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Alternative Market Briefing

What to do when you lose patience with your illiquid hedge fund investment

Tuesday, October 30, 2012

Benedicte Gravrand, Opalesque Geneva:

Multiplicity Partners sees a massive increase in long-term investors like pension funds, UHNWIs and family offices losing patience with their hedge fund providers over their progress in liquidating side pockets or other illiquid/impaired investments.

As a Zurich-based independent investment boutique that helps investors liquidating their illiquid hedge fund investments, Multiplicity should know what it’s talking about. Since 2009, its team has managed the wind-down of various hedge fund portfolios with assets of more than $2 billion for clients.

Thomas Ritter, partner at the firm, said in a recent release: "Even four years after the peak of the financial crisis, investors are still sitting on an estimated $50 to $75 billion of illiquid and impaired hedge fund investments. In Switzerland, we now see that even the most patient investors, who are typically invested through funds of funds, become tired of excuses for not getting their money back. Unfortunately, the secondary market for hedge funds is highly fragmented and exhibits a high degree of information asymmetry between buyers and sellers. An immediate exit in the secondary market may therefore not be advisable if the investor does not need liquidity urgently. But "kicking-the-can-down-the-road" and letting fees erode the remaining value of the assets is not an option either."

Kinetic, a global pr......................

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