Hedge Fund Redemptions
Hedge Fund Redemption Dates
The WSJ recently ran a short piece on how some relatively large hedge funds are facing waves of redemptions from their investors. One $14B hedge fund has seen their assets shrink to just $11B after dozens of investors submitted their redemption requests. Another has shrank from $10B to $8B.
Many hedge funds have what is caused a gate or gating clause within their agreements with investors which only allows a certain percentage of the firm's assets to leave the fund through redemption requests each quarter. While some hedge funds have gating clauses set at 7.5%-10% many others are at 15-20%, meaning that only 7.5% of the hedge fund's total assets may leave the fund via redemption notices each quarter.
While there will always be hedge fund redemptions as investors shift their investment allocations it will be interesting to see if the above gating clause percentage rates fall as some hedge funds face liquidity issues with clearing their current positions or whether investors become more aggressive in demanding higher gating percentage levels as they might have gotten out of a past hedge fund investments later than planned due to one of these gating redemption clauses.
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