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Benedicte Gravrand, Opalesque Geneva:

An important and often overlooked aspect of new fund investments is the side letter, which has been gaining some ground of late, especially among newer managers and funds of funds.

Side letters are agreements that supplement or modify the terms of a fund's offering memorandum, subscription agreement or constitutional documents. They are often granted to large or important investors prior to investment and provide preferential treatment.

U.S. law firm Seward & Kissel has conducted a second study on side letters negotiated by their hedge fund manager clients, covering the period July 1, 2016 through June 30, 2017.

This second study noted an uptick in the use of side letters by new managers. In the 2015/2016 study, 87% of the side letters were with managers in business for two or more years at the time of execution. It went down to 80%. And 13% were with managers less than two years old; that went up to 20% more recently.

Among investors requiring side letters, funds of funds represented more tha......................

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