Liquidity and illiquidity: threats or opportunities?

Wed Mar 31, 2010



Phil Moore, special reports writer, HedgeFund Intelligence

Prior to the summer of 2007, the chances are that if you had asked a fund of funds manager to define a gate or side-pocket, he would have referred you to the closest field or billiards table. Too cynical? Probably. But with the benefit of hindsight, market participants say that in their pursuit of high risk-adjusted returns, too many hedge fund investors simply ignored or forgot to read the small-print on redemptions, lock-ups and gating. For the many investors that continue to sit on illiquid, gated positions, or on assets locked into side-pockets, it was an expensive oversight. It was also a mistake that few are likely to make again in a hurry.

The change in investors' attitudes since the crisis has been very striking to Manfred Schraepler, director and head of funds at Deutsche Bank's funds platform, db funds. "When I spoke...

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