The following are some of the more commonly used terms related to hedge funds and a quick definition. This page is by no means intended to provide a complete glossary for Hedge funds, but more as a quick reference for our members to understand tha various terms used in this site. For a more detailed glossary, you may want to follow this link.

Some of the terms in this glossary are invented by Tipping Monkey and may not be understood outside the context of Tipping Monkey Virtual Hedge Funds. Such terms are usually denoted by [TM Only] next to the term. Unless otherwise attributed, the contents in this page are created by Tipping Monkey.


Total amount of capital injected into a portfolio or fund. This is slightly different from Assets Under Management (AUM) as AUM may change due to profits and losses incurred by trading activity. Tipping Monkey tracks the asset base as the opening balance of the portfolio plus the sum of all direct member investments. The Asset base will be used to calculate the percent change in a portfolio or fund.

Assets Under Management. Related: see "Asset Base".

The amount of Virtual Dollars earned by a Virtual Hedge Fund Manager over his/her entire career. This amount includes all the earnings across all the Virtual Hedge Funds that this member manages.

A Closed Fund refers to a Fund that is closed to new investors. A closed fund may still continue to operate for its existing investors, but it is not accepting new investors.

How often fees are assessed on a fund. For example, a Fee Assessment Period of 3 months means that fees are assessed every 3 months, or 4 times a year. For a Tipping Monkey Virtual Hedge Fund, the Management and Incentive Fees are assessed together at the same time, though, in practice, different hedge funds may have different policies regarding fee assessments.

Since the fees are expressed as percentage per year, the effective fee rate is calculated by dividing the annual percentage rate by the number of fee periods per year, and then applying the effective rate to get the fee amounts.

Describes the key strategy or strategies employed by a Hedge fund to direct its trading activities. The following are some of the well-defined strategies. However, for Tipping Monkey Virtual Hedge Funds, we let our members specify whatever they wish, as some of these strategies are not available to Tipping Monkey members, yet.

• Macro Centric (Tactical)
• Managed Futures (Tactical)
• Long/Short Equity (Tactical)
• Sector-Specific (Tactical)
• Emerging Markets (Tactical)
• Market Timing (Tactical)
• Short Selling (Tactical)
• Convertible Arbitrage (Relative Value)
• Fixed Income Arbitrage (Relative Value)
• Equity Market Neutral (Relative Value)
• Distressed Securities (Event-driven)
• Reasonable Value (Event-driven)
• Merger Arbitrage (Event-driven)
• Opportunistic Events (Event-driven)
• Multi-Strategy (Hybrid)
• Fund of Hedge Funds (Hybrid)

The term in parentheses refers to the Style of the Strategy. See "Fund Style" for the list of Fund Styles.


Describes the primary style in which a Hedge fund operates. The following are some of the popular styles, but for Tipping Monkey Virtual Hedge Funds, we let our members specify whatever they wish.

• Tactical
• Relative Value / Arbitrage
• Event-driven
• Hybrid

The name used to designate a Hedge Fund. In Tipping Monkey, Virtual Hedge Funds are referred to using its unique Fund Symbol or Ticker Symbol, whereas Fund Names are mostly used under conversational contexts. In reality, Hedge Funds are not publicly traded entities so they do not have ticker symbols, or public valuations, for that matter. See "Ticker Symbol" for more information.

This is essentialy a blurb that the Virtual Hedge Fund Manager wrote to attract other members to invest in thier Virtual Hedge Fund. This is the Fund Manager's best bet to catch other members' interest.

See "Risk Expectation".

See "Ticker Symbol".

* Note: High Water Mark is not supported by Tipping Monkey at this point.

The assurance that a fund only takes fees on profits unique to an individual investment. For example, a $1,000,000 investment is made in year 1 and the fund declines by 50%, leaving $500,000 in the fund. In year 2, the fund returns 100%, bring the investment value back to $1,000,000. If a fund has a high water mark, it will not take incentive fees on the return in year 2, since the investment has never grown. The fund will only take incentive fees if the investment grows above the initial level of $1,000,000.


The return above which a hedge fund manager begins taking incentive fees. For example, if a fund has a hurdle rate of 10%, and the fund returns 25% for the year, the fund will only take incentive fees on the 15% return above the hurdle rate.


See "Performance Incentive Fee".

The date at which the Fund started operating.

The number of shares initially created at the inception of the Hedge Fund. The initial share price is calculated by diviing the Asset Base by the number of Initial Shares.

The Lockup Period is the length of time in which an investor's initial investment cannot be redeemed.

A percentage of the total AUM that a fund manager retains for managing the fund. Management Fees are expressed as a percentage per year. This fee is assessed regardless of the performance of the fund.

This is the Maximum Number of shares that a Virtual Hedge Fund is allowed to create. This sets an artificial upper limit of how much additional investment a Virtual Hedge Fund can take on. Shares are created when a member subscribes to a VHF, and are destroyed when a redemption occurs. See "Subscription" and "Redemption" for more details.

The Minimum Investment Amount per subscription imposed by the Virtual Hedge Fund Manager.

Tipping Monkey had invented a Virtual Exchange for our member to value and trade Virtual Hedge Fund Shares. The suffix :MONX is used to denote the "Monkey Exchange", in which VHF Shares are traded virtually. The Monkey Exchange only exists within the realm of Tipping Monkey and does not exist in the real world. All Tipping Monkey VHFs are identified using its symbol, plus the :MONX Exchange Suffix

A very brief version of the "Offering Memorandum" used in Tipping Monkey to explain the basic terms of a Virtual Hedge Fund. See "Offering Memorandum".

A document that explains in great detail about all the terms and conditions related to a Hedge Fund. This usually includes information about the Principals and thier bios, as well as all the Fund's investment style and strategies and fee structures.

Current number of outstanding shares issued for the Virtual Hedge Fund. See "Subscription" and "Redemption" on how outstanding shares are affected.

The fee assessed on new profits attained by the fund during the last fee assessment period. Typically, Performance Incentive Fees are expressed as a percentage per year over profits attained. Some Hedge funds also have a Hurdle Rate, which limits Incentive Fees to be applied on profits that are over the Hurdle Rate. See "Hurdle Rate" for more details.

Prerequisite: see "Subscription", "Ticker Symbol" and"Share Price". The Quotation system returns the most recent Share Price for a given VHF Ticker Symbol. In addition to the Share Price, the quotation system also returns other pertinent information such as trading volume and historic charts. In reality, since Hedge Fund valuations usually only occur when a Redemption or Subscription occurs, Quotation systems for Hedge Funds are almost unheard of.

The act of releasing shares back to the Hedge Fund to redeem money. In reality, most hedge funds have specific time windows in which redemptions are allowed. Moreover, most Hedge funds also impose Lockup Periods, in which new investments cannot be redeemed until after the Lockup Period.

For Tipping Monkey Virtual Hedge Funds, this is kept simple in that redemptions may occur at any time as long as the Lockup Period provisions have been met. Most real Hedge funds have a Lockup Period of one or more years, but for VHF, the Lockup Period is just for illustrative purposes only and can be set to as short as 2 weeks by VHF managers.

Redemptions affect the number of Outstanding Shares for Tipping Mokney VHFs in that whenever a subscriber redeems a number of shares, the shares are converted back to Virtual Dollars based on the current Share Price. Then any unpaid Management Fees and Incentive Fees are calculated pro rata and deducted from the proceeds. The proceeds are then credited back to the redeeming member, after the "Settlement Period" as specified in the VHF Offering Details.

Hedge Funds often invest in illiquid investments that cannot be converted back to cash easily. Hedge Fund investors are often required to wait a certain period of time after a redemption before they actually see the money. To illustrate this, redemptions made on Tipping Monkey Virtual Hedge Funds will have to go through a similar Redemption Settlement period, which is the amount of time between a redemption is made, and when the Virtual Dollars are credited back to the redeeming portfolio. In Tipping Monkey, the Redemption Period can be set to 1, 2 or 4 weeks.

This is the Fund Manager's own assessment of the general risk level based on the trading style and strategies used by the manager. The four pre-set values are: Low, Moderate, High and Very High. These are also consistent with the standardized measurements used in the real hedge Fund vocabulary. Since these are very subjective estimates, one should take this with a grain of salt.

The Share Price of a Virtual Hedge Fund is an artifact specific to Tipping Monkey that allows VHFs to be traded by other members just like shares of public companies. The Share Price of a VHF is determined after the close of every trading day by dividing the latest portfolio value of the VHF by the number of Outstanding Shares.

The act of investing in a Hedge Fund by buying shares of the fund. In reality, to subscribe to a Hedge Fund, an investor will have to sign a Subscription Agreement to become a shareholder of the Hedge Fund company. For Tipping Monkey, to keep things simple, a Virtual Hedge Fund can be traded just like a stock, except that VHF subscriptions are only processed after the close of each trading day.

When a member buys shares of a VHF, appropriate amounts of Virtual Dollars are deducted from the subscribing portfolio, and the corresponding number of shares are created in the VHF. This increases the number of Outstanding Shares of the VHF. The newly created shares are moved to the subscriber portfolio, and the Virtual Dollars are credited to the VHF portfolio.

Related: see "Closed Fund", "Maximum Outstanding Shares Allowed", and "Minimum Investment".

The Ticker Symbol is an artifact specific to Tipping Monkey Virtual Hedge Funds, which is used to identify a VHF for quotation and trading purposes. The Ticker Symbol for a VHF is composed of the base Symbol (e.g. PRIME) followed by the :MONX "Monkey Exchange Suffix" (i.e. PRIME:MONX). You can get Quotes for a VHF just by typing in the Ticker Symbol into any "Get Quotes" box in Tipping Monkey. VHF Ticker Symbols are NOT recognized outside of the Tipping Monkey website.

See "Virtual Hedge Fund".

Virtual Hedge Funds are portfolios that are created and managed by Tipping Monkey members who wish to open up their portoflios for other members to invest. A Virtual Hedge Fund is assigned a Ticker Symbol and and has a Share Value. VHFs ecan be traded by other members much like a regular stock, but with a few major differences. Virtual Hedge Funds are simulation entities and are to be used for education purposes only. Related: see "Subscription", "Redemption" and "Share Price".

See "Ticker Symbol".