HEDGE FUNDS RAISE THE GATES, AND INVESTORS PAY

By Nathaniel Luce

Publication: NEW YORK TIMES DEALBOOK

Numerous money-losing hedge funds have curtailed investor withdrawals over the past few months as redemption requests piled up. But “raising the gates,” as it’s known in the industry, can cost investors dearly, according to a recent study from the Vanderbilt University’s Owen Graduate School of Management and Columbia University. “Given that most hedge funds require significant investment levels to begin with, the resulting costs of liquidity restrictions — whether existing or newly imposed — can potentially be staggering for investors,” said NICOLAS P.B. BOLLEN a professor at the Owen School and one of the authors of the study.