Hedge Funds

Moody’s welcomes trend for investor-level gates


The increased use of investor-level gates by hedge funds is a positive credit development that improves overall asset-liability management, according to credit rating agency Moody’s Investors Service.

These gates “also promote the orderly unwind of positions and alleviate the pressure of en masse investor redemptions [and] help reduce legal risks managers face as they balance competing interests of redeeming investors and those remaining invested in a fund,” the firm said in a special comment issued this week.

Moody’s makes the distinction between investor-level gates – which independently limit redemptions for each of a fund’s investors – and fund-level