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Laxman Pai, Opalesque Asia - for New Managers:

Amidst an uncertain economic environment, a new report indicates a continuing shift in portfolio dynamics towards longer-held positions necessitating a tightening of liquidity rules into 2022.

Hedge fund terms regarding withdrawal frequency, investor-level gates, and so-called "hard lock-ups" all trended toward limiting liquidity last year, revealed the Seward & Kissel New Manager Hedge Fund Study.

The share of funds limiting withdrawals to a quarterly (or less frequent) basis rose to 91% in 2022, up from 81% five years ago. The increased restriction was most marked among funds employing non-equity strategies. Only 55% of such funds limited withdrawals to a quarterly basis in 2018, while 93% did last year. Other important liquidity terms followed the trend.

In 2021, just 21% of all funds employed both investor-level gates (restricting the amount an investor may redeem at any given time) and lock-ups (prohibiting investors from withdrawing capital for a stated term). In 2022, that doubled to 42%. Among standard classes of equity funds, the use of investor-level gates leaped from 18% in 2021 to 60% in 2022.

As per the study, the share of managers who launched with just a U.S. standalone fund rose to 60%, up from 39% in......................

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