When hedge funds become illiquid, what options
are open to investors?
Hedge funds are typically high risk, high reward
investments. However, when high risk investment strategies fail
to pay off, the true liquidity of underlying assets may be
revealed to not be quite as the promotor, or perhaps more
importantly, the investors hoped. The 2008 financial crisis led
to a surge in the number of funds facing liquidity issues. Some
of these issues were down to global macro events, but many were
due to unrealistic expectations of liquidity as against
investment return. Since then, funds and those advising them
have become much more alert to addressing liquidity issues, but
these problems are by no means a thing of the past....