The long lock up conundrum

Posted 15.01.2009


With many ‘star names’ in the hedge fund industry being able to use their clout to lock up investor assets for lengthy periods, the notion that illiquidity is a price worth paying for better performance should be scrutinized. This paper will analyse how the performance of ‘long lock up’ funds compares to the performance of their cousins who do not impose such punitive conditions on investors whilst assessing comparative performance in difficult market conditions.

Funds examined

For the purpose of the paper, the definition of long lock up fund applies to hedge fund holdings with a liquidity of greater than 2 years. Since data on long lock up funds is not so widely available, we could only use 8 long lock up funds held by our clients for the paper. Details of the funds are listed below with the fund names withheld to preserve confidentiality agreements Analysis long lockup performance

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