Ira Kustin Authors Article for The Hedge Fund Law Report on Managing Liquidity Demands in More Flexible Fund Structures
The Hedge Fund Law Report has published the article “Beyond the Master-Feeder: Managing Liquidity Demands in More Flexible Fund Structures,” written by Akin Gump investment management partner Ira Kustin. The article explores different tools that hedge fund managers can use to effectively manage assets with different liquidity characteristics, while also addressing investor liquidity expectations.
Kustin writes that hedge fund managers should consider a vehicle that invests alongside an existing hedge fund “to serve as a venue for housing less liquid, yet nevertheless appealing, assets.” He writes that structuring any co-investment or sidecar vehicle “involves some creativity and, naturally, depends on the number of investments expected to be pursued by the vehicle and the characteristics of the investors in the sidecar.”
Some advisors to hedge funds, Kustin acknowledges, would prefer to house all investments in their main fund. He says, however, that those funds will need to “incorporate mechanisms for monitoring liquidity needs in light of investor redemption requests.”
Kustin proceeds to discuss some issues that might arise with service providers in connection with novel hedge fund structures. He also outlines some of the compliance and conflict concerns he sees.
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