Moneymoney

Tue Oct 15, 2019, 10:26 AM

"Hard To Obtain Liquidity" - South Korea's Largest Hedge Fund Halts Redemptions

As Bloomberg reports, Lime Asset Management, South Korea’s largest hedge fund with about $4 billion of assets, suspended withdrawals from more funds on Monday, freezing a total of $710 million of its portfolio, after the firm said last week it couldn’t sell assets fast enough to meet redemption demands.

The hedge fund halted an additional 243.6 billion won ($210 million) today after freezing funds worth 603 billion won on Oct. 10, Won Jong-Jun, chief executive officer at the Seoul-based firm, said in a press briefing this afternoon.

https://www.zerohedge.com/markets/hard-obtain-liquidity-south-koreas-largest-hedge-fund-halts-redemptions

This also explains why GAM, Woodford, H20, Arrowgrass and many more funds (in the near future), will be similarly gated once their investors discover there is no liquidity to sell into and the only "real time" liquidity is offered to those who have a "first seller mover advantage", to wit:

If investors anticipate severe losses on the fund’s investments, they could be incentivised to “run for the exit” to be the first to redeem their shares.
The first-mover advantage in open-ended funds arises because losses on asset sales to meet redemptions are incurred by investors which remain in the fund.
As in a ‘bank run’, the asset manager is, in principle, forced to sell assets in a fire sale in order to meet its short-dated liabilities

0 replies, 40 views

Reply to this thread

Back to top Alert abuse

Moneymoney