The Premier Choice For Private Equity And Hybrid Vehicles

Fund structures that combine a hedge fund approach to investing in liquid assets with private equity style features are growing increasingly attractive to fund managers.

The "hybrid fund" combines a traditional hedge fund investment mandate with the characteristics of a private equity fund (such as being closed-ended, a waterfall distribution of profits and a specified investment period).

In its 2013 report, J.P. Morgan identified the key drivers for this upswing in hybrid hedge fund vehicles as being major changes to the global credit market aligned with the growing regulatory pressures (not least the pressure on European banks following Basel III). This finding is echoed in the February 2014 report by New York-based law firm Seward & Kissel, which points to an increasing convergence between hedge funds and private equity funds, with hard lock-up periods as well as tougher redemption terms.