Chapter 21

Access is an investor's ability to place new or increased money in a particular fund.

Conservative funds of funds have underlying hedged positions.

Diversified funds of funds represent a broad mix of funds.

Fee netting in the case of a multistrategy fund is when the investor pays incentive fees based only on net profits of the combined strategies, rather than on all profitable strategies.

A liquidity facility is a standby agreement with a major bank to provide temporary cash for specified needs with prespecified conditions.

Market-defensive funds of funds tend to have underlying and unhedged short positions.

Nontraditional or unconstrained bond funds do not simply take long positions in investment-grade sovereign and credit securities, but may also invest in high-yield or emerging markets debt, often including leverage and short positions.

Operational due diligence is the process of evaluating the policies, procedures, and internal controls of an asset management organization.

Seeding funds, or seeders, are funds of funds that invest in newly created individual hedge funds, often taking an equity stake in the management companies of the newly minted hedge funds.

Strategic funds of funds tend to have underlying directional bets.

Nontraditional or unconstrained bond funds do not simply take long positions in investment-grade sovereign and credit securities, but may also invest in high-yield or emerging markets debt, often including leverage and short positions.