Wed, Sep 20, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Redemptions from low fee hedge funds could lead to 2%-3% drop in performance, says Melvyn Teo

Wednesday, April 21, 2010

From Sagar Chakraverty, Opalesque Asia:

“A lot of the low performance fee funds tend to have higher liquidity risks and this liquidity risk will translate into problems for investors when they attempt to pull money out of their fund.” This is what Melvyn Teo, associate professor of finance at Singapore Management University (SMU) shared with Opalesque’s founder Matthias Knab in a recent video interview (here).

Teo is involved in extensive research in finance and hedge funds, and also manages the BNP Paribas Hedge Fund Centre at the SMU. This centre runs seminar, conferences, and educational programs on hedge funds, and also conducts fund research.

In one of his recent research work, Teo looked into the veracity of the liquidity claim of hedge funds, especially those that raise gates and prevent investors from withdrawing money. He found that lots of the investments are fairly illiquid, and that there are huge deviations in the funds’ liquidity profile. He believes this liquidity exposure is related to agency problems, which arises when management and stockholders have conflicting ideas on how the company should be run.

Higher liquidity risk related to lower performance fees When investors pull money out from hedge funds that charge low performance fees, return of those funds tends to drop in the next month by 2% to 3%. This trend is stronger when stock market liquidit......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Asia - Hedge funds used to love shorting China. Now, not so much, Fledgling China FoFs require careful use: NCSSF, Amac, Japanese banks turn to PE, hedge funds for returns[more]

    Hedge funds used to love shorting China. Now, not so much From Bloomberg.com: A sharp devaluation. A credit crisis. And an economic hard landing. That's what some of the biggest names in the hedge fund industry were predicting for China after the nation's stocks and currency tumbled in 2

  2. Launches - Orchard launches new credit platform, ETN based on hedge fund to launch on the LSE[more]

    Orchard launches new credit platform Orchard Platform has rolled out Deals as a part of its new platform launch. With the addition of Deals to their suite of technology solutions for loan originators and institutional investors, Orchard Platform takes the next step in their evolution. De

  3. Neuberger Berman closes $1.1bn Credit Opportunities Fund[more]

    Neuberger Berman, a private, independent, employee-owned investment manager, announced that NB Private Equity Credit Opportunities Fund LP closed on $1.1 billion of limited partner commitments. The Fund seeks to invest in the secured and unsecured debt of private equity-backed companies, primarily i

  4. Capital Dynamics launches mid-market private credit business[more]

    Capital Dynamics, a global private asset manager, has launched a dedicated Private Credit Asset Management business. Experienced industry executives Jens Ernberg and Thomas Hall have joined Capital Dynamics to co-lead the company's new private credit initiative. They are based in Capital Dynamics' N

  5. ...And Finally - FAN-antic[more]

    From Newsoftheweird.com: Jeffrey Riegel, 56, of Port Republic, New Jersey, left 'em laughing with his obituary's parting shot at the Philadelphia Eagles. In it, Riegel asked that eight Eagles players act as pallbearers, "so the Eagles can let me down one last time." Riegel owned season tickets for 3