Hedge Fund Consultants Key Terms

Some terms you might find as you explore hedge fund consultants

By Ann Starr

Hedge fund consultants are highly trained and experienced professionals that can help companies, organizations or individuals navigate the market for these securities. They can help you with determining your risk profile, developing your strategy and providing ongoing guidance and support as you invest in these funds. There are numerous hedge fund software packages on the market and a hedge fund consultant can also help you select the best one for your needs. As you delve into this seemingly arcane field, it would helpful if you understand some simple terms.

Net asset value

Net asset value (NAV) is a financial term that describes a hedge fund's value less the value of any liabilities. There isn't a common method for calculating a net asset value used by hedge fund consultants and it will depend on the circumstances, the purpose of the valuation and regulations that might apply.
Try: InvestorWords.com has a concise definition of this term.

Dividends

Dividends are a portion of profits paid out to stock holders. When a hedge fund earns a profit or surplus, that money can either be re-invested or paid as a dividend. Hedge fund consultants can help determine whether it makes sense to pay out dividends from a fund.
Try: Street Authority offers a complete definition.

Stock split

A stock split refers to when a company divides the number of shares it has into a larger number, so that they are more affordable and therefore marketable, while maintaining the current stockholders' proportion of ownership. Hedge fund consultants can evaluate whether or not a stock split will be beneficial.
Try: Investor Glossary provides a definition as well.

Blue sky law

A blue sky law is a state law that is designed to regulate the offering and sale of securities to protect the public from fraud. Hedge fund consultants can work to ensure that a fund meets the requirements outlined in blue sky laws.
Try: Farlex offers an in-depth explanation.

Anti-money laundering

Anti-money laundering (AML) is a term that describes the legal controls that are required of financial institutions and hedge funds to prevent or report any activities that occur and which are designed to disguise whether the funds were acquired illegally. Hedge fund consultants can assist with putting in place controls to ensure that AML regulations are followed when hedge funds receive funds.
Try: U.S. Commodity Futures Trading Commission offers a definition and information on what is required for financial institutions to establish AML programs.

Offering memorandum

Offering memorandum, also referred to as a private placement memorandum (PPM), refers to a legal document that is composed by a hedge fund consultant and which states the objectives, risks and terms of a hedge fund.
Try: Zeromillion.com defines the term and explains what main sections are required for an offering memorandum.