed the freedom and flexibility to invest in a variety of markets and to utilize investments and strategies with variable long/short exposure and degrees of leverage with the goal of generating absolute returns.

High-net-worth sector

Refers to wealthy private investors.

High-water mark

The highest peak in value that a fund has reached. If the value of the fund falls below its previous peak (or "high-water mark"), no performance fees may be charged until after a new historical high has been achieved.

Hurdle rate

The minimum amount a fund needs to earn before performance fees are charged.