The future of hedge funds

Thu Apr 23, 2009

Michael E. Lewitt, president, Harch Capital Management, LLC

In 2008, the hedge fund industry hit a wall. Many funds not only lost money for their investors; they compounded their miscues by mistreating their investors by refusing to return their funds, or returning those funds ‘in kind’.

In funds heavily invested in illiquid assets, temporary delays in returning investor funds in order to effect a managed liquidation of assets may well be the best course of action for all of the investors in the fund, both those who are exiting and those who are staying behind. But many funds holding liquid assets also availed themselves of the general market meltdown to block investors from leaving. And adding insult to injury, managers of all types of funds that prevented investors from exiting continued to charge fees on this trapped money. This was probably the worst sin committed by managers in...

ISSN: 2151-1845 / CDC10004H

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