Keeping Options Open – The Growing Demand For BVI Hybrid Funds

Hedge funds and private equity funds were traditionally considered to be two completely different alternative investment classes, but as managers and investors increasingly seek to take advantage of exposure to both asset classes, the industry has witnessed a significant rise in the popularity of hybrid funds.

"Such fund structures aren't new - the concept has been around for quite a while now. However, in the last couple of years, we've seen an increased demand for them, as many managers wish to establish funds with flexible mandates that combine elements of both hedge funds and private equity," says Eric Flaye, counsel, Conyers.

A hybrid fund is one which holds a mix of both liquid and illiquid investments and seeks to combine elements of fund terms that are customary for both hedge funds (that is, liquid investments) and private equity funds (for the illiquid element), within a single fund vehicle.