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The key takeaways of the Study are as follows:

- Excluding certain outliers, the average regulatory assets under management ("RAUM") of the Mature Managers in the Study was approximately $5.1 billion (as compared to $4.9 billion in the prior study). The average RAUM of Newer Managers in the Study was approximately $387 million.

- Funds-of-funds continued to be the most common category of side letter investor, representing 42% of all side letter investors. This category experienced a slight uptick from the downward trend we have seen in recent years.

- A slightly lower percentage (44%) of side letters contained an MFN clause than in last year's study (48%).

- Side letters with government plans and corporate pension plans were the second and third most common investor categories, respectively, of side letter investors, suggesting that the revived interest in hedge funds by these types of investors that we first identified in last year's study has continued.

- Similar to side letters, in the context of separately managed accounts, funds-of-funds remained the most common type of investor.

"Our fifth Side Letter Study has again unearthed valuable insights into the continued evolution of hedge funds and their investors," said Kevin Neubauer, a partner in the Investment Management Group at Seward & Kissel and lead author of the study. "The Seward & Kissel 2019/2020 Hedge Fund Side Letter Study demonstrates strategic choices being made by hedge fund managers and their investor base alike."

Study:

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