Maintenance
A set minimum margin (per outstanding futures contract) that customer must maintain in his margin account.

Managed Futures
Represents an industry comprised of professional money managers known as commodity trading advisors who manage client assets on a discretionary basis, using global futures markets as an investment medium.

Management Buyout (MBO)
Acquisition of a company by its existing management. The financing structure may involve a significant amount of borrowed capital, (thus resembles an LBO), or may have a more balanced debt/equity mix if equity financing is available to management.

Market-if-Touched (MIT) Order
An order that becomes a market order when a particular price is reached. A sell MIT is placed above the market; a buy MIT is placed below the market. Also referred to as a board order.

Market Neutral - Arbitrage
Attempts to hedge out most market risk by taking offsetting positions, often in different securities of the same issuer. For example, can be long convertible bonds and short the underlying issuers equity. May also use futures to hedge out interest rate risk. Focuses on obtaining returns with low or no correlation to both the equity and bond markets. These relative value strategies include fixed income arbitrage mortgage backed securities, capital structure arbitrage, and closed-end fund arbitrage.

Market Neutral - Securities Hedging
Invests equally in long and short equity portfolios generally in the same sectors of the market. Market risk is generally reduced, but effective stock analysis and stock picking is essential to obtaining meaningful results. Leverage can be used to enhance returns. Usually low or no correlation to the market. Sometimes uses market index futures to hedge out systematic (market) risk. Relative benchmark index usually T-bills.

Master-Feeder Fund
The term used for interest rate swap or cross-currency swap transactions for hedging interest rate and foreign exchange risk in fixed income securities. Convertible arbitrage managers often 'swap out' of the debt portion of the convertible leaving only the equity derivative. This effectively removes the interest-rate risk and credit risk.

Maximum Drawdown
A typical structure for a hedge fund that has both US investors and non-US investors. An offshore 'master' fund is owned by two 'feeder' funds: one is a US limited partnership (LP) and the other is an offshore fund. As the investors will have different tax treatments, US investors invest into the US feeder fund and non-US investors invest into the offshore feeder fund. All the investment funds are then pooled at the master level and managed by the fund manager.

Merger Arbitrage
An investment strategy that involves investing in securities of companies that are the subject of some form of corporate transaction, including acquisition or merger proposals, cash offers and leveraged buy-outs. These transactions will generally involve the exchange of securities for cash, other securities or a combination of cash and other securities. Typically, a manager goes long the stock of a company being acquired or merging with another company, and sells short the stock of the acquiring company.

Mezzanine Debt
Privately negotiated subordinated debt investments, usually with a parallel investment in equity securities at relatively low cost or at nominal cost. Subordinated convertible debt is often combined with preferred shares, structured with warrants or options.

Minimum Acceptable Return (MAR)
An investment return "floor" chosen by the individual investor, that serves as the dividing line between a good and bad performance outcome. For example, if an investor is only worried about losing money, the investor's MAR would be zero and any negative returns would be viewed as risky or bad, if an investor needs to earn 7% annual return (i.e. their personal MAR) in order to meet their goals, any return under 7% would be considered risky or bad.

Mortgage Backed Securities Arbitrage
The mortgage backed securities strategy specializes in arbitraging mortgage backed securities and their derivatives. This strategy takes place primarily in the United States. The market is over the counter and extremely complex. The two greatest risks are prepayment and valuation; all securities are marked to market, but the pricing and valuation models used by the different participants may vary, and overall market liquidity has a huge impact.

Most Favored Nation Clause
A clause that states that any side agreements negotiated by other investors will be also extended to the investor who has the most favored nation clause.