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P

Pairs trading

An investment strategy that seeks to buy a relatively undervalued security and simultaneously short sell a relatively overvalued security with similar characteristics (same industry / sector, market capitalization, etc).

Pari passu

Meaning the same in strategy, rights and privileges ("of equal step" in Latin).

Passive management

Investment strategy that replicates the performance of a specified index or benchmark.

Percentage of positive months

The percentage of months that delivered positive returns since the inception of an investment.

Performance

The profits and losses of an investment over a specific period.

Performance fee

Hedge fund managers typically levy a 20% performance or incentive fee, whereby the fund manager retains 20% of all profits above a high water mark.

Prospectus

Legal document that describes a mutual fund's objectives, managers, terms and investment parameters.

Pooled fund

Any fund in which multiple investors contribute assets and hold them as a group. A common example of a pooled fund is a unit trust.

Portfolio parameters

Legal restrictions placed on a fund's investment mandate and codified in the offering documents

Position

The amount of a security either owned (long position) or borrowed (short position) by an individual or by a dealer.

Prime broker

Provides services such as securities lending, leveraged trade executions, and cash management, among other things, to fund management firms.

Private Equity

Refers to equity capital offered to private investors rather than being offered publicly on an exchange.

Proprietary system/money

Private securities trading methodology developed by an investment management firm.

Put options

An option contract giving the owner the right, but not the obligation, to sell a specific amount of an underlying security at a certain price within a given time.