Tussle over terms
August 26, 2008
A slide in performance is giving investors more clout with managers over terms on gates, lockups, side pockets and fees. It’s now a buyer’s market – at least for some.
As performance slides, investors are gaining ground on gates, side pockets, lockups and fees
By Britt Erica Tunick
When emerging market investor John Moon left Oaktree Capital Management to go out on his own in April 2005, the price of getting in on his new fund's action was pretty onerous: Investors had to keep their money locked up for three years. Moon Capital's requirement wasn't uncommon at the time. The threat of mandatory registration with the Securities and Exchange Commission led many funds to take advantage of a loophole exempting those with lengthy lockups. And investors - particularly pensions and endowments seeking exposure to alternative investments for the first time - readily complied. But now that market conditions have changed, the balance of power is shifting ever so slightly in investors' favor. Moon, who had three-year lockups in his strategy as early as 1999, recently altered the terms of his fund, giving...
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