Hedgeweek: Liquidity is leading concern of institutional hedge fund investors

13 September 2011

Some 75 per cent of investors are looking for greater liquidity in their hedge fund investments following the financial crisis, according to the latest Preqin study.

Funds with lock-up periods are now considered less favourable amongst investors as they seek the flexibility to exit their investments at their own discretion. Although some investors are prepared to compromise on their liquidity demands when offered more favourable terms in other areas, 34 per cent place the priority on liquidity.

The study found that 30 per cent of investors will not consider investing in funds with a lock-up period, and only 6 per cent will invest in a vehicle with a lock-up period of over 24 months. In addition, 46 per cent of investors stated a preference for quarterly redemptions, while 32 per cent seek access to funds with monthly redemptions. "The majority of investors have increased their liquidity requirements following the market downturn, and the demand for funds with shorter lock-up periods and greater flexibility in terms of redemptions has grown in the years since 2008", says Amy Benstead, manager - hedge fund data at Preqin.

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