Hedge Fund Administrator - services your clients and investors; supports you administratively and operationally; and provides you financial, tax and compliance reporting. This includes audits and tax coordination; compliance services such as anti-money laundering and know-your-client procedures required by the Patriot Act, and middle office services.

Hedge Funds: Hedge funds are a subset of the alternative investment asset class. The term usually refers to private investment vehicles that may utilize a wide range of investment strategies and instruments. Hedge funds include traditional stock and bond investments, but generally combine these with short sales, arbitrage, and leverage, not generally found in traditional stock and bond market strategies. Normally they are structured as limited partnerships, LLCs or offshore investment companies where the general partner receives an incentive fee.

Hedge Ratio: The number of stocks required to hedge against the price risk of holding an option or convertible security.

Hedging: A strategy designed to reduce investment risk using call options, put options, short selling, or futures contracts. A hedge can help lock in existing profits. Its purpose is to reduce the potential volatility of a portfolio, by reducing the risk of loss.

High Water Mark: High Water Mark is a loss carried forward. That is, if you make a $100 the first year and a $100 the second year, then lose $100 in the third and forth year, you are not really even. Rather the General Partner must make back your initial $200 gain before becoming eligible again for a performance fee.

Holding Company: A corporation that owns the securities of another, in most cases with voting control.

Holding Period: The amount of time an investor has held an investment. The period begins on the date of purchase and ends on the date of sale, and determines whether a gain or loss is considered short-term or long-term, for capital gains tax purposes.

Hot Issue: A newly issued stock that is in great public demand. Technically, it is when the secondary market price on the effective date is above the new issue offering price. Hot issues usually experience a dramatic rise in price at their initial public offering because the market demand outweighs the supply.

Hurdle rate - The minimum investment return a fund must exceed before a performance allocation/incentive fee can be deducted. Frequently LIBOR, Tbills, a certain percentage, or other benchmarks.

Hurdle Rate: The internal rate of return that a fund must achieve before its general partners or managers may receive an increased interest in the proceeds of the fund. Often, if the expected rate of return on an investment is below the hurdle rate, the project is not undertaken.