Alternative asset management firm Crystal Capital Partners has launched new onshore and offshore investment funds that allow investors to customize their exposure to the underlying hedge funds. But these are not your typical funds of hedge funds.
Crystal Capital’s new vehicles allow investors to select underlying hedge fund portfolios based on their unique investment needs, but unlike fund of funds, the vehicles are structured so that so that the assets, liabilities, liquidity and investment terms of each hedge fund portfolio are segregated from other portfolios in the funds.
“The financial crisis taught us that the traditional fund of funds structure does not address the needs of today’s investors,” said Steven Brod, senior partner at Crystal Capital. “First, the concept of a pooled vehicle allowed the liability incurred by one asset to potentially affect all other assets in the pool. Second, the concept of pooled liquidity caused liquidity dilution, delays and uncertainty during times of crisis for all investors in traditional fund of funds.”
He explained that Crystal Capital’s fund structure addresses the pooled vehicle issue by segregating the assets of each customized portfolio from the assets of other portfolios in the funds. This structure also addresses the pooled liquidity issue by allowing each investor to determine their individual investment allocation and liquidity terms based on the underlying funds they have selected.
“Each investor deserves to have greater knowledge over the actual investments in their portfolio,” Brod said. “Our structure provides clients with the confidence that they have control over their investment decisions, with the added comfort of knowing that other investors in the fund cannot affect the liquidity or other terms that they have chosen for their portfolios.”
Florida-based Crystal Capital Partners was founded in 1992 and is a registered investment adviser.