Structural Difficulties Posed by Hedge Funds Investing In Illiquid Securities

Simon Riveles Hedge Funds, Illiquid Securities, Private Equity Fund, Side Pockets

As the number of hedge funds pursuing similar strategies has grown, managers have increasing looked to private equity and other illiquid assets to generate alpha. However, the traditional hedge fund structure is meant to facilitate investing in liquid securities that are readily marked-to-market. Housing illiquid assets under the traditional hedge fund model can result in a variety of potential problems in the area of taxation, …