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Alternative Market Briefing

Side letters are good news for the hedge fund industry

Friday, November 27, 2020

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Kevin Neubauer
B. G., Opalesque Geneva:

Kevin Neubauer, a partner in the Investment Management Group at Seward & Kissel LLP, a U.S. law firm, speaks to Opalesque about the increasing use of side letters by new hedge fund managers and corporate and government plans. Indeed, investors in hedge funds are increasingly using side letters, which are documents in which the investors seek to obtain modifications in their rights and entitlements.

He also talks about what New York hedge funds are up to, and the impact of the revised definition of accredited investors.

Opalesque: What were your most significant findings in this year's annual side letter study, and what do they mean for the hedge fund industry overall?

Kevin Neubauer: There are a couple of takeaways. When we did this study we categorised asset managers into two buckets, new managers, and established managers. The idea being that new managers, those that have less than a two-year track record, may have different pressures and different incentives and therefore may enter into side-letters with prospective investors reflecting those pressures and incentives. The takeaway here is that regulatory assets under management for the group of new managers that we looked at increased significantly. What that s......................

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