Funds Hub

Money managers under the microscope

Guard dog shows teeth

September 3, 2009

You’ve got to hand it to Cerberus.

While we dutifully write stories about a new beginning for the hedge fund industry, marked by transparency at levels never seen before and fund structures designed to satisfy those burned by the credit crisis, the firm named after the guard dog at the gates of Hades comes up with its own tactic — lock up investor money for three years.

You might think that this is the last thing investors want, but it has a curious logic.

The biggest complaint about the widespread lock-ups in the hedge fund industry over the last 12 months was the arbitrary nature of them. Just when clients thought ‘phew, at least I can pull my money out of XX fund’, they found the gate slammed shut on them.

With Cerberus’s new model though, investors will have comforting certainty about the status of their money at the firm’s hedge funds, and know that they’ll need to plunder other sources for cash should the need arise again. We’ll have to wait and see if others follow suit, but a widespread adoption of three-year lock-ups could give investors pause for thought and slow the recovery of the industry’s asset building.

As an aside, I’ve just glanced at tonight’s copy of the doomed London Paper and spotted some heartwarming fixed-income news to lighten anyone’s mood.¬†In the ‘Lovestruck’ column designed to allow the resurrection of brief encounters in the streets we find the following tortured appeal:

“You work at Bloomberg. Fancy discussing things other than bonds?” – Investment Banker.

I can only hope that by spreading the message in this blog we might speed the couple towards a happy union. And worth wondering too, why on earth Reuters journos have failed to flutter the hearts¬† of the City’s freesheet readers?

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