Tussle over terms
Tue Aug 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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