User:WWB Too/Hedge fund structure (Open-ended nature)
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Open-ended nature
[edit]Hedge funds are typically open-ended,[1] meaning that the fund will periodically accept the admission of additional investors and allow existing investors to withdraw their money from the fund at specified intervals (e.g. monthly, quarterly or semi-annually), usually following a fixed lock-up period.[2][3] New shares are issued when an investor buys, while existing shares are redeemed and canceled when an investor makes a withdrawal.[4] Hedge fund shares and limited partnership interests generally do not trade in the secondary market (although there are limited secondary markets for such trading)[5] and hedge funds do not typically distribute profits to investors before redemption.[6][1] This contrasts with a closed-ended fund, which either has a limited number of shares which are traded among investors, and which distributes its profits, or which has a limited lifespan at the end of which capital is returned to investors.[1]
Notes
[edit]- ^ a b c David Stowell (2012). "Investment Banks, Hedge Funds, and Private Equity". Academic Press. p. 299. ISBN 9780124046320.
- ^ Stein, Jeremy C. (2005). "Why Are Most Funds Open-End? Competition and the Limits of Arbitrage" (PDF). The Quarterly Journal of Economics. 120 (1): 247–272. Retrieved 22 October 2012.
- ^ "Registration Under the Advisers Act of Certain Hedge Fund Advisers: footnote 141". Securities and Exchange Commission. Retrieved 23 October 2012.
- ^ François-Serge Lhabitant (2007). "Handbook of Hedge Funds". John Wiley & Sons. ISBN 0470026634.
- ^ McMillan, Michael G.; Pinto, Jerald E; Pirie, Wendy; Van de Venter, Gerhard (2011). "Investments: Principles of Portfolio and Equity Analysis". Wiley. ISBN 0470915803.
- ^ Herbert B. Mayo (2010). "Investments: An Introduction". South-Western College Publishing. p. 241. ISBN 0538452099.