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Hedge Fund Lock Up Provision

Hedge Fund Lock Up Provision

Hedge Funds Still Locked Up $100 Billion from Investors

A few hedge funds are holding tough against investors redemption requests with a "sliver" of the industry refusing to liquidate their portfolios that are currently locked-up. Although the vast majority of hedge funds have liquidated their portfolios and bowed to redemption requests, it is believed that there are still $100 billion locked up by some hedge funds.  

Many hedge fund managers with lock-ups requested patience from investors before returning their money and providing a more liquid portfolio.  The industry came under some fire from investors after some wanted to withdraw money from funds during the crisis but found that their money was tied up under a lock up provision.
Industry observers said that time is up for hedge fund managers that aren't finished liquidating their portfolios and honoring redemption requests.

Most hedge funds that had liquidity problems “have gotten to the point where 95% to 99% of their portfolios are cleaned up,” said a hedge-fund-of-funds manager who asked not to be identified.

“There are these small dregs left in their portfolios, hedge fund rumps that don't go away, that you don't forget about, that are distracting and annoying but which aren't headline news,” the manager said.

But there remains a “sliver” of funds stubbornly hanging on to more than a slight percentage of their portfolios, and those funds aren't returning money to investors who want it back, said Geoff Varga, a partner and leader of the insolvency-and-distressed practice of Kinetic Partners U.S. LLP, a business consultant to money managers. Source

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