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From Kirsten Bischoff, Opalesque New York : The request period for hedge fund redemptions varies with different funds, but a large portion require investors to give notice quarterly with anywhere between 30 and 45 days notice. In the first quarter of 2009, this may mean that Valentine’s day will bring many managers heartache, as expectations for further investor redemptions have risen in the wake of the Madoff fraud, as well as necessary portfolio rebalancing of institutional investors.
Side pockets, redemptions-in-kind, gates, fund restructuring, and even suspension of redemptions have raised the ire of investors over the past months and some have gone as far as tracking those funds using these techniques.
However, managers and fund directors are still faced with the fiduciary duty to act in good faith and the best interests of the fund and the fair treatment of all investors, and the fact remains that these are the tools many hedge fund managers have at their disposal in times of distress.
When documents do not allow for side pockets but do allow for “redemptions in kind”
Typically, funds which deal in illiquid securities have detailed the use of side pockets in their offering documents.
“In the traditional sense they are quite valuable for both parties,” Ingrid Pierce, a partner in Walkers' Corporate and International Finance Department and head of the firm's Commercial Trusts Group told O...................... To view our full article Click here
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