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Hard Dollars

A reference to the way money managers pay for services. Hard dollars is the use of cash to pay for services. The alternative is soft dollar payments, that is pay for services with commissions that are generally derived from the trading of securities.

Hedge

A strategy that is used in securities trading and portfolio management to reduce the risk of large losses by investing in securities that move in the opposite direction of other holdings. For example, a portfolio may have holdings that are sensitive and insensitive to interest rate movement.

Hedge Fund

A pooled investment, organized as a limited partnership, that invests in any type of security that can make money for the owners of the fund. This flexibility is a major difference between a mutual fund and a hedge fund. Another difference is the lack of regulatory oversight for hedge funds compared to mutual funds. Most hedge funds also have relatively high investment requirements.

Hedged Portfolio

An investment strategy that buys a stock and a put option on the stock so the position is riskless.

Hidden Load

A commission that is hidden in the fine print of a mutual fund prospectus or life insurance policy that is not readily identifiable by investors.

High Current Income Mutual Fund

A mutual fund that produces high current income by investing primarily in junk bonds.

High Yield Bond

Same as junk bond. A low quality rated bond that has a high coupon rate of interest.

Hold

To retain ownership of a security for a longer period of time. Also, the recommendation of an analyst to retain ownership of a security and not sell it.

Holding Period

The length of time an investor owns a security.

Homogeneity

The degree to which different items have similar characteristics. A homogeneous portfolio has holdings that have similar performance and risk characteristics.

Horizon

As in investment horizon. The length of time until an investor needs income from an investment or a return of principal. Investors may use different investment strategies based on horizon.

Horizontal Price Movement

Also known as a sideways market. Price movement of a security, portfolio, or market in a relatively narrow trading range for a prolonged period of time.

Hostile Takeover

The takeover of ownership of a company that is counter to the wishes of senior management and the board or directors.

Hourly Fee

Some financial advisors charge hourly fees for their planning and other services. Hourly fees will vary by location. Advisors in larger cities will charge higher hourly fees than advisors in smaller cities.

Hypothecation

Pledging securities as collateral for a margin account loan.